AboutHarvey Mechanic Expertise US Federal tax issues of nonprofit 501(c)(3) public charities only. 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 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.
To search my previous answers you can do a Google search: site:allexperts.com/q/nonprofit [with your other search terms appended].
Experience I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar.
Education/Credentials B.S. Columbia University in New York City, 1970
J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude
Question QUESTION: Thank you for providing so much valuable information. My daughter is a gymnast and our booster club policies include the following: 1) required membership (signed parent agreement) w/registration fee and quarterly fees; 2) fines for, late payment of quarterly fees, non-participation in mandatory fund-raising and/or violation of fund-raising policies set forth, and, absences from club meetings. It also states that failure to participate in meetings, committees, and fund-raising could result in dismissal of athlete from team! Lastly, it states that 75% of the family's required fund-raising must be completed within a certain time frame. This is a non-profit booster in a for-profit gym. I spent a few years working in non-profit as a grant writer and this just doesn't seem legal. So, I ask you, is this legal? Thank you for your time.
ANSWER: No, none of those details are legal for 501(c)(3) organizations that are booster clubs funding a for-profit gym. The main principle of funding by a U.S. IRS 501(c)(3) nonprofit is that the booster club may not discriminate in making grants to youth or college students on the basis of their family's membership in or funding to the club, or the family's fund-raising or time put into club activities. A good discussion of that instruction is found at: http://jkn.com/View?j=842129.169787694498
If the 501(c)(3) organization has "individual accounts" make sure that the people know that funds that are earmarked by relatives who are giving their own funds to the 501(c)(3) organization are not deductible donations. Also make sure that the determination of what funds go into each individual account is not based upon one of the prohibited methods that I wrote about, i.e. family's membership or fund-raising.
Harvey Mechanic
Attorney At Law
Harvey108@hotmail.com
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QUESTION: Thank you, I will definitely refer to the sites suggested. Since I'm planning to bring the improper operations to the attention of the board I wanted to clarify with you that, it is not in compliance with 501 (c)(3) regulations to charge quarterly dues w/membership or to impose fines for nonpayment of dues and/or nonparticipation in meetings and fund-raising events. Also, we have 3 work or pay options 1) work at 3 gymnastics meets and 36 hours at the booster snack bar located in the gym, 2) pay $1,250 and work 1 meet and no snack bar hours, 3) pay $2,000 for a total buy out. My apologies if my follow-up is long and somewhat repetitive, I just want to be clear. My husband and I would like to argue for the option to not join and just pay our fees as they come. Legally speaking, shouldn't we be allowed to do so? Thanks!
ANSWER: A booster club may charge membership fees and have any other requirements for membership but it may not discriminate in funding on the basis of any failures of membership or even membership.
Harvey Mechanic
Attorney At Law
Harvey108@hotmail.com
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QUESTION: Okay, last follow-up. I've concluded that we are like Booster Club A in the article's example, which would make the club in violation of exempt status, correct? Also, based on your previous answers my understanding is that the club can require any rules, fines, and work assignments the board sees fit. However, the club cannot require my family to join and it cannot discriminate against my daughter with regards to funds based on us not joining or fund-raising? Is this correct? Thank you, again.
Answer Yes, booster clubs like the Example A in the IRS article are in violation of 501(c)(3) organization regulations. You are correct in all of your points in this follow-up of yours. Don't worry about it if you have another follow-up. Many parents get totally confused about the booster club rules, especially because many clubs have been operating like Booster Club A.
Harvey Mechanic
Attorney At Law
Harvey108@hotmail.com
