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PBUSA IFA Policy

Parent Booster USA (PBUSA) is a nonprofit corporation recognized by the Internal Revenue Service (IRS) as tax-exempt under section 501(c)(3) of the Internal Revenue Code (“Code”). PBUSA holds a group letter ruling that provides that all members of PBUSA are also recognized as 501(c)(3) public charities. To ensure compliance with IRS rules for 501(c)(3) charities, PBUSA has adopted the following policy regarding PBUSA members who operate individual fundraising accounts.

Parent Booster USA Policy

The Internal Revenue Service (IRS) has found that the use of IFAs (individual fundraising accounts) frequently results in illegal private benefits, however, the IRS has stopped short of strictly prohibiting IFAs. Based on the available IRS guidance, PBUSA adopts the following policy regarding its members' use of IFA’s:

  1. PBUSA strongly encourages its members not to use IFAs;
  2. If PBUSA members use IFAs, the IFA activity must make up an insubstantial portion of the overall activities of the organization; and participation in fundraising and/or IFA activity must be voluntary;
  3. PBUSA members who engage in IFA activity do so at their own risk understanding that IFAs may result in:
    • fines and penalties from the IRS; and/or
    • loss of tax-exempt status.
Background and definitions

PBUSA is aware of only one article published by the IRS directly relating to the use of IFAs, a 1993 article, Athletic Booster Clubs: Are They Exempt? This article suggests that the use of IFAs frequently results in illegal financial benefit to the individual members. However, the article stops short of strictly prohibiting IFAs and does not provide any specific rules or “tests” to determine when IFAs are or are not legal. Instead, the article suggests the determination is a matter of reviewing the full facts of each case.

In 2007 and 2008, at least three booster clubs in Kentucky were assessed fines and penalties by the IRS for engaging in fundraising activities in which parents and students were given credit for volunteering and fundraising. In a letter to one of the booster clubs, Lois Lerner, Director of Exempt Organizations for the IRS, reportedly stated that any booster club that raises money to benefit an individual rather than the group is in violation of federal law and stands to lose its tax-exempt status.

Individual fundraising account

An individual fundraising account is any method by which a booster club credits an individual or family for all, or a portion, of the funds raised by the individual, family or organization. Credit may be given for sales of products (i.e., gift wrap, candy bars, etc.) and service at organization fundraising events (i.e., car wash, concession stands, etc.).

Private benefit doctrine

Nonprofit, tax-exempt, 501(c)(3) organizations are required to be organized and operated exclusively for tax-exempt purposes. “Exclusively” has been found by courts to really mean “primarily”. Organizations do not meet this requirement if more than an insubstantial amount of their activities benefit individual or private interests rather than benefiting the organization as a whole. To PBUSA’s knowledge, insubstantial in terms of IFA activity has not been defined in terms of a percentage of overall activities or gross receipts.

See also Cooperative Fundraising from School Fundraising: So Much More than Cookie Dough.

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.

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