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Nonprofit Law/Dissolving of booster club funds

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QUESTION: At the end of June our gymnastics booster club will dissolve. According to our bylaws, any remaining monies must be donated. Currently we operate from a resource fund and from the member's individual accounts. Several members will be attending a final meet in June and wish to divide the resource fund up to the members to offset the cost of this meet. According to the booster club handbook, the resource account is for holiday parties, operating costs, or other costs as approved by the board. The money for the resource account comes from membership dues and a small percentage comes from the fundraisers held throughout the year. If the money was divided among the members attending this meet, there would be no money to donate. Can this fund be divided to offset the costs for the members attending this meet, or does it need to be donated? Thanks for your help.

ANSWER: A 501(c)(3) booster organization may grant funds for the meet expenses of the youth, but the grants would need to cover the costs not only of the members of your booster organization but everyone who is similarly situated. My summary of IRS regulations relating to 501c3 booster organizations is at:
http://goo.gl/ULw6f6
and you may be interested to read that.

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

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: The booster club was dissolving because the current owners are closing the business. If the gym is bought out, can the existing booster club continue or would a new booster club need to be established? I appreciate your help.

Answer
A 501(c)(3) booster organization may not be established to fund a for-profit gym, but you could look into the articles of incorporation and bylaws to see if there is anything in there about the 501(c)(3) organization needing to fund youth who participate on a certain team.  If not, the booster organization may fund youth programs held at any gym.

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

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

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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 Harvey108@hotmail.com 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 "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

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.

Education/Credentials

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

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


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