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Fundraising and Finance: Understanding the School-Volunteer Relationship

by Parent Booster USA on Nov 01, 2017 12:00 am

Volunteer organizations raise money for their schools. That sounds like a simple and praiseworthy relationship...but maybe not. Even if a school has a good relationship with its fundraisers, the split of roles and responsibilities between the school and its fundraising organizations is usually less than ideal.

Here’s the problem: School fundraising is a multibillion-dollar business operated by volunteer parents who may have no experience setting up and managing a tax-exempt charitable organization. In addition, just when one group of parents gets the hang of all the complex federal and state charity fundraising rules, their children move on to a new activity and the parents follow. All knowledge is lost, and often the groups’ tax-exempt status is also lost.

Schools provide varying degrees of support to their booster clubs. But because few school administrators have experience in dealing with tax exempt charities, they hesitate to get financially involved.

Booster clubs are separate legal entities for which schools are reluctant to assume liability for club activities. But schools inadvertently take on liability when they implement a policy, such as one requiring the school principal to review and approve the booster club budget, and then suggest that the school has no liability for the budget it just reviewed and approved. That’s just one of many school district policies that don’t make sense or are unenforceable.

What can be done to clean up the often-messy, always-complicated school–volunteer fundraising group relationship? It’s quite simple if you follow just two rules: (1) understand who is responsible for specific activities and (2) have the responsible group pay its own bills.

Who Is Responsible?

Clearly, the school is in charge when it comes to overseeing academics, hiring the teachers, selecting the curriculum, and setting the school calendar. However, responsibility gets murkier with regard to extracurricular activities like sports, band, and the robotics club. Band, for example, may be an academic subject for which students earn credit and a grade, but the optional annual spring band trip may be considered an extracurricular activity.

Follow the funding to fi nd the answer to the question about responsibility. Because schools normally hire the band director and athletic coaches and have other budgeted funds to support their activities, the school is the sponsor and responsible party for the band and sports teams.

The school, however, may provide no funding for the debate team or robotics club. The school may allow the English teacher to advise the debate team and the math teacher to advise the robotics club. The teams may be allowed to meet after school in classrooms. But the teachers receive no compensation for their assistance, and the teams must raise the money to purchase supplies and enter competitions. Their boosters or fundraisers sponsor their activities and are thus the responsible party.

Who Pays the Bills?

The next step is easy. Once you identify the responsible party, you know who should contract for services, make purchases, and pay the bills.

Because the band and football team are school activities, the school should contract and pay for uniforms and equipment, hire and pay the directors and coaches, and pay for transportation, housing, and the like. The boosters who support the band and football team raise money and donate the cash (make a grant) to the school, which is paying the bills.

Follow the funding to find the answer to the question about responsibility.

The boosters are the sponsors of nonschool activities, like the robotics club and debate team. The school provides no funding, so the boosters purchase the supplies and pay the costs of participating in competitions and other events. They pay the bills.

On the Other Hand

I recently learned from school administrators and booster club volunteers in an Alaska school district that in many of that state’s school districts, the school “doesn’t pay for cloth.” In other words, although the school district sponsors sports teams, it relies on booster clubs to raise the funds for, contract for, and purchase team uniforms and helmets.

The athletic director explained that schools can’t contract for new uniforms if they don’t have the money in their budget. The boosters don’t have the money in their bank account either, but they contract for new uniforms, then work hard to raise the money before the bill comes due.

If the school sponsors a sports team, it must ensure that the team has the uniforms and equipment to play the game. The school may ask the boosters to raise the money, and the boosters may grant those funds to the school. But the sponsoring (responsible) party should pay the bill.

That Alaska school district is not alone. A Florida high school booster club treasurer sought my advice on how to handle a bill for football helmet refurbishment.

The booster club had not contracted for the helmet refurbishment. The boosters did not know about the contract until they were billed for several thousand dollars. The boosters had not budgeted for the refurbishment and did not have the funds to pay for it. The treasurer discovered that the football coach—although not authorized by the boosters to do so—had signed the contract in the name of the booster club. The treasurer also learned that the coach routinely signed booster club checks even though he was not an authorized signer on the bank account.

Raising money to subsidize increasingly stretched school budgets is a key reason school fundraising groups are cropping up everywhere.

The refurbishment company was threatening legal action. The treasurer asked whether the boosters or the school that hired and paid the coach was responsible for the bill. The problem arose because the responsible party—the school sponsoring the team—had not contracted for a needed service.

Raising money to subsidize increasingly stretched school budgets is a key reason school fundraising groups are cropping up everywhere. The issue isn’t with the fundraising— the issue is with ensuring that the responsible party pays the bills.

How Do We Fix It?

Before planning activities and events, the school and fundraising groups should answer three important questions:

  1. Is this a school activity or a booster activity?
  2. Is this an academic (graded) activity or an optional activity?
  3. Does the school have standard procedures for purchasing this product or service?

The answers will help determine whether it’s a school or booster activity and who is responsible for contracts and payment. The best practice is for the fundraising group to act as a grantor and give the money it raises to the school as the grantee.

YOU SUPPORT THEM, WE SUPPORT YOU

With PBUSA membership, we file all the IRS and state paperwork. We keep your booster club up and running year after year.