The good news: since the mid-1970s,
booster clubs that support amateur athletic competition have been eligible
for 501(c)(3) tax exempt status but the bad news: since the mid-1990s, the IRS determined
that many athletic booster clubs violate rules for tax exemption.
You see, tax exempt organizations must use all their income to support their
tax exempt purpose but the problem is many athletic booster clubs use their
money to support only the athletes that help raise the money. When you operate
this way your organization is working to support your members rather than working
to support your amateur athletic purpose. Athletic booster clubs must also
understand and follow Title 9 discrimination rules and rules on
compensating amateur athletes. To make sure your athletic Booster Club is
sticking to the rules, follow these three guidelines. First, support the entire
competition team. Do not restrict your funds only to those athletes that help
fundraise. Second, encourage but don’t require membership in the booster club or
participation in fundraising. Your booster club may not have any
requirements that determine who may or may not be on the competition team.
Third, ask coaches and other school representatives to serve on your board
as non-voting advisory members. They should let you know what the team’s
needs are and advise you about Title 9 and other rules of amateur competition.
By knowing the rules for athletic booster clubs, you can stay out of the
penalty box. I’m Sandra Pfau Englund and Now You Know.