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Nonprofit Law/Gymnastics booster club


QUESTION: Parents of our 501(c)(3) gymnastics booster club are asking if they can fund-raise for their children's teams.  We have many different team levels (levels 2 through 10).  Some parents on the Level 3 team would like to fund-raise and have the money be applied to their level 3 team assessments only (not go to the general fund).  If individuals on the level 3 team do not want to volunteer they will still benefit from the fundraiser.  Can the level 3 team raise money for their team or does it have to be shared with the general fund?

ANSWER: My summary of IRS regulations relating to 501(c)(3) booster organizations is at: and you may be interested to read that. As to your specific issue, Internal Revenue Code section 501(c)(3) which is available at (on page 2, first column)  has, in part, that the 501(c)(3) organization must be "operated exclusively for religious, charitable ...or educational purposes
... no part of the net earnings of which inures to the benefit of any private shareholder or individual".

Therefore, it may not authorize fundraising for an individual or a family.  As for fundraising for a team, that is not prohibited. However, if the number of members of the team is small then there may be a problem with the IRS.

on page 4:
---Start of Excerpt--
A charitable organization must be set up for the benefit of an
indefinite class of individuals, not for specific persons. A
corporation organized and operated for the benefit of specific
individuals is not charitable, even if the specific individuals in
question are in need of assistance. Citing to Rev. Rul. 57-449.
---End of Excerpt--

The IRS explained its behavior, "Thus, even when we determine that
the beneficiaries of an organization `comprise a charitable class',
we nonetheless proceed to assure that there is `no selectivity with
regard to the identities of the individual[s] * * * to be
benefited", [citing to Aid to Artisans, Inc. v. Commissioner, 71
T.C. 202, 215-216 (1978)... to assure that there is no
impermissible private benefit." (footnote on page 18.

I know of no case where the IRS drew the line on what is a group that is too small.

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 for your prompt message.  In our booster club, we have around 60 gymnasts.  They are all broken up into teams (we call them levels) and the average size of the team  is around 10.  One of the levels/team would like to fund-raise for their level/team of 10 and the funds raised will go directly to those 10 individuals on the level/team towards payment of their assessment fees.  If any of the gymnasts on the level/team does not want to participate in fund-raising, they will still benefit from it.  The other 50 or so gymnasts on different teams/levels will not receive the funds.  Is this acceptable?

ANSWER: Sorry, but I have not found any regulation or court case that give a specific number, below which would be considered unacceptable. Has your organization filed form 1023 Application for Exemption yet?  If so, approximately when and did your group indicate it would be raising funds for certain teams separately?    After you give me that information I will reply further.

However, on the basis of the IRS' position below, I doubt that 10 is large enough.

See pdf page 13 of under the heading
"Charitable Class
--start of excerpt  ---
The group of individuals that may properly receive
assistance from a charitable organization is called a charitable
class. A charitable class must be large or sufficiently indefinite
enough that the community as a whole, rather than a pre-selected
group of people, benefits when a charity provides assistance.
--end of excerpt  ---
More details are found starting at pdf page 6 of

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 unfamiliar with the 1023 application for exemption.  I'm fairly new to the organization and want to make sure our fund-raising is acceptable.  I know we file 990-EZ every year. I don't think the booster club has ever stated it would fund-raise for certain teams separately.  Teams are asking if they can do this and we don't know if this is acceptable.

My opinion is that it is not acceptable to fundraise for a subgroup of only ten members, based upon the charitable class issue.

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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