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Thousands of School Booster Clubs Not in Compliance with Tax Laws

by Parent Booster USA on Jan 12, 2010 12:00 am

Thousands of school support organizations including parent teacher organization (PTOs), band booster, sports booster and other groups are likely not in compliance with federal and state tax regulations. According to Parent Booster USA, a national umbrella organization for PTOs and other school support groups, of the estimated 100,000+ booster clubs in the country, less than 10% appear to be registered with the IRS as tax-exempt organizations.

“All school booster clubs that raise $5000 or more a year are required to file a tax return with the IRS,” stated Sandra Englund, founder of Parent Booster USA. “It used to be that if a nonprofit raised less than $25,000/year it did not need to file an annual tax or information return. That’s not so anymore. If school booster clubs are not recognized as tax-exempt, they may be required to file and pay corporate income tax on the funds they raise.“

According to the U.S. Department of Education’s National Center for Education Statistics, there were 98,793 public K-12 schools in the United States in 2007. There are an additional 35,000+ private K-12 schools. Most of these schools have at least one PTO or other booster club raising funds for the school. Many schools have a half-dozen or more booster clubs including PTOs, band, choir, football, baseball, cheerleading, and other academic, sports and arts-related groups. Yet, a search of IRS records found less than 9000 school “booster” organizations listed as tax-exempt charities.

“It appears to us that a large percentage of school support organizations are unaware of IRS rules, and are therefore out-of-compliance,” stated Englund.

Annual tax, or “information” returns as the forms are called for groups exempt from paying federal income tax, are due by the 15thday of the 5th month following the close of a nonprofit organization’s fiscal year. For groups that follow a calendar year ending December 31, that means the IRS Form 990 information return is due May 15th each year. The information returns for booster clubs that follow a school year ending June 30th should file the IRS Form 990 by the following November 15th.

Lack of compliance may be due, in part, to how complicated obtaining tax-exempt status can be. To be recognized as tax-exempt charities by the IRS nonprofits must file Form 1023. Many groups find it necessary, and cost prohibitive, to obtain legal or other professional assistance to complete the required paperwork. The alternative is join a national umbrella group, such as the National PTO or Parent Booster USA, an obtain tax-exemption under a group letter ruling.

“We don’t want to see parents struggling with IRS forms, or school booster clubs paying tax unnecessarily on volunteer-earned money,” stated Englund. “Parent Booster USA was formed to provide support to booster clubs, and most importantly provide an easy, cost-effective way for booster clubs to obtain immediate recognition of tax-exempt status.”

FEATURED BLOG

Running an Effective Meeting

Sandra Pfau Englund

Aug 30, 2019

Booster club bylaws often reference Robert’s Rules of Order as the “rules” for managing a meeting. Have you ever read Robert’s Rules? It’s a good way to get a good night’s sleep!

O.k., so, having no rules leads to muddled, oftentimes chaotic meetings. On the other hand, using strict Robert’s Rules of Order can result in confusion or imbalance, dominated by those very few who understand Robert’s Rules. According to Sandra Englund, founder of Parent Booster USA, it’s far better to use a simplified form of parliamentary procedure. Using Sandy’s Simple Parlipro for Nonprofit Organizations, you provide a solid framework for your meeting that encourages everyone to participate and stops any one person from controlling it.

Meetings should not be all about the rules. According to David Gillig, Senior Vice President of Children's Hospital and Health Center in San Diego, a meeting should be 80% inspiration, learning and fun, and 20% business. Busy parents are more likely to attend if they feel as if they will gain something for themselves, and their kids, out of the meeting. We recommend that you start the meeting with something fun or educational — our parent engagement blog talks more about this.

Place reports at the end of the meeting; consider providing digital or written copies of reports that parents can read outside of the meeting. No one wants to sit through standard reports. One exception is financial reports. Always include the treasurer’s report. The treasurer’s report should include a written budget and a report that shows how money was raised and spent. Making bank statements available is a good way to help ensure accountability. You can read more on financial accountability here.

It’s good practice to put start times for each item on the agenda. This helps ensure that the meeting stays on track and flows effectively. It’s particularly important if you are discussing any controversial issues in which it is more likely that someone will filibuster! Having a rule that each person gets an opportunity to speak once, before anyone is given a second opportunity to speak, helps encourage more participation.

Below is a sample agenda to help you get the most out of your booster club meetings. Start your meeting by reviewing the agenda. This is where you can explain the “rules” you’ve set for the meeting, including for example, that you will work to stay on-time to help ensure that the meeting starts and ends accordingly. You can also mention here, or just before the Q&A time with the principal, that each person will be provided the opportunity to speak once before anyone speaks for a second time. The report time is kept brief to allow the bulk of time to be given to the information provided by the principal. Minutes need approved; although a little unusual, we included approving the minutes at the end to allow more time for the more important matters up front.

ABC Booster Club
Agenda
[DATE]
1. Call to order & Review of Agenda 6:00p
2. Guest speaker – Principal Melissa Everly discusses school remodel plan 6:05-6:25p
3. Q&A 6:25-6:35p
4. Financial report 6:35-6:45p
5. Other reports 6:45-6:55p
6. Approve minutes from prior meeting 6:55p
7. Next Meeting 6:59p
8. Adjourn 7:00p

Planning and structuring your meeting for success if the key to having an effective meeting.

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.

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