Parent Booster USA -- Athletic Booster Clubs Face Intense Scrutiny: 5 Tips to Keep Out of the Penalty Box

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In a 2013 U.S. Tax Court case, (Capital Gymnastics Booster Club, Inc. v. Comm'r., T.C. Memo 2013-193), a gymnastics booster club was stripped of its 501(c)(3) status because it used the tax-free funds raised to support only the gymnasts and their parents who participated in fundraising. A quick Google search reveals many booster clubs publicly advertise that they aren’t following the rules.

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It was big news four years ago when the IRS stripped a gymnastics’ booster club of its 501(c)(3) status because it used its funds only to support the people that raised the money

Tax-Exempt Sports Boosters Still Violating IRS Rules

Booster clubs continue to operate for the personal benefit of the parents and their student athletes rather than for IRS-permitted tax-exempt purposes, says booster club blogger, and attorney, Sandra Pfau Englund. Englund, who founded Parent Booster USA to help schools and their boosters understand the rules of nonprofit, tax-exempt fundraising, says most parents and school authorities simply don’t understand how to set-up and legally fundraise for their schools.

“It was big news four years ago when the IRS stripped a gymnastics’ booster club of its 501(c)(3) status because it used its funds only to support the people that raised the money,” says Englund. “Yet, it’s still common-place for parent-led booster clubs to require parents to ‘volunteer’, and only support the athletes and their parents that help fundraise”.

•IRS tax-exemption rules require:

  • Booster club membership must be voluntary. Booster club membership cannot be a requirement to be on any level of competition team.
  • Booster club funds must support the entire team. Funds cannot be limited to supporting only members of the booster club, or only people who help fundraise. “Credit” may not be provided based on the amount of money raised; booster club funds may not be “withdrawn by” or returned to an athlete that leaves the team.
  • Gym owners may not control the booster club. For-profit gym owners should not serve on the booster club board, vote, or otherwise control the booster club.

In a 2013 U.S. Tax Court case, (Capital Gymnastics Booster Club, Inc. v. Comm'r., T.C. Memo 2013-193), a gymnastics booster club was stripped of its 501(c)(3) status because it used the tax-free funds raised to support only the gymnasts and their parents who participated in fundraising. A quick Google search reveals many booster clubs publicly advertise that they aren’t following the rules.

Tell the story with:

  • Attorney Sandra Pfau Englund (sandrapfauenglund.com), author of, "School Fundraising: So Much More than Cookie Dough", is available to comment on the continuing problem with athletic booster clubs following IRS rules.
  • See also Sandy’s blog, "Athletic Booster Clubs Face Intense Scrutiny: 5 Tips to Keep Out of the Penalty Box". (parentbooster.org/Blog)
  • An example of a gymnastics booster club that requires parents to volunteer, and provides its earnings only to those who participate in fundraising, Colorado Springs Aerials Booster Club. See its website that each gymnast and their family must volunteer at Bingo, plus an additional 25 hours per year, and that funds raised only benefit families that actively participate. This booster club raises over $1,000,000 per year from Bingo alone.

CONTACT:
Parent Booster USA
Kathy Weideman, kathy(at)parentbooster.org, 703.304.1204

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