Booster clubs, to be considered as legitimate, nonprofit organizations, have a number of regulations that need to be followed in order to maintain their legal status. Booster club legalities can vary from area to area depending on state practices, but there are a number of general booster club laws that should be followed no matter where your organization is established. Below, we’ve listed a few of the guidelines that should be followed in order for you to create and maintain a legal booster club organization!
Register Your Booster Club as a Non-Profit Organization and Apply For an EIN
For your booster club to be seen as a legitimate organization, you should register with the state your booster club is based in as a nonprofit organization, allowing you to fall under section 501(c)(3) of the Internal Revenue Code. Registering as a nonprofit will allow you to create a legal booster club which will then be granted tax-exemption after all of the necessary documentation is filled out and submitted to the IRS. Reserve the name of your booster club and contact the Internal Revenue Service at the number 800-829-4933 to receive a “Tax-Exempt Status for Your Organization” form, also known as Publication 557. You will then be sent a package titled as “Application for Recognition of Exemption.”
To abide by other booster club legalities, fill out the IRS Form 1023 , found on the official Internal Revenue Service’s website. Here are some additional IRS Instructions for Form 1023 that will ensure you are thorough while you incorporate your booster club into the legal system.
Applying for a Federal EIN, or employee identification number, is necessary for your booster club to to abide by laws around creating legal business entities – including booster clubs. Federal Employee Identification Numbers (EIN) are used by the government to identifying any businesses or organizations that are active within the United States. You can proceed with the application for an EIN for your booster club by filling out the IRS Form SS-4. For extra guidance, check out the IRS Pub 1635: Understanding Your EIN.
Additionally, to ensure the tax-exempt status of your organization, have your booster club fill out Form 8718 from the IRS, also called “User Fee for Exempt Organization Determination Letter Request.” Once you receive your determination letter, which will serve as a form of proof or your organization’s tax-exempt status, your booster club will legally be listed as a tax-exempt nonprofit.
Keep Your Booster Club Organized and Up To Date
While you legally aren’t required to do this, it’s in the best interest of the booster club to decide on a consistent way to keep track of any transactions and donations that are going through the club. Try to avoid using personal bank accounts within the club. Rather, establishing a bank account for the booster club can help alleviate confusion on the financial comings and goings of your organization. Additionally, having an official club bank account can, in a way, ensure some level of honesty and transparency from the members of your organization as it will be more difficult to take or transfer money without notice.
To keep an accurate financial log, look into filing your records digitally. Manual record keeping has become somewhat of an archaic practice that can be inconvenient for organizations such as booster clubs. When it comes to creating a legal booster club organization, keeping track of the club’s financial activity is necessary. Therefore, establishing records in a program such as Excel or Quickbooks is heavily recommended. Whatever method you might choose to incorporate within your booster club, make sure it is accurate, dependable, and efficient so that there will not be any trouble in the scenario of an independent audit or something of that nature.
Your Booster Club Must Adhere to Regulations of Tax-Exempt Organizations
In order to fall under section 501(c)(3) of the Internal Revenue Code, it’s necessary for an organization to be serving a public purpose. Booster clubs usually support school programs, such as music, drama, athletics, and academics, meaning that their public purpose is built into their creation. However, there’s multiple ways a booster club can be discounted from being a public charity.
If a booster club takes part in private inurement (see below), they could be penalized, losing their 501(c)(3) benefits, breaking a crucial booster club law. Private inurement means that those who are in charge of the club receive direct financial benefits from the actions of the club. Similarly, to be considered a nonprofit, your booster club has to avoid substantial private benefit activity where certain members of the booster club are given more benefits based on their contributions to the club.
Booster clubs are extremely valuable resources to the community. However, a booster club can only run smoothly and successfully if it stays within the law. Keeping track of the booster club’s financial records and being aware of the regulations that apply to all nonprofits is a necessary part of creating and maintain a successful legal booster club organization.