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Nonprofit Law/Work Required or Additional fees


QUESTION: My son plays soccer in the local league that is organized as a 501c3.  I understand how they are organized and "understand" the inurement part of being a 501c3.  They have now instituted a policy where they want to force people to volunteer and make them pay a fine if they don't volunteer.  I say they cannot do this as that would be benefitting those who can and do volunteer and penalizing those who don't thereby inuring those who do.  Can they force someone to volunteer or does this violate the statute?

ANSWER: If the soccer league requires a fee that is fine, just like a 501(c)(3) university would require tuition.  But, if they offer people an opportunity to work instead of paying, for example the $500 in fees, then that work is taxable as any other employment.

The Internal Revenue Code at section 102(a) provides that gifts are not income.  "Gross income does not include the value of property acquired by gift..."

But 1.102-1(a) of the Income Tax Regulations provides that "Section 102 does not apply to prizes and awards (see section 74 and 1.74-1) nor to scholarships and fellowship grants (see section 117 and the regulations thereunder).

Those are taxable.

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 that is understood.  We do pay a fee already of $500.00 to cover registration, uniforms, tournament fees etc.  They are saying that now to help the club we must volunteer hours or we will pay a fine if we don't.  You have the option to essentially not do anything and pay a fine or volunteer and have the fine waived.  This volunteering is to help the club.  It could be doing anything from helping with a fundraiser to working at a tournament checking players in, or setting up on Saturdays.  There are is another angle to this there are 2 divisions to the club the recreational division and the competitive division, this fine is only for the competitive division players.  The club is operated as one, the lesser skilled players generally play in the rec division while the more competitive players play in the competitive division. Thanks in advance

ANSWER: The club has explained it strangely, but essentially they are saying that you need to pay the amount (whatever the fine amount is) or work.  So my answer that I initially gave still stands.

But to answer your specific question, you should look to your original agreement when you paid the $500.  If the agreement was for certain goods and services, the club does not have an enforceable right to now demand more for the same goods and services, whether more in funds or by some requirement of work.  

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: I'm confused because several of the other responses that I have read say they cannot force you to volunteer.  That it must be optional.  I also see responses where they say that they can't make you pay fees or fines for not participating in fundraising or other club activities.  For example "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)."

I also read the case about Capital Gymnastics in Virginia where they were doing the same thing had to stop the practice and actually lost the 501c3 status.



The case which I referred to is about Capital Gymnastics Booster Club, Inc.
and you referred to other examples about "booster clubs", but you are inquiring not about a booster organization but a "soccer league" and, therefore, the treatment is different for booster organizations and sports groups.

The IRS has explained that work may be required by a 501(c)(3)organization, like a university:
--- Start of Excerpt ---
 Generally, you cannot exclude from your gross income the part of
any scholarship or fellowship that represents payment for teaching,
research, or other services required as a condition for receiving
the scholarship. This applies even if all candidates for a degree
must perform the services to receive the degree.
--- 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


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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