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Nonprofit Law/Discrimination based on amount of fundraising

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QUESTION: I have a child in a youth sports organization 501c3 to which we have paid significant participate dues (1500) for three months. The club has always had a fund raiser and requires that families either raise money, or pay an additional 250.00.  We were not in a position to pay the additional fundraising amount this year and consequently, our child is being barred from participating in the remaining competition.  This last competition is part of the standard set competitions for the team as discussed in the beginning of the sports season.  Is it your opinion that this organization has the right to bar my child from participation because I did not pay the incremental 250 mandatory fundraiser?

ANSWER: A youth sports organization that has been granted 501(c)(3) organization status with the IRS is treated in the same way that other 501(c)(3) organizations, like private colleges are treated.

A school or youth sports group may have a requirement that families pay $250, but they may not give as an alternative that the family work with the understanding that both the group and the family would not report the income as ordinary employment income. If there was no reporting then it would mean that the family was working and getting value in exchange, which is covered by the IRS barter rules (the value of the benefits is treated just like ordinary employment income).

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, but perhaps I did not express my question adequately.  The question is: can member be banned from participating in events based on their level of fundraising?  Can a 501c3 organization bar a dues paying member from competing because they did not fundraise?

ANSWER: Sorry. I see now that I did not answer your specific question earlier.  A 501(c)(3) youth sports organization that has a requirement that was disclosed before you paid the $1500 dues, may only bar a family that does not fulfill the requirement.  You had in your subject the word "Discrimination".  

Discrimination laws generally only protect person against certain actions based upon religion, national origin, race and a few other categories.

Some states, such as Florida have laws that are more extensive in reach than the Federal laws. Florida protects against discrimination on the basis of race, color, sex, religion, national origin, age, disability and marital status.
http://snipr.com/9y21o

Now, if the youth group bars your child it is a question of fact whether from the amount that you already paid you would have expected to have received certain services and that the last competition was valued less than the $250 in reference to the whole year's services.  If so, you may have a cause of action in small claims court against the club for not providing value, unless they specifically disclosed to you, upon joining what the result would be if you paid $1500 but did not pay the $250. You may be covered in what is called unjust enrichment and the small claims court would be able to
decide on the matter, but, generally, the claim under unjust enrichment would not apply if there is a contract that addresses the issue of refunds.
http://en.wikipedia.org/wiki/Unjust_enrichment

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: Thank you.  One last question: It is then your opinion, based on your understanding of what information I offered, that the 501c3 is in their right to  ‘discriminate’ against members based on their level of fundraising.  IE. Bar those who did not raise additional funds beyond their dues from participating in club events? I am considering filing a 13909 referral, and would appreciate your opinion.

Answer
My opinion is based upon the fact that $250 may be paid.  If the family does not want to pay the $250 then they work (what you called fundraise).  As I explained earlier, the organization may not be in compliance with employment tax laws but that is a different matter from your question, which was whether the group could, in fact, not allow someone to participate.

You are welcome.

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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