A clean routine is the goal of every gymnast. It’s also a good goal for gymnastics booster clubs. Yet, many gymnastics boosters are running far afield from IRS rules for 501(c)(3) organizations. Make sure your gymnastics booster club performs a clean routine every time by following these 4 guidelines.
Many gymnastics booster clubs keep track of the volunteer hours that each member works, and/or track the amount of money each person raises, and then provide a credit against the annual fees charged by the booster club. Operating this way is against IRS rules and federal law for 501(c)(3) groups.
Membership in gymnastics booster clubs, and helping the booster club with fundraising, both must be voluntary, and must be unrelated to how the booster club funds are used.
Do not simply divide the amount raised, say $1000, by the 10 gymnasts on the team, providing each with a $100 credit toward competition costs. In addition, don’t estimate the total annual costs/gymnast for the entire year, deduct estimated fundraising dollars, and then bill parents for the remainder. Operating this way gives the appearance that it is the booster club that charges fees for gymnasts to compete. Doing so is against IRS rules.
Instead, use booster funds to pay for specific competition expenses, such as all competition coaching fees, or all regional and national competition entry fees. It’s o.k. if some team members compete in more events, or at more competitions, and therefore have more fees covered than other gymnasts. Treating athletes “equally” is not a dollar-for-dollar rule. And if the booster funds raised can’t or don’t cover all competition costs, it’s o.k. that parents cover the additional costs. However, to avoid any appearance that the booster club is charging fees, and is responsible for determining who can and cannot compete, monies collected from parents should relate to specific fees charged by third parties (e.g. $59.95 for the competition leotard). The boosters may collect the fees, and pay for the entire team, but it should be clear that a third party (competition sponsor, leotard vendor, etc.) will receive the money collected.
You should, however, develop an annual budget showing line item by line item the costs the boosters hope to cover with funds raised. Then distribute this budget to all team members, detailing the cost of supporting competition athletes at each level. Using this budgeting tool, you may request that athletes either help raise the money by participating in fundraising, or alternatively make a “fair share” donation. Provided that your language, and actions, makes clear that “fair share donations” are voluntary, these donations are allowed, and may be tax-deductible to the donor. You may also have annual booster club dues, provided that membership in the booster club is voluntary.
For-profit gym owners may attend booster club meetings and provide information and advice, however, gym owners should serve as advisory members and never have voting rights. When votes are taken, it’s a good idea to have the gym owners leave the room. Your booster club also should never purchase equipment or pay any costs that reduce the gym owner’s costs of operating their for-profit training facility. This is another reason that having boosters cover competition related costs, making payments directly to vendors and not through the gym, is the best approach to keeping things separate between the boosters and the gym.
Follow the money. It’s the rule investigators use to sniff out corruption. It’s also why athletic booster clubs face intense scrutiny by the Internal Revenue Service (IRS), the Department of Education (DOE), and amateur athletic regulating bodies. It costs $35,000-50,000 a year to train Olympic-level figure skaters. Parents shell-out $2000/year or more to have their junior-level gymnasts compete. The cost to equip a high school football player? From $800-1000/per player. (The helmet and shoulder pads alone often run $500/player.) It’s all that money, and how it’s raised, that can get athletic boosters into the penalty box…unless you know the rules of this money game.
Booster clubs and the IRS
Athletic booster clubs supporting national and international competition were first eligible for IRS 501(c)(3) tax-exempt status, making their income free from federal income tax, in 1976. Sports boosters supporting local and regional competitions became eligible for tax-exempt status in 1982. Just ten (10) years later, however, the IRS published Athletic Booster Clubs: Are They Exempt?, suggesting that athletic boosters either didn’t understand the rules of tax-exempt status, or weren’t playing fair. This article lays out the ground rules for operating an athletic booster club. It defines what’s foul play in the booster club game, including boosters that require their members to volunteer, or clubs that limit their support to the athletes who participate in fundraising.
