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Nonprofit Law/youth football fundraising


QUESTION: i am a youth football coach that coaches for various leagues year round.. different leagues for different times of year. for the fall league we chose to coach in last year, we did some fundraising for the team as well as took corporate donations. the league is a 501.3(c) & all donation checks are made out to the league. as the designated team we spend the money on league assessment fees, mouth pieces, water, player gifts, team parties, & anything else the team may need, with the approval of the league. we must first get approval of the purchase, then buy it with our own money then present receipts for reimbursement. above & beyond the league team assessment fee we spent  the raised team funds on players jackets, water & ice for practices & games, coaches thank you plaques, we traveled & participated in a bowl game,& purchased practice equipment such as tackling dummies, footballs, pull sleds & the like, among other things.we have always been instructed that any $ raised above & beyond the team assessment fee due the league, should be spent on the team. as a coach i recruit players, bring players from previous years/seasons & are given a few players from general league sign ups. our team plays 3 seasons a year & during this time we gain & lose players based on whether they want to play or what ever reason. this fall our players, parents & coaches have decided not to return to this league that we have attended in the fall for the last 3 years, & have decided to join another fall league due to a better age & weight fit for our players. upon informing the league we would not be returning this coming fall, they demanded that the practice equipment be returned to the league. just the practice equipment. not anything else we purchased for the team.. can they claim items that our team purchased with team raised funds? if so how can they justify claiming only the practice equipment?

(p.s. they have filed a suit in small claims court)
thank you
Da coach

ANSWER: Unless you have a contract with the league that indicates that the practice equipment is the property of the league or becomes the property of the league if a team leaves the league, I have no idea what the league is basing their claim on.  It is, therefore, the burden of the league, in small claims court, to send you the text from the relevant portion of the contract or other agreement, such as the league rules that your team agreed to.  If they, instead, think that they are basing their claim on the law, then the burden is on them to provide the specific law that they are referring to. I suggest you contact the league and ask them, before the date you are going to small claims court, where in the team membership agreement with the league the text is that they are relying on.  Tell them that you don't want you or them to waste time going to the court hearing and you would prefer to settle the matter and avoid court, but you need the basis of their claim so that you can discuss then with the families on the team.

I have in my profile that this free forum is only for general questions about IRS federal exemption issues of 501(c)(3) organizations. The league may have a state law claim and those are controlled by state law and states may differ somewhat with how they would treat such issues. Even though this forum is not for such state law issues, I will try to direct you a bit. I suggest you obtain a copy of the complaint that they filed in small claims court and read the information at

You did not ask, but a 501(c)(3) youth sports organization is supposed to only spend its funds on activities that are direclty related to the sporting activity needs of the youth.  Gifts to players, and team parties are not considered by the IRS as such charitable or educational purposes.  

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: Thank you. I have already asked for proof of this law or league rule because I have never been verbally told, given it in writing, or agreed to any terms resulting in the equipment belonging to the league upon leaving. Received no answer. In fact my witnesses are 3 other head coaches that are not aware of any rule that proves their claim. I forgot to tell you that they encouraged all head coaches to purchase equipment & said that funds do not need to be spent on the kids gifts, as long as it was for the team, which my witnesses will also confirm.. They are claiming in their complaint statement that the equipment is theirs BECAUSE they are a 501.(c)(3) organization. & they claim it's in their bylaws which I nor any other coach has recieved a Copy of. Were in the last stages & We already have a court date. So I'm ready to hear the decision. As I have nothing to lose but equipment. But said league has a reputation that may not hold up through this because kids & parents follow coaches. Not leagues. It's the nature of the beast.
But To understand your last comment about what funds are supposed to be used for, are you saying they are approving $ to be spent on things that it shouldn't  be?
Thank you so much   
Da coach

If a 501(c)(3) organization approved the expenditure of a substantial amount of funds for social activities, which parties are an example, and gifts other than of a minimal value, then it is not operating properly.  But that will not help you in the matter at issue in small claims court.

The fact that something is in their bylaws only goes to their internal operations.  It does not bind someone who has not been informed of what is in the bylaws, unless they have an agreement with your team in which they indicated that you are bound by provisions in their bylaws and then it would have been up to you to request a copy of their bylaws.

That league may be misunderstanding the IRS regulations as to 501(c)(3) organizations and now trying to remedy it.  However, they may make grants to non-exempt entities, such as your team, which may even be an unincorporated association.  Revenue Ruling 56-304 has:
--- Start of Excerpt ---
Organizations privately established and funded as charitable
foundations which are organized and actively operated to carry on
one or more of the purposes specified in section 501(c)(3) of the
Internal Revenue Code of 1954, and which otherwise meet the
requirements for exemption from Federal income tax are not
precluded from making distributions of their funds to individuals,
provided such distributions are made on a true charitable basis in
furtherance of the purposes for which they are organized.

However, organizations of this character which make such
distributions should maintain adequate records and case histories
to show the name and address of each recipient of aid; the amount
distributed to each; the purpose for which the aid was given; the
manner in which the recipient was selected and the relationship,
if any, between the recipient and (1) members, officers, or
trustees of the organization, (2) a grantor or substantial
contributor to the organization or a member of the family of
either, and (3) a corporation controlled by a grantor or
substantial contributor, in order that any or all distributions
made to individuals can be substantiated upon request by the
Internal Revenue Service.
---End of Excerpt---
(cited with approval in IRS instructions for Form 1023 Application
for Exemption on pdf page 23 middle column) at:

Also, under an agreement, took the funds that your team raised and agreed to reimburse you for your purchases, when they then did.  There appears to me nothing in that agreement that would mean that they ave rights to the equipment.  

If you want to set up a conference all between you, me and the league representative, I would be willing to be on that for 10-15 minutes without a fee.  You can inform them of my qualifications. You can send him:
--- Start of Excerpt ---
I have as my main area of practice the law of nonprofit entities. I have an area at's site called where I answer questions relating to nonprofit organizations: and you can see there the very positive feedbacks that I received there for my answering over 13,000 questions.
--- End of Excerpt ---

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


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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