Nonprofit Law/501c3 vs 501c7


I just became president of a booster organization for our daughter's competitive dance group.  The sole purpose of this group is to raise money for our dancer's entry fees. Last year we raised around $12,000.

Three years ago we were formed as a 501c7. I just became involved with the organization this year and realized this fact in looking through our paperwork. After examining everything I'm thinking we should be a 501c3 because more than 35% of our gross receipts are from outside the membership.  (We have a $25 per dancer dues, but that would be the only membership income, our remaining income is generated through fund raisers such as concession stands, car washes, bake sales, etc). Being a 501c3 would also allow us to receive tax-deductible donations.

When the organization was formed it was very small and they had little money so I think they went the cheaper route in terms of which classification to apply for.

I believe we are better suited as a 501c3. Do you agree and what can we do to transfer or apply for that if we are already established as a 501c7?  

Thanks for your time.

My summary of IRS regulations relating to 501(c)(3) booster organizations is at and I have a concern that your organization would not qualify as a 501(c)(3) organization because you wrote "dancer's" which is singular.  If each family is required to raise funds for their own child or if families are allowed to raise funds for their own child, then the organization would not qualify as a 501(c)(3) organization as you can read in that summary.

Let me know if you have any follow-up after reading that summary.

If you have that problem with qualification for 501(c)(3) organization status you would also have a problem with qualification as a (c)(7) organization. IRC 501(c)(7) exempts from federal income tax, clubs "organized for pleasure, recreation, and other nonprofitable purposes, substantially all of the activities of which are for such purposes and no part of the net earnings of which inures to the benefit of any private shareholder."

That is a similar inurement prohibition as in the code for 501(c)(3) organizations.

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. For me to consider your individual situation and how the law applies, I would need to gather more information.

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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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