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Nonprofit Law/Non profit cheerleading booster not seeking tax exempt status

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QUESTION: I have two questions regarding our non profit booster.

Question one:
Our old booster was a tax exempt organization but wanted to partake in IFAs. Our board wasn't very knowledgable on the IRS guidelines and was quickly turned away by our home cheerleading gym; and has since dissolved.
We have decided to start a new non profit booster but not go for our tax exempt status. If we incorporate as a non profit but pay taxes on donations etc. can we credit funds to individual athlete accounts?

Question two:
Can the owner of the home gym sit on the board of this booster but revoke his right to vote on any financial matters? Essentialy the gym owner would sit on the board to monitor and to make sure things are not ran improperly.

Our booster is at a standstill until we figure all of this out.

Thank you!

ANSWER: 1.  The word "nonprofit" refers to the State requirements, which for you are the requirements of Florida. In some states, like New York and Florida, the term "Not for Profit" is used instead of "nonprofit, though. You asked about incorporating as a nonprofit. http://goo.gl/pbPdk is the "Florida Not For Profit Corporation Act" and specifically note section 617.01401(5) provides a definition:

--- Start of Excerpt ---
“Corporation not for profit” means a corporation no part of the income or profit of which is distributable to its members, directors, or officers, except as otherwise provided under this chapter.
--- End of Excerpt ---
http://goo.gl/xh9Sm

You propose to have members sell or solicit funds on behalf of the organization for their own benefit and, therefore, the operation would not be qualified to incorporate as a State Not-for-Profit corporation.

2.  Yes, your articles of incorporation or bylaws may provide that the for-profit gym owner may sit on the board and not vote on issues in which he has a financial interest.

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: Please correct me if I'm wrong, but it was explained to me that we can incorporate as a not-for-profit and allow athlete scholarships as long as we participated in donating to public charity as well. I just want to have my ducks in a row before presenting this to our booster club members.

Answer
If you have something from a reputable source, send me the URL so I can comment on it, but you have not corrected my recitation of the facts that I relied upon, namely that you propose to have members sell or solicit funds on behalf of the organization for their own benefit and that, by definition that would exclude you from being qualified to incorporate in Florida under their Not For Profit Corporation Act.

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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