Hypothetical question for the day....

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i think under 501c all monies collected must be used by end of each year. That is what I have been told. You cannot carry over monies, and that is why loophole in contract or your commit contract. Usually states if monies received during fundraising events can and will be used to buy materials as seen fit (balls, dirt for field, nets) from collections of funds.

Money DOES not have to be used by years end, it can be put in the bank or invested. If that were the case no one would have money to start the next year. If you GIVE your money to an organization it is now theirs you gave it!

 

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... But, being a non-profit, 501(c)(3) or otherwise, requires you to state the purpose of the organization (i.e. Establish and promote girl's fastpitch softball in Anywhere, OH) and you must follow that statement in your spending (i.e. tournament fees, facility fees, uniforms, training, etc). Reimbursing parents for hotel or travel costs would most likely fail an audit (I am an auditor as well) if the organization's stated purpose was similar to above) and your daughter might have some eligibility issues with the NCAA. Parents having a fundraiser to offset travel costs that would not flow through the organization would most likely alleviate the NCAA issues.

The biggest advantage of holding 501(c)(3) status is that donations to the organization can be tax deductible if the donor does not receive any goods or services for the donation. That is why parents cannot deduct the fees they pay to the organization. Also, advertising (business name on banners) is considered a service received for the donation, but that is getting pretty nit picky by the IRS. If the IRS is looking at such things in your organization, you have much, much bigger problems to worry about!!

Great information! I especially like your suggestion of doing fundraisers outside the organization if you don't need donations to be tax deductible.

I would appreciate your input on some questions:

1. Would paying travel costs be allowed if the stated purpose was to establish fastpitch travel teams?

2. Could the disbursement be treated as a refund of unused fees paid by the families?

3. If someone receives something in exchange for a donation, aren't they allowed to deduct the portion of the donation in excess of what they receive in return. Example: They can still deduct $85 of a $100 donation if what they received is valued at $15.

4. Our 501(c)(3) organization typically fundraises by running snackbars at tournaments. We get donations from companies to help stock the snackbar and ultimately distribute the profits to families by the number of hours they worked. Do you have any feedback and/or suggestions?

 

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Actually, I talked with NCAA in Indianapolis one time about I wanted to have an event where I could send the team to the national event and upon winning the tournament.. the winners would receive for 1st $1500.00 TRAVEL expenses 2nd $1000.00 and 3rd $500.00 and asked if there was a problem with that according to NCAA rules.

I was told NO they did NOT see an eligibility issues.. and the money could be used to pay for parent's car gas expenses, parent's room expenses, parent's admission to the tournament expenses, parent's food bill expenses.... any way they wanted to spend ...AS LONG.... it got the student-athlete to the National tournament and was part of the expense to having her there. Actually, they said it was a low amount compared to what is allowed in reality.

BUT, in a few states such as Ohio.. according to NCAA... it could be illegal.

Then the rep from NCAA called Ohio a dinosuar...compared to other states....LOL

See, Ohio in their regulations.. has no money value can be given based on placement of team in a tournament.

In reality, "paid berths" are illegal in Ohio. But, to get around it .. a TD can send the $$$$ to the organization and the org can redistribute it to the team and pay for their entry fee to the tournament.

Every year for my uniform blowout.. some moron always has to come on the thread and say something about it's illegal..blah, blah, blah.. every year...LOL Happens every year .

But, after skirting the rule with Ms Price of OHSAA.. I am giving out UNIFORMS valued at $600.00.. to which I either do a) paid to the org in a $600.00 cashier's check or b) pay for the uniforms ( up to $600.00) at the winning teams choice of suppliers.

Last year's winner in the 18u, was Doom15u (Wear) and they bought warm-ups with them. The total cost was $612.00. I paid the $600.00 and the org paid the $12.00.

 

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I was actually involved in a court case where we sued a 501(c)3 for this exact thing. Due to problems with the org, we left (not softball). At that point in time, we had fund raised $1250, all of which wa sitting in my DD account.

We owed no expenses of any sort and had receipts for several items that were reimbursable.

The court ruled that the org could indeed just keep the money and use it as they see fit. However, in our favor, they had reimbursed another parent that left the org $250. So the court said that they had set the precedent by going against their by-laws and they were required to forward our total balance to another non-profit of our choice.

The reason is that we were never told that the org could keep the money, and they had reimbursed another parent for a lesser amount.

With that said, at the end of the day, while in your heart you raise the money for your DD, in reality, you raise money for that organization. You either trust the board members to do the right thing, which would be to use the money to further the cause of the organization, or you dont trust them.

Sounds like it turned sour for you, but in the end, I beleive the org is right.

BTW, the org that we sued had taken that money and bought some other girls 5 year jackets, then had to pay us the money back.

 

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All this makes you wonder if going to all the trouble to set up a 501C3 is worthwhile--especially for new organizations---would seem better bet to have evryone pay as they go.

 

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Then the parents don't get that tax write off for that initial fees.

 

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Just tell the organization to donate it to the fundraiser for our girls HS softball . 100.00 cost --60% payout. To be held Aug 21st in Portsmouth Oh. at the local CAY building. PM me if interested will be lots of food and cheap beer prices. cash tables , cash buy

OK here is a special deal, bring me 4 poker players and I'll buy YOU a ticket to play for free. Ticket includes a smoked rib dinner from nearly world famous "Scioto Ribber"

So sell 4 100$ tickets to your buddies and I'll buy the 5th ticket for you. PM me. It's this coming Sat. I need cash turned in by Thursday. MD

 

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As was mentioned earlier

The biggest advantage of holding 501(c)(3) status is that donations to the organization can be tax deductible if the donor does not receive any goods or services for the donation. That is why parents cannot deduct the fees they pay to the organization.

 

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Perhaps the restrictions are a reason to avoid setting an org up as a 501(c)(3) org to begin with. Corporate sponsors can still write off sponsorship money if they benefit from advertising. In which case they are paying for a marketing service, not making a "donation".

In the case of individuals, they will donate to help the girls, not for the write off. Individuals who itemize can still write off up to $500 in charitable contributions without any supporting documentation.

Bottom line is: do you trust the people running the org and did you get what you paid for?

 

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Thank goodness our org. meets every Sept. after teams are set and coaches submit and agree on a budget for the upcoming year. Fundraising is later planned to cover difference between player fees and money needed. Based on submitted budgets, by the time tryouts are complete each team has approx. $150.00 to $200.00 that carries over into the next season. Basically enough to keep bank accounts active until new monies start getting deposited.
Always works out well...finishing the year with large account balances would be asking for trouble.

 

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..and they were required to forward our total balance to another non-profit of our choice.

This is the way I always understood it. Couldn't the org just forward the money to offset fees for the players new org?

 

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TY so much everyone for the input! Very informative and helpful.

Here's a hypothetical update..if this were a real situation

Board met over the weekend and has no conclusion. Apparently they did not have an accurate ledger of our account..and have no idea how much money we gave them or the expenses they paid!..3 weeks after they disbanded the team!....(yes I am quite the screenwriter)

Also they are aware of this post and have asked us to not discuss it in public!..WOW..shocker there...(allegedly)..

 

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hum.............

 

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if an org is claiming a 501(c)(3) status, you have to think of them like red cross or any other charity. If you did a walk-a-thon and raised $1,500 then decided you wanted it back because you did not agree with the way they appropriated funds, you could file a complaint but they would not give you back the money because it wasn't yours to begin with. The same reason you can't claim funds raised on your taxes. Eventually you can complain to the irs that they are not a charity, but other than that, not much you can do about it. Just let everyone know specifically who this group is so no one else falls prey to them....

exactly

 

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TY so much everyone for the input! Very informative and helpful.

Here's a hypothetical update..if this were a real situation

Board met over the weekend and has no conclusion. Apparently they did not have an accurate ledger of our account..and have no idea how much money we gave them or the expenses they paid!..3 weeks after they disbanded the team!....(yes I am quite the screenwriter)

Also they are aware of this post and have asked us to not discuss it in public!..WOW..shocker there...(allegedly)..

If they are a 501(c)(3) then they have to have in detail: where the money came from, how much money it is, and how or what they did to get the money.

 

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As someone earlier said-question is what is legal vs. what is right. No Director better be advocating a bonus with the money you raised, or he could be in some pretty deep IRS trouble for