Re: Mandated Fundraising

[Hurste]

Another person asked the question about mandated fundraising with the option of a buyout. I have a follow up question about that as I have run into that with Little League Baseball. Your response was that the league may mandate fundraising in lieu of volunteering however what if one has paid the required registration and volunteers their time as well? Can the league still mandate fundraising and/or their buyout in addition to the time I am volunteering as a coach? Lastly, what if we cannot raise these required funds, what can the league do in response because I cannot afford the buyout. Please clarify this for me. Thank you.

[Shiraz]

I don't know which of my previous answers you are referring to, but if a Little League has fees and allows the fees to be waived if there is work done, that is allowed by then that work is consider regular taxable employment as fringe benefits are given in exchange for work.

The IRS  has written:

---Start of Excerpt--

You have asked whether issuing a Form 1099 for each Scout

receiving such benefits would negate the private benefit question.

In this case, you would treat all income the Scout receives through

the earmarked account as compensation for tax purposes.  An exempt

organization can, of course, pay reasonable compensation for

services.  Treating the receipts as income to the individual,

however, may raise additional issues for the Pack.  In particular,

the fundraising activity may, if conducted by paid labor rather

than volunteers, be characterized as unrelated business income

taxable under section 511 of the Code.  You may wish, therefore, to

consider whether creating a possible tax liability for both the

individual Scouts and the Pack is appropriate under the

circumstances.

---End of Excerpt--

www.irs.gov/pub/irs-wd/02-0041.pdf at the bottom of page 2

That work is not considered, in tax law, as "volunteering".  

As the IRS writes at:

www.irs.gov/pub/irs-tege/fringe_benefit_fslg.pdf on page 72-73

(takes a while to load as it is a 91 page pdf file):

--start of excerpt  ---

The use of the term "volunteer" generally has no significance in

applying the tax law....

A volunteer is an employee if an entity has the right to direct and

control the volunteer's performance, not only as to the results to

be accomplished, but also as to the methods by which the results

are accomplished.  It is the "right" to control, even if the entity

does not exercise the right, that is important. Many factors in an

employment relationship have to be considered before a decision can

be made as to whether the entity has the right to direct and

control.

If an entity does not retain the right to direct and control the

details and means of performing the work, the volunteer worker is

not an employee.

--end of excerpt  ---

If a league requires a registration fee and also some particular type of work(like sales activity), the league is not required to accept other type of work(coaching) as a replacment for the sales activities.  If the family does not comply, then under general state contract law, the 501(c)(3) organization may withhold benefits to the family. Harvey Mechanic, Attorney at Law - [email protected]