Cheer Booster Clubs Within A For Profit Business

[Birnie]

I am a member of a cheer booster club organized within a for-profit cheer gym to raise funds for monthy dues(to the for profit) ,uniforms and comp fees.. membership is $25.00 per year.  Fundraising is done by participation.  If you sell candy or participate in any fundraising event your child gets 95% of all funds raised less 5% that goes to the booster club for operating expenses. any corporate donations are distributed equally among the entire membership less the 5%.  not all members of the for profit gym are members of the booster club. is this legal?

Also, the owners of the for profit gym want to become part of the booster club as CEO's or create a board of directors so they have more control ove the booster club and its activities.  Is this legal for the for profit gym to be part of the booster club and can they draw a salary or coaches fee(since they are also coaches at the for profit gym) from the booster club?  Can a booster club change its name or do they have to reapply for 501(C)(3) status?  sorry this is so long but I am sooo confused!!!

[Saxan]

The fund-raising would be legal if the children declared their 95% as taxable income. Otherwise, it is illegal for a 501(c)(3) organization.  Also the owners of the for profit should not be prominently involved in the 501(c)(3) organization that is the booster club. The main principle of funding by a U.S. IRS 501(c)(3) nonprofit is that the booster club may not discriminate in making grants to youth or college students on the basis of their family's membership in or funding to the club, or the family's fund-raising or time put into club activities. A good discussion of that instruction is found at:http://www.danceadts.com/edsupport/parentgroups/irs.htm

If you want more details, I suggest you read my summary of some booster club rules that you find athttp://harvey108.fileave.com/boosterclubs.pdf Harvey Mechanic Attorney At Law [email protected]