Some booster parents argue that it’s only fair to restrict the money raised to the people that raise it. Why should freeloaders share in the fundraising rewards? This argument sounds reasonable. But upon further review of the IRS rules, you’ll find that booster clubs are given tax-exempt status because the money raised supports a “public purpose”, like amateur sports competition. To support amateur sports competition means that you must support all athletes on the competition team, regardless if they are members of the booster club, or if they help fundraise. It may help to think about another tax-exempt organization, like National Public Radio (NPR). Everyone can listen, but only a small percentage make donations to support NPR.
It’s been 25 years since the IRS published the rule book on athletic booster clubs. The rules must be widely known and followed by now? Nope. In a 2013 U.S. Tax Court case, 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 other clubs that publicly advertise that they aren’t following the rules. For example, a prominent Colorado Springs gymnastics booster club states on its website that “active members” must complete 25 hours of volunteer service in the Bingo fundraiser or pay $20/hour for hours not worked. If you opt-out of fundraising, you “agree” to waive financial benefits resulting from the booster club’s Bingo operation, which according to the club’s 2016 IRS Form 990 tax return, grossed the club over $1,000,000.
Amateur athletic rules
Amateur athletic regulating bodies, such as the University Interscholastic League (UIL) in Texas, have rules to ensure student athletes’ priority remains education. These rules require, for example, that students not be paid or otherwise compensated for participating on a sports team. Athletic boosters, therefore, should not provide gifts or rewards to student athletes without the school’s consent to make sure they don’t violate amateur athletic rules.
5 Tips to Keep Out of the Penalty Box
This playbook is so jam-packed, how do you keep track of all the rules? A good place to start is with these 5 tips developed by Parent Booster USA to keep your booster club out of the penalty box:
We teach our kids to play by the rules of the game. We also teach them that sometimes life doesn’t seem fair. To the parents who slave over fundraisers every weekend, and chaperone the field trips, it may not seem fair that the kids whose parents don’t help benefit from your hard work. The rule of this game, however, is to make sure all student athletes have an opportunity to improve their skills and compete.
Questions? Reach out and ask. Parent Booster USA is always on your team.
Each year at Christmas and again at the end of the school year my tuba-playing son brought home a note asking for a donation to provide the band directors a gift. Money was collected and a gift card or a check was given to the director and assistant director. Most often we contributed, except for those years when the note got lost in my son’s backpack and didn’t surface until sometime around July.
There’s no problem with collecting donations and providing teachers, band directors, coaches and others’ gifts. However, school booster clubs and other fundraising groups are violating IRS rules when they use money in the organization’s bank account to buy gifts for individuals.
So, what about providing gift cards to teachers to buy classroom supplies? I don’t recommend it. It’s far better to operate your organization like grant-making foundation. You raise the money and determine how it should be spent. You then provide a grant to the school designating the purpose of the grant, and the school, using its standard procedures, reimburses the teachers or distributes the funds. If you provide gift cards directly, the cards should be for Staples, or Office Depot or another store where school supplies are normally purchased, and you must collect receipts from all the teachers for the entire amount of the gift card to ensure that the funds are used for classroom supplies.
You probably think I’m the Grinch and am down on teacher appreciation luncheons also? No worries, I’m not. Teacher luncheons are o.k. provided it’s about recognition and appreciation and doesn’t include a hefty swag bag. The bottom line is that 501(c)(3) tax-exempt organizations must use all their money to support their mission. You can’t benefit specific individuals, including those that raise the money, or the teachers, advisors, and coaches.
It may sound grinch-like to some, but it is quite true,
Your organization’s funds may not be spent on few,
You must raise all your money for one and for all,
For those that play trumpet or run with the ball.
You may not buy gifts or give away money,
To the coach or the teacher or your favorite honey.
Instead says the tax man who gave you exemption,
Your funds must be spent only on your big mission.
There are at least 20 high school stadiums in America with a seating capacity between 10,000 – 21,000. Thirteen are in Texas, four in Ohio. You could even say there’s a football stadium competition going on in Texas. The McKinney School District is building a new $70 million football stadium that will seat 12,000 and the next school district over has a $60 million stadium that seats 18,000.
