All-Star What Are The Signs Of A Struggling Gym/program?

[MissCongeniality]

I have some questions about the above info with the booster club.

Say there is a fundraiser selling wreaths, no one is required to sell, the people who did sell only get the profits based on what they sold, not as a group. The money is collected and given to the booster club who then calculates everyone's profit and gives a check to the business side of the gym and they in turn credit the accounts for those who earned profit. Is that not how the booster club is suppose to be run?

Or what about working like concerts and sporting games? There is a group of people who work, but not everyone who is a member of the booster club. The money earned for the event is divided equally by the number of people who worked the event and then like above that money goes to the booster club which then divides it up and gives a check to the gym who credits the accounts.

Are booster clubs not allowed to charge membership fees? Keep a certain percentage of every fundraiser to use towards other items like helping pay for the banquet, etc?

I am genuinely confused and would love some help understanding this.

It depends how the booster club is organized. Some just call themselves "booster clubs" but do not go about getting the legal paperwork that recognizes them as a 501(c)(3) or similar. Of course then they are supposed to pay taxes, but that is another story... IF the club is organized as a 501(c)(3) then the profits must be shared regardless of who worked or how many hours were worked or how many items were sold. In other words... EVERYONE benefits (Bernie smiles - sorry, couldn't resist). Now awards (financial benefits) can be dispersed on a team by team basis... like the club could say "this team travels more so we are awarding them XYZ $", but the benefit can have NOTHING to do with how much was "earned" and/or worked and should never be benefiting "individuals".

There are a lot more rules and fine print about the gyms involvement in the "booster club" and how they might benefit. The reality is many are operating incorrectly and could be liable for taxes and penalties. Anyone who is a board member of a booster club puts themselves at risk and should highly suggest that the club consult a lawyer who specializes in the area.

 

[BlueCat]

I have some questions about the above info with the booster club.

Say there is a fundraiser selling wreaths, no one is required to sell, the people who did sell only get the profits based on what they sold, not as a group. The money is collected and given to the booster club who then calculates everyone's profit and gives a check to the business side of the gym and they in turn credit the accounts for those who earned profit. Is that not how the booster club is suppose to be run?

Or what about working like concerts and sporting games? There is a group of people who work, but not everyone who is a member of the booster club. The money earned for the event is divided equally by the number of people who worked the event and then like above that money goes to the booster club which then divides it up and gives a check to the gym who credits the accounts.

Are booster clubs not allowed to charge membership fees? Keep a certain percentage of every fundraiser to use towards other items like helping pay for the banquet, etc?

I am genuinely confused and would love some help understanding this.

You would need to talk to an accountant and/or lawyer to get an official answer. If you are claiming to be a non-profit and/or not paying tax on the income, there are special rules for how money is distributed. Lots of people do it wrong.

 

[XtremeWpg]

I don't think we have these kinds of regulations in Canada. We have a fundraising director who is assisted by our parent committee. Each person raises whatever amount they want, and it's held in an account with a detailed list of who has how much from what fundraiser. People can apply the money to travel/uniforms/monthly fees and the program doesn't take a cut.

 

[Amie815]

Thank you for the responses and helping me learn more. I appreciate it.

 

[SthrnCheerMom]

The gym we just left did several fundraisers each season. 2 were athlete specific, meaning the profits went to our accounts. We sometimes did 1 other that was for the gym. I normally participated in the ones that would go to our account. The gym one not always. It wasn't because it was just for the gym but more because of the product it was (not something I felt would be a good seller for us). I am careful who I hit up for fundraising.

 

[DonnaM]

I would also think that working events or fundraising and getting money in your child's account would have to be reported as income. When I work at summer camps and my DD gets free tuition, the monetary value of that tuition is part of my compensation and is taxable. I could see it being similar.

 

[emo_wifey]

I would also think that working events or fundraising and getting money in your child's account would have to be reported as income. When I work at summer camps and my DD gets free tuition, the monetary value of that tuition is part of my compensation and is taxable. I could see it being similar.

Yes. I am apart of a group that works events, and they either send your check to your program or they have to have a 1099 for you.

ETA: the money sent to the gym still goes directly to our accounts though. Not sure how that works regarding taxes and income.

Sent from my SAMSUNG-SM-G900A using Tapatalk

 

[cheermomforever]

I have some questions about the above info with the booster club.

Say there is a fundraiser selling wreaths, no one is required to sell, the people who did sell only get the profits based on what they sold, not as a group. The money is collected and given to the booster club who then calculates everyone's profit and gives a check to the business side of the gym and they in turn credit the accounts for those who earned profit. Is that not how the booster club is suppose to be run?

