Nonprofit Law/New 501(c)(3)

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Question
QUESTION: I am working with a cheerleading team to organize a parent booster club for fundraising purposes.  Would we be filing for nonprofit as a "charitable organization", as a "private foundation" or as "other'?  Our primary purpose will be to support the efforts of the team to attend competitions, purchases uniforms, etc.

ANSWER: 501(c)(3) booster organizations are classified by the IRS as charitable organizations. You did not ask, but I suggest that you do not refer to the organization as a "parent" booster "club".  Although mostly parents would be doing fundraising, you would not want to exclude grandparents or uncles or friends.  Also, I recommend not using the term "club" which implies some social group or a group for recreation activities.  The American Red Cross is a charitable organization and it would in no way call itself a "club".  My summary of IRS regulations relating to 501c3 booster organizations is at:http://goo.gl/ULw6f6and 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: Thanks you for your response. I have read many of your replies and they are very helpful. I'd like to see if I understand. If we start a booster association that is inclusive to all interested, but does not require membership to benefit from the association, we can have individual accounts for participants to raise individual funds as long as we also have group fundraisers that benefit the entire organization, regardless of affiliation with the boosters. Is this accurate?

Answer
No fundraising to benefit individuals allowed. I will direct you to my summary of IRS regulations relating to 501c3 booster organizations which is at: http://goo.gl/IdQwML and you will see there:

In June of 2011 that IRS wrote:
---Start of Excerpt--
If a booster club confers a benefit on a participant in return for their fundraising activities, such as by crediting amounts raised by a participant toward that participant's dues requirement, or by crediting amounts raised against the cost of a trip, the booster club is providing a private benefit to that participant. Consequently, such practices could result in the organization failing to be described in 501(c)(3).
---End of Excerpt---
http://www.irs.gov/pub/irs-tege/booster_club_field_directive_6-27.pdf  

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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