As a booster-club-backer, I was relieved to learn that these stadiums are funded by tax-payer approved bond packages rather than placing the fundraising burden on the backs of volunteer parent athletic boosters. The conversation about these huge stadiums though made me wonder about whether bigger is necessarily better.
For example, how do these school districts with jumbo-tron-sized stadiums avoid Title IX claims? All federally funded schools must comply with Title IX and its equal opportunity provisions. Although Title IX doesn’t require a dollar-for-dollar match in spending on male and female sports, schools must show that there are similar opportunities for boys and girls including similarity in the quantity and quality of equipment provided, the financial support for travel, fairness in assigning and paying quality coaches, and equal facilities, such as locker rooms, fields and arenas.
Schools routinely have to deal with the balance getting tipped when, for example, a volunteer athletic booster club makes a large donation to enhance a male-sport-facility and the school doesn’t ensure that equal facilities are available for girls’ sports. When you have multiple schools in a school district sharing a huge mixed-use facility (some stadiums accommodate 7-8 high schools for football, soccer, lacrosse, and band competitions), this becomes even more complex to track.
Huge stadiums have been a part of the American high school landscape for over a century. Stadium Bowl (capacity 15,000) was built in 1910 in Tacoma, WA; Fawcett Stadium (capacity 22,400) in Canton, OH was built in 1938. In fact, half of the 20 largest stadiums I looked at were built in 1940 or before. But in this day of Title IX considerations and asking the same people who pay for the stadium to also contribute to the booster club’s fundraisers just makes me wonder, is bigger always better?
Friday night football is in full swing, with the crashing football helmets, cheerleaders leading the crowd, and the high school marching bands entertaining at half time. Parent-volunteers also are busy, selling tickets to games, and raffle tickets and concessions to raise much-needed funds to pay for the “extras” that the school’s can’t afford.
Most of the time those “extras” are for additional coaching and music staff, fancy costumes and props for the musical productions or trips to camps and festivals. But lately I’ve heard about school booster clubs asked to raise money for basics like helmets. When I spoke recently to Alaska school officials and booster club volunteers I learned that many Alaskan school districts “don’t pay for cloth”. I was shocked and starting wondering if there shouldn’t be some “rules” regarding for what volunteer fundraising groups are asked to raise money.
Public schools are not required to field a football team but it seems to me that if the school fields a team, the school budget ought to cover at least the basics – required uniforms and safety equipment like helmets. I learned in Alaska that a school’s basketball coach asked the parent fundraising group to sign a contract for new basketball uniforms in August; a contract for thousands of dollars that the boosters had not yet raised. The coach’s argument was that the school couldn’t take on the contract and the liability to buy the uniforms because the school might not have the money when the bill came due. Apparently it’s ok to ask the parent volunteers to take on the same liability with no guarantee that that will be able to raise the money to pay the bill.
So what should volunteer-led school booster groups be asked to raise money for, and what should be the responsibility of the school? School fundraising groups are similar to foundations; they raise money to make grants to the schools that they support to pay for the “extras” that are not in the tax-funded school budget.
Schools have staff and procedures in place to handle contracting with vendors to buy products – like uniforms and helmets – and pay for services – such as transportation to away-games and the like. When volunteer groups go beyond making grants and start contracting for products and services, the responsibilities of the volunteers start to blur.
What do you think? Should schools expect booster clubs to buy helmets and uniforms? What is your school booster club raising money for this year.
While out walking our dogs, Tott and Stella, I was thinking about how much speech matters. Tott and Stella instinctively know the difference between the frustrated bark of Sam, who spends too much time fenced in his back yard, and the happy bark of Scrappy, a large and friendly puppy.
My thoughts turned to speech and speeches because of how wearying all the political speeches become during the seemingly-never-ending- every-four-year-presidential-election campaign cycle. But then I hear a gem…a speech that champions the parents of this country, particularly parent volunteers, and I have to smile. In a campaign season in which there has been little focus on education by any of the candidates, my heart leapt a little when parents and parent volunteers got a little attention at this summer’s political conventions.