Or what about working like concerts and sporting games? There is a group of people who work, but not everyone who is a member of the booster club. The money earned for the event is divided equally by the number of people who worked the event and then like above that money goes to the booster club which then divides it up and gives a check to the gym who credits the accounts.

Are booster clubs not allowed to charge membership fees? Keep a certain percentage of every fundraiser to use towards other items like helping pay for the banquet, etc?

I am genuinely confused and would love some help understanding this.

We sell wreaths. We set the price, usually $5 per wreath profit, which is then put into an account to b used.

 

[MissCongeniality]

We do exactly what u mentioned with wreaths. We set the price, usually $5 per wreath profit, which is then put into our account to b used.

devil's advocate here --- so technically you are making an income on the wreaths (5$) but are you (or is anyone) paying taxes on that income? The whole tax issue is why many programs have a separate booster club organized as a 501(c)(3) or similar. But once something is organized that way... there are then other requirements/restrictions (as mentioned previously). As I said before, most programs are not doing it by the letter of the law but more "well that's how XYZ does it". Most don't get in trouble... but those that do, well happy fine/back tax paying.

ETA: There are actually different rules for schools too--- so they can often do things that a private organization can't (in terms of fundraising).

 

[cheermomforever]

devil's advocate here --- so technically you are making an income on the wreaths (5$) but are you (or is anyone) paying taxes on that income? The whole tax issue is why many programs have a separate booster club organized as a 501(c)(3) or similar. But once something is organized that way... there are then other requirements/restrictions (as mentioned previously). As I said before, most programs are not doing it by the letter of the law but more "well that's how XYZ does it". Most don't get in trouble... but those that do, well happy fine/back tax paying.

ETA: There are actually different rules for schools too--- so they can often do things that a private organization can't (in terms of fundraising).

We have 501c, separate acct from gym and all $ goes directly to gym costs.

 

[alpaca]

This is taken directly from the IRS website:

Inurement/Private Benefit - Charitable Organizations
A section 501(c)(3) organization must not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. No part of the net earnings of a section 501(c)(3) organization may inure to the benefit of any private shareholder or individual. A private shareholder or individual is a person having a personal and private interest in the activities of the organization.


It seems pretty clear to me.

 

[Ally13]

26 U.S. Code § 501 - Exemption from tax on corporations, certain trusts, etc. | US Law | LII / Legal Information Institute

"Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation (except as otherwise provided in subsection (h)), and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office."

I haven't put too much effort into researching this, but, based off the links below, it seems like booster clubs need to distribute earnings equally, regardless of whether or not people participated in the activities that generated the income. Which is consistent with the definition above that net earnings cannot benefit any private individual. Earnings cannot also go towards equipment or gym costs (bills, whatever), but I'm sure a lot of clubs do it anyways

5 Essentials for Booster Clubs to Meet IRS Requirements | The Booster Leader

Should Students Who Don’t Fundraise Get to Participate? | The Booster Leader

ETA: Spending part of my Friday night looking up the tax regulations relating to cheerleading booster clubs... I officially have no life lmao.

 

[MissCongeniality]

We have 501c, separate acct from gym and all $ goes directly to gym costs.

Breaking the rules/law...can't benefit individuals based on # sold, hours worked, etc. But, whatever, "everyone does is this way" (until they get caught ) I've worked them too. My CP even did...well underage and she was in charge of carding people! Great way to make $...but the organization could face major penalties if audited...

 

[ACEDAD]

You would need to talk to an accountant and/or lawyer to get an official answer. If you are claiming to be a non-profit and/or not paying tax on the income, there are special rules for how money is distributed. Lots of people do it wrong.

And by "lots" I think you mean "everyone". I've yet to run across a group that was actually doing it correctly.

 

[BlueCat]

(Again, I'm not a lawyer or accountant)

Many people have the idea that if they call it a "fundraiser", then everything should just be OK. If you are exchanging a product or service for money, that is a business subject to all of the rules, regulations, etc that go along with that. Technically, selling lemonade from your front yard, scented candles from the lobby, or candy bars in the hallways at your school, etc. are all businesses that should pay sales tax and a myriad of other taxes and duties to the city, county, state, and federal government.

Do most of them get away with skipping most of that? Probably. However, when you get to a certain point in your business and people depend on you staying open to feed their family, you simply can no longer take those kinds of risks.

FWIW, getting set up as a 501c or other "non-profit" doesn't suddenly make your life easy when it comes to taxes and regulations either. You also face severe restrictions on how you can distribute proceeds, many of which seem very unfair on their surface.