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Nonprofit Law/working concession in lieu of band fees

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QUESTION: I am a band parent and our current band fees are $500.00. You are required to pay $250.00 at the beginning of the band season and if you agree to work only 2 home games then at the end of the band season the final $250.00 will be credited back to your band account because the concessions stand is the only way that the band has of supplementing the band budget otherwise the band fees would be $750.00 per marcher in our area.  We have a non-profit status but we have ONE parent that is threatening that if it is imposed upon her that she must work two home games or pay the additional $250.00 then she is going to report band boosters to the IRS and has threatened to try to get the non-profit status taken away.  Are we in violation of anything?  If we lose the concession stand then most of our marchers will not be able to afford to march and we will not be able to keep the concession stand to supplement anything in the band program because this is our only funding source.  Please let me know what we might be able to do.
Thanks.

ANSWER: You wrote that "our current band fees are $500.00".  Who set that amount?  Was that amount set by a public school?  If not it appears that, if not, a nonprofit organization set that amount as due from each family. After you give me that information I will reply further. My summary of IRS regulations relating to 501(c)(3) booster organizations is at http://goo.gl/IdQwML and you may be interested to read that.

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

---------- FOLLOW-UP ----------

QUESTION: the director of the performing arts program set the band fees cost at 500 and implemented the work two home games and only pay 250. the main reason that he implemented this is because the concessions is approx. 33% of our budget and there are only a handful of parents that are constantly working every home game.  We are on the verge of losing the concession stand if we can not man it sufficiently therefore he felt that this would prompt parents to staff the stands better.  Out of 144 marchers, we have only 1 parent that is throwing a fit about having to work 2 games next year and what is so bad is that she hasnt paid any of her marchers band fews from this year as of yet.  

What can we do to keep the stand and keep the fees down?
Thanks,
T

ANSWER: It appears from what you wrote that the director of the performing arts program is an employee of the public school board and has given an order on behalf of the school board that certain fees and work is required for a student to be part of an activity. A school board may require fees and work in exchange for services.  A school board is not a 501(c)(3) booster organization and is not subject to the IRS regulations relating to such 501(c)(3) organizations.

Now, the parents are working in exchange for benefits to their family and, therefore, the value of the work is considered taxable as any other employment. Even though the school board may decide to limit a student's participation in certain after-school activities, that does not mean that a 501(c)(3) organization has a cause of action against a family for not joining their group or working for their group.

In August, 2013 the U.S. Tax Court supported the revocation of
501(c)(3) organization status of a formerly exempt organization and
noted that a parent's fundraising was earmarked to reduce what
otherwise could be a $1,400 payment the parent would have to pay
out of his/her pocket. The direct linkage of a parent's fundraising
resulted with paying expenses for that parent's child and was a
very specific benefit obtained by the insider.  While the parent
may not have been paid cash, the parent nevertheless ended up
escaping having to write a check for the amount of the benefit.
Families who did not fundraise did not receive any benefits from
the purported a 501(c)(3) organization.  http://goo.gl/QS9wCH

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

---------- FOLLOW-UP ----------

QUESTION: So our only option in order to keep our tax exempt status as a band booster organization is to not make it mandatory for parents to work the concessions in lieu of 250.00 band fees and make everyone pay the 500.00 fees up front or go to a no pay no March policy which is what we were trying to avoid. With this policy no one will work the concession stand because there were only 8 of us that faithfully volunteered previously and we will loose the stand which supplements 33% of our budget and in return fees will be 750.00 to 1000.00 next year. I don't see how the program can survive like this.  Please advise.

Answer
I suggest that you do not use the word "volunteer" in reference to work that you would be doing in exchange for some benefits. For example, the State of New York Department of Labor has explained on page 22 of one of their publications, "The term volunteer means a person who works for a nonprofitmaking
institution under no contract of hire, express or implied, and with no promise of compensation, other than reimbursement for expenses as part of the conditions of work."
http://www.labor.state.ny.us/formsdocs/wp/Part142s.pdf

I do not have any other advise other than, in lieu for working at a concession stand, that the parents work at other jobs during the time that they would otherwise had been working at the concession stand.

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. 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

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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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