Updated Wednesday November 7, 2018 by Office.
Policies and Procedures
Soccer Fundraising Policy
The IRS has traditionally recognized 501(c)(3) tax exempt status for nonprofit amateur youth sports organization that are “organized and operated exclusively to foster sports competition”. No part of the net earnings of which inures to the benefit of any private shareholder or individual.
Charitable Purpose: 2 prongs
- Private benefit
- No part of the net earnings of the team fundraising may inure to the benefit of any player, family or team staff.
- Club and Team Fundraising must be organized so that it benefits all players and does not favor certain individuals over others—no “insider” preference is allowed.
- Club and Team Leadership must ensure that money is not given directly to a participant and/or parents -it must be used to offset cost of participation in program.
- No system rewarding parents or players with team funds based on time or effort contributed to the Team or its fundraising activities is allowed (IRS calls this cooperative fundraising)
- The requirement that each player/family participate in fundraising activities in direct proportion to the benefits they expect to receive causes a direct benefit to flow to these parents.
- Cannot Require Contributions or Participation
- Using Team Funds to Collectively Pay for league, tournament Fees, Uniforms, Coaches Fees is Permissible if Incidental to Primary Purpose.
- A Team is not prohibited from acting as a conduit or clearinghouse to collect and pay league or tournament related costs and coaches’ expenses as long as that is not its primary activity.
- The “administrative” activity of assembling funds in a centralized place such as the Team or Club bank account, forwarding the meet entry fees to the meet sponsors and paying the coaches’ expenses so that they could accompany the athletes benefits all the athletes equally.
- It facilitates the ability of the teams and the athletes to participate in competitions.
- These administrative-type activities are specifically contemplated by Section 501(c)(3) of the IRC to include exempt organizations which foster amateur athletic competition.
- This administrative component must not be the youth club team primary purpose, which must remain fundraising exclusively for charitable purposes.
- No tax “write-offs” for funds given to a youth club or team for conduit or clearinghouse activities.
- -Parents, do not write these funds off
Youth Sports Teams: “Private Benefit” prong
- Subjective balancing test
- Any private benefit from a particular activity must be incidental—quantitatively and qualitatively, to the overall exempt purpose to be achieved
- To be qualitatively incidental: the private benefit must be unintentional, and a necessary consequence of the activity being undertaken
- Keep detailed records that show the nondiscriminatory use of team fund resources
- Always gear activities toward the “common good”.
- Don’t require all parents of team players to participate in a fundraising activity.