Michelle Obama recognized parents in her speech at the Democratic National Convention when she pointed out that we move our country forward “by all of us coming together on behalf of our children – folks who volunteer to coach that team, to teach that Sunday school class because they know it takes a village.” Wow! She noticed that #parentvolunteersmatter! And regardless of where the words came from, Melania Trump, wife of Republican presidential nominee Donald Trump, in her speech at the Republican National Convention, stated “we want our children in this nation to know that the only limit to your achievements is the strength of your dreams and your willingness to work for them.” I’m thrilled that parent volunteers got some well-deserved recognition!
You see, speech and speeches matter because they are so often repeated. Who doesn’t know Lincoln’s famous “fourscore and seven years ago,” Franklin D. Roosevelt’s “the only thing we have to fear is fear itself,” and John F. Kennedy’s “ask not what your country can do for you – ask what you can do for your country”?
I hope the words of Obama and Trump are repeated often to acknowledge parent volunteers and all they do for our children, our schools and our nation. Because #parentboostersmatter.
Many of us watched in awe as Simone Biles tumbled across the floor during the Olympics. I had to watch parts of her floor routine twice to believe what I was seeing. What many watching don’t know is how much it costs to raise an Olympic gymnast.
Most gymnasts train at for-profit gyms (Biles trains at World Champions Centre, opened by her grandparents in Spring, Texas in 2014) and must pay for tuition, leotards, warm-up suits, grips for bars, wrist guards, competition entry fees, travel costs (transportation, meals, hotels), and competition coaching fees. It all adds up with the annual cost to raise a gymnast estimated at nearly $2,000; it costs a minimum of $20,000 to raise an Olympian. Many gyms form nonprofit parent-led booster clubs to raise money to help reduce the costs. Sounds good, but operating a nonprofit booster club connected to a for-profit gym gets tricky.
The IRS provides federal 501(c)(3) tax-exemption for gymnastic and other sports booster clubs that “foster national or international amateur sports competition”. In fact, the U.S. Olympic Committee itself is a 501(c)(3) organization. Booster clubs associated with for-profit gyms must be careful to use funds raised to benefit the competition team only, and not financially benefit either the gym or the individual gymnasts or risk loss of their valuable tax-exempt status. One booster club that lost its tax status is Capital Gymnastics. Capital Gymnastics used a point system to credit gymnasts and their parents who participated in fundraising events with the funds raised. This is a common practice – to reward those who participate in the fundraising. How else do you get volunteers? What many volunteers and gyms don’t know is that arrangements in which credit is provided only to those who fundraise is not within the allowable activities of 501(c)(3) organizations.
In the 2013 Capital Gymnastics case the judge ruled that while “parents who make a serious financial investment in the development of their children’s athletic abilities should be free to arrange the activity in the manner they choose…the arrangement that Capital Gymnastics developed [reducing individual fees and costs based on point system related to the amount of fundraising conducted by each gymnast and her family]…does not further a tax-exempt purpose [but]…reflects instead the purpose of promoting the financial interests of its fundraising members.” In other words, cooperative fundraising activities are essentially the operation of a small business to help those participating in the business raise money to pay off their personal expenses. This is not an illegal activity but it is a taxable one rather than a nonprofit, tax-exempt purpose.
So for what can parent-led athletic boosters raise money? Booster funds may be used for competition costs, including in the case of gymnastics, competition leotards, travel costs, entry fees, and competition coaching fees. The key is that the funds raised must benefit all members of the competition team, even the gymnasts and their parents that did not participate in the fundraising or who may not be part of the booster club. In addition, funds raised may not benefit the for-profit gym such as by purchasing a new balance beam or other equipment for the gym.
Learning to stick the landing doesn’t come cheap. It takes lots and lots of practice and hard work for an athlete and his/her support team. It was great to see so many Olympians showing gratitude to their moms and dads for all the time it took to haul them to and from practice, and to and from meets; they may also have been thanking them for all the time they spent working concession stands and selling cookie dough in order to raise an Olympian.
