Nonprofit Law/Gymnastics Booster Club Information
Hey I found you. I just sent you another email just an hour or so ago.
I read one of your articles in regards to purchasing gym eqp for gymnastic gyms. It wasnít what I was looking for however was very informative. I appreciated you taking your time to explain it. I also wanted to know if you could point me to your other articles. I would love to read them.
Iím interested in finding out, and what I was originally looking for information on:
1. Can a booster charge new gymnasts a booster start-up fee for a booster that started up prior to their existence? If so how long can they charge new gymnasts? I didnít realize it cost money to start a nonprofit booster.
2. What are booster clubs allowed to charge other than meet fees and training for the coaches?
3. Are boosters allowed to purchase eqp for the gym for donation?
I appreciate your appreciations, Daniele.
To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter. My summary of IRS regulations relating to 501(c)(3) booster organizations is at: http://goo.gl/IdQwML
and you may be interested to read that.
1. As I have explained in my summary of IRS regulations, a 501(c)(3) booster organization may not base any decisions on its granting of benefits to families on their membership or fee payments to the organization. Otherwise, such an operation would be what the IRS calls a cooperative. A cooperative is not qualified as a 501(c)(3) organization. A 501(c)(3) booster organization is to be a charitable, not a cooperative, organization. A charitable organization, like the Red Cross, does not require beneficiaries to work for the Red Cross in order to receive benefits.
In August, 2013 the U.S. Tax Court supported the revocation of 501(c)(3) organization status of a formerly exempt organization and noted that a parent's fundraising was earmarked to reduce what otherwise could be a $1,400 payment the parent would have to pay out of his/her pocket. The direct linkage of a parent's fundraising resulted with paying expenses for that parent's child and was a
very specific benefit obtained by the insider. While the parent may not have been paid cash, the parent nevertheless ended up escaping having to write a check for the amount of the benefit. Families who did not fundraise did not receive any benefits from the purported a 501(c)(3) organization. http://goo.gl/QS9wCH
But, if a family wants to joint a new booster organization the organization can certainly require them to pay a fee, including start-up fees. If they use an attorney the costs in the set up would be substantial.
2. They can charge for anything directly or indirectly relating to gymnastics to the persons who have agreed to join such an organization but the membership agreement should notify what the types of charges would be so that potential members know what they are getting involved in.
3. A 501(c)(3) organization is not allowed, under IRS rules, to purchase equipment and give that equipment to a for-profit gym. The gym is not a charitable beneficiary and, therefore, grants to them, are prohibited. The grants would result in what the IRS calls, substantial private benefit to the for-profit gym. An extensive discussion by the IRS of the private benefit issue relating to 501(c)(3) organizations is found at http://www.irs.gov/pub/irs-tege/eotopich01.pdf
Especially note page 8 about a private school benefiting the insiders.
Attorney at Law
P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.