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Nonprofit Law/501(c)3 Fundraising


QUESTION: I have a quick question... I am sure you have covered this on multiple occasions, but I cannot seem to locate the exact answer.

You have mentioned that the 501(c)3 Booster club can require a membership fee and a fundraising fee if it is in the Booster club agreement and the members voluntarily sign-up to be a member of the Booster Club and accept the requirements.  My question is... If you cannot give credit to individuals for the amounts of money they have raised toward their fundraising requirement, as this would be deemed an inurement, then how does the Booster Club keep track of the fundraising requirement at all to make sure that a person has met their fundraising obligation? If you are required to fundraise $ 300.00 but the club is not allowed to give you credit for the money you have fundraised, then how can you enforce the requirement?

Thank you in advance!

ANSWER: I don't see that there is any difficulty in keeping track of how much a family raises for the general fund of the organization, do you?  They simply turn in the funds to the treasurer who counts them.

If the booster organization has a fundraising requirement of $300 and they have a rule that those that do no not sell enough to get to that total, or otherwise fundraise, then the rules can simply state that those people will no longer be members of the organization.  Again, the organization will not be able to discriminate against that family in making grants for the youth in the family who are gymnasts.

The booster organization may not report to the for-profit gym who is a member of the booster organization nor who has been raising what, because there is no reason, other than tax evasion, for such a report. By such actions, the booster organization would jeopardize their 501(c)(3) exemption.  See starting on pages 11 "Private Facil ity Owners" which discusses prohibited private benefit and excessive control of the booster organization by such private facility owners.

Harvey Mechanic
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.

---------- FOLLOW-UP ----------

QUESTION: It seems like a fine line between making the fundraising requirement a mandate and being able to actually enforce it.  The whole purpose of the Booster Club is to provide financial support for gymnasts and this is done through fundraising and through donations or fees collected from the parents.

If parent A sells $250.00 worth of corporate sponsorships for the Booster Club and he has a mandated $300.00 per year fundraising requirement to be a member of the Booster do you credit this $250 toward his $300 obligation without it being an inurement to him?  Is it in the fact that you can't make him pay the difference at the end of the year, therefore it is not a personal gain to him?  If they don't meet their fundraising obligation, the only penalty would be non-membership in the Booster Club.

A fundraiser for a 501(c)(3) organization whose family does not receive any tangible benefits from the fundraising is not receiving any private inurement. Internal Revenue Code section 501(c)(3) which is available at (on page 2, first column) provides, in part, that the 501(c)(3) organization must be "operated exclusively for religious, charitable ...or educational purposes ... no part of the net earnings of which inures to the benefit of any private shareholder or individual".

The organization may also mandate that the member pays the difference between the $300 and the $250 raised ($50) and, if that is not paid then the organization may terminate the membership.

The main issues of 501(c)(3) booster organizations involves who the organization is benefiting, not who is fundraising for it, except that it may not discriminate in grants to youth on the basis of any membership or fundraising by that youth's family.

Harvey Mechanic
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.

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Harvey Mechanic


DO NOT GIVE ME INFORMATION THAT YOU WANT KEPT CONFIDENTIAL. I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "" without the quotes and then add your search terms before hitting enter.


I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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