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Overage For Fundraising For 501(c) 3 Youth Sports Team

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Overage For Fundraising For 501(c) 3 Youth Sports Team

Postby Dunleah » Mon Nov 28, 2016 1:36 am

Hello, my question I hope doesn't seem to confusing.  I will try to give as much detail as possible.  My son plays travel baseball for a 501(C)3 organization.  His fees are $1100 for the season, this is his last season because next year will be high school.  We let his manager/coach for the team know up front we were organizing a fundraiser that would raise great money for each player to help pay for the cost of the team.  However, the team manager/coach needed fees paid up front for uniforms, bags, hats, shoes, tournament fees, etc.  We thought ok, these fees would be given back to us after fundraiser was complete.  The fundraiser was based on parents working the event for their son.  If they could not work, they were allowed to get someone to volunteer to represent their son.  Once this was all said & done, we raised $2325.00 for our son.  We also already had to pay $800 towards his team fees.  We had no choice in paying that before the fundraiser took place because our fundraiser need a license from state which took 90 days.  And the coach need the money to pay for tournaments.  My question is, how can we get back our $800 we had to front before fundraiser?  We were told after we raised that much money, that we would not get our fees reimbursed to us because our organization is a 501c3 organization.  If you add up the 2325 + 800 - 1100 = an overage of $2025.  The organization did pay for our hotel stays for 2 out of town trips but that still leaves an overage of $1525.  Isn't there a way to give it back to us, at least the $800 we fronted months before the fundraiser?  It could be gas cards, dinner cards, grocery cards or even visa cards.  If not, can we legally request from the organization that they donate to another charity fund?
Dunleah
 
Posts: 31
Joined: Thu Jan 16, 2014 4:35 pm

Overage For Fundraising For 501(c) 3 Youth Sports Team

Postby Clem » Mon Nov 28, 2016 9:12 am

Hello, my question I hope doesn't seem to confusing.  I will try to give as much detail as possible.  My son plays travel baseball for a 501(C)3 organization.  His fees are $1100 for the season, this is his last season because next year will be high school.  We let his manager/coach for the team know up front we were organizing a fundraiser that would raise great money for each player to help pay for the cost of the team.  However, the team manager/coach needed fees paid up front for uniforms, bags, hats, shoes, tournament fees, etc.  We thought ok, these fees would be given back to us after fundraiser was complete.  The fundraiser was based on parents working the event for their son.  If they could not work, they were allowed to get someone to volunteer to represent their son.  Once this was all said & done, we raised $2325.00 for our son.  We also already had to pay $800 towards his team fees.  We had no choice in paying that before the fundraiser took place because our fundraiser need a license from state which took 90 days.  And the coach need the money to pay for tournaments.  My question is, how can we get back our $800 we had to front before fundraiser?  We were told after we raised that much money, that we would not get our fees reimbursed to us because our organization is a 501c3 organization.  If you add up the 2325 + 800 - 1100 = an overage of $2025.  The organization did pay for our hotel stays for 2 out of town trips but that still leaves an overage of $1525.  Isn't there a way to give it back to us, at least the $800 we fronted months before the fundraiser?  It could be gas cards, dinner cards, grocery cards or even visa cards.  If not, can we legally request from the organization that they donate to another charity fund?
Clem
 
Posts: 39
Joined: Wed Jan 22, 2014 1:05 am

Overage For Fundraising For 501(c) 3 Youth Sports Team

Postby Arnolde » Tue Nov 29, 2016 8:46 pm

The IRS may have a problem with a 501(c)(3) organization allowing

individuals to engage in sales activities that, even in part, go

for their own, private benefit.

See www.irs.gov/pub/irs-wd/02-0041.pdf on the top of page 2 about

Scouts collecting for their own use. "Earmarked accounts may not be

compatible with continued tax exemption." The IRS then cites to

www.irs.gov/pub/irs-tege/eotopica93.pdf  (Example one on page 5),

where they determined that the resulting "private benefit to the

individual members was substantial and negated the charitable

intent of the organization precluding exemption under section

501(c)(3) of the Code".

The IRS continued:

---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

Unless you want to have work treated by the IRS as taxable to the

families, then no benefits(other than insubstantial benefits) can

be given in exchange for work.  Those benefits are what the IRS

calls taxable fringe benefits.

www.irs.gov/pub/irs-tege/fringe_benefit_fslg.pdf

Credits are benefits when fees are reduced by certain dollar

amounts by work just like the common situation when student is

offered a reduction in tuition at a 501(c)(3) university in

exchange for work.

www.irs.gov/faqs/faq/0,,id=199750,00.html

Therefore, if you realized benefit, either directly or by refund of earlier paid fees, that work(sales) is taxable to your family. Harvey Mechanic, Attorney at Law - [email protected]

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.
Arnolde
 
Posts: 43
Joined: Fri Jan 31, 2014 9:04 am


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