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Does a Booster Club Need to be a 501c3?

Does a Booster Club Need to be a 501c3?

Have you ever considered changing your booster club into a booster club 501c3 Organization? Do you know what 501c3 tax exemption is and how it differs from a non-exempt nonprofit organization?  Let’s break it down.

It’s possible your booster club organization is already a registered nonprofit organization with your state. It is also possible that while your organization is a nonprofit, it has never registered for 501c3 tax exemption at the federal level. The key difference between a nonprofit and 501c3, is that you first register as a nonprofit with your state, and then register as 501c3 tax exempt with the federal government. To become a 501c3 there are some additional application steps and annual guidelines you need to follow,

In the process of setting up a booster club 501c3 organization correctly.

That being said, if your organization has not become a 501c3, then it is missing out on several benefits of 501c3. It is not required for your booser club to get 501c3 status however, it can help your organization to grow in a number of ways. Plus, you and your donors can gain some additional tax benefits that can save  money on both ends.

Unfortunately, many organizations avoid or disregard getting tax-exempt status. According to some stats, only 12% of the booster clubs have registered their organizations for 501c3 status. Perhaps unbeknownst to these clubs, they overlooked the opportunity to grow donor contributions by offering tax benefits. The end result?  Booster clubs without 501c3 status leave potential donations sitting on the table.

The primary reason club leaders neglect filing for 501c3 status is they think it is an overly tedious application and approvalprocess. In reality, it’s not that difficult and as you will soon see: rewarding! Let’s walk throughthe benefits of having booster club 501c3 status and perhaps you will reconsider getting your organization’s status updated.


Volunteers of a booster club 501c3 organization getting ready for an event.

Advantages of Booster Club 501c3 Organization

Though there are additional hoops your Booster Club leadership needs to jump through to achieve 501c3 status from the Federal government the pay off can be huge. Now only do you save on State and Federal taxes, your club will gain access to more incentives for donations, new sources of potential funding and an overall increase in status of the organization.


Youth baseball team supported by a nonprofit booster club.

Tax Exemptions for Your Booster Club 501c3 Organization

Once you become a nonprofit at your state level, you can apply to achieve the status of a Booster Club 501c3 Organization from the IRS. The most important reason for creating a 501c3 booster club are the special tax exemptions. 501c3 organizations generally do not pay or have discounted rates for:

  • Corporate Income tax
  • Sales Tax on purchases made by the organization
  • Some Specific Salary Taxes
  • Certain types of property taxes

If you are a qualified Booster Club 501c3 Organization you should check with your accountant or tax professional to see which of these or other tax incentives your booster club may qualify for. The goal of these tax incentives is to ensure that as much of the money that is raised by a nonprofit goes to the cause that it supports.


Kids soccer team supported by a local booster club organization.

Donations and Grants For Your Booster Club 501c3 Organization

Beyond taxes, your 501c3 status come a number of perks that you may be unaware of.  First as a Booster Club 501c3 Organization many of your supporter donations are tax deductible for those donating supporters!  It may not sound like much, but is actually is a GREAT incentive for supporter donations. Second, an additional perk that comes as a Booster Club 501c3 Organization is you are eligible for specific donations and grants. Many foundations large and small only give grants to organizations with 501c3 status.


Lady Justice on top of courthouse building.

Limited Liability

An often-overlooked perk of forming your booster club correctly is liability.  In many cases people are eager to get started supporting an activity and will not take the time to create an organization. Instead they simply start using personal bank accounts, funds and ignore the advice of setting up a new organization. The problem is, that this leaves the people running the organization open to to any liability. Like creating any business in the proper fashion, setting your booster club up as its own proper entity and going through the hoops of achieving nonprofit status as a Booster Club 501c3 Organization will help ensure that the leadership and suppoters are shielded from potential liability.  This does not mean that booster clubs and leadership can get away with anything, but it does ensure that individuals involved with the booster club may be shielded from more frivolous legal or accounting perils.


A volunteer for an accredited booster club 501c3 organization.

Your Booster Club 501c3 Organization Credibility

Once your organization has qualified as a Booster Club 501c3 Organization, you immediately gain a new status in the community at large. Having that 501c3 designation means your organization has taken the time to set itself up properly and in the eyes of both the state and federal government your club is now a verified more trustworthy organization. The impact of updating to this organization structure alone should have both near and long term positive impacts on your fundraising.

Additional Benefits of 501c3 Status

Still not convinced of the benefits of 501c3 status?  Beyond everything discussed thus far, once your club achieves 501c3 status there are a ton of business to business perks that come with your nonprofit status. For instance you can enjoy special mailing services, discounts or free media services, and much more. Not to mention, local, regional and national media outlets usually provide free or super discounted rates to 501c3 nonprofit organizations.

If you can’t get the best postage for any purpose, you can also opt for excellent postages at a discounted rate. The United States Postal Service provides booster club with 501c3 status different options like special bulk mailing rates. This way, you can save great money when you have to mail donors or volunteers. If you make it a habit as you run your booster club to ask vendors and service providers if they have nonprofit rates or discounts, you will be surprised how many actually do!

Filling out federal paperwork to create a booster club nonprofit.

Bottom Line

Booster Club 501c3 Organization offers you plenty of advantages. All of these perks help you save money or grow revenue by increasing donor engagement. Having 501c3 status is not mandatory, but if you want to boost your booster club’s visibility, legitimize it within your community and grow your revenue, you should seriously consider applying for this designation.

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March 30, 2021 / by / in

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