The Orange County Public Schools, located in the Orlando, Florida area, just announced a new cellphone rule. The announcement said cellphones may no longer be used by high school students in the classroom. I’m puzzled. Were students ever allowed to blithely text away while the teacher taught chemistry or calculus? Don’t the usual classroom discipline rules apply – listen and participate in class or head to the principal’s office? Is there really any difference between texting your buddy on your cell phone or passing handwritten notes in class?
My son attended a large high school in this school district a year ago. He always thought the rule then was that there was no use of cellphones in the classroom…except when students were leaving early and awaited a text from their parents that they had been signed out at the attendance office. In fact, parents of students frequently use cellphones to communicate information to their children about carpools and other matters. I’m wondering if my son’s 4000 student high school really wants its staff to have to handle all those messages?
The announcement goes on to say that cellphones are no longer needed because the school district is providing laptops for students to use in class for research and other educational purposes. I guess that’s good…but it hardly seems like an advancement. I no longer have a laptop but rather take only my smart phone and iPad on business travel. And why would it be against the rules to pull out your cellphone and google some facts if a teacher asks you to do so?
One of the biggest challenges volunteer leaders of school fundraising groups face is getting along with the school principal, teacher, coach or other staff that advises the group. While schools talk about parent and community involvement, with so many stakeholders pulling at them – the Board of Education, teachers, students, parents – sometimes it feels like volunteer leaders are more annoyance than help. That said, a big part of your job as a school support organization is helping to improve the communication between school, parents and students.
For example, I recently read a story about the Orange County Florida school district in the Orlando area. The school announced that students will no longer be allowed to use cell phones in the high school this fall. What’s interesting to note here is the school district said it based its decision on the recommendation of a student advisory group. There’s no mention of getting input from parents or even other school staff. My son went to a 4000 student high school in this school district and the school attendance relied upon parents to text their student when picking them up and signing them out for any reason. Getting input from students is great but I’m wondering if the school had gotten input from parents and the attendance office folks if the new policy might be written differently.
When it comes to volunteer/school boundary lines keep in mind a few simple rules:
It’s difficult to measure how much money volunteer-led school fundraising groups – you know those parent teacher organizations, athletic, arts and other booster clubs – raise to cover education costs where government dollars fall short. The best estimate I’ve seen is $4.5 billion plus. Probably plus, plus, plus. This parent-led fundraising for “free” public education is unique to the U.S. which got me wondering whether the presidential election will have any impact on the funding of “free” public education. I took a look at what the leading candidates, Hillary Clinton, Donald Trump, and Gary Johnson, had to say about public education.
Clinton appears to support public education. She’s stated that the U.S. should “commit ourselves to the idea that every young person in America has the right to a high-quality education, from pre-school all the way through college.” (Take Back America Conference 2007). She supports universal pre-kindergarten for every 4-year-old, and debt-free college if you attend a public college or university (2015 CBS Democratic primary debate in Iowa, Nov. 14, 2015).
By contrast, both Trump and Johnson, have said that they would reduce or eliminate the U.S. Department of Education. On Fox News Sunday, October 18, 2015, Trump said he would “be cutting tremendous amount of money and waste and fraud and abuse. But no, I’m not cutting services, but I’m cutting spending.” Trump has said “education has to be local” (Announcement speech, New York City, June 16, 2015), and that public education would improve with more competition. “If you look at public education as a business – and with nearly $300 billion spent each year on K-through-twelve education, it’s a very big business indeed – it would set off every antitrust alarm bell at the Department of Justice and the Federal Trade Commission. Who’s better off? The kids who use vouchers to go to the school of their choice, or the ones who choose to stay in public school? All of them. That’s the way it works in a competitive system.” (The America We Deserve, by Donald Trump, p. 83, July 2, 2000).
Johnson stated that he would abolish the Department of Education and that similar to Trump believes competition will improve education. “If you had full-blown competition when it came to education you’d have educators making $30 million a year because what they do is they’d be laying down templates that would positively impact all educational earners. Everything in our lives is competitive and as a result of it being competitive things are better and better and better. But why can’t we apply that to our schools”. (Adam Carolla radio show, May 2016).
The bottom line – I don’t see volunteer-led school fundraising going away or even reducing in size regardless of who is elected president in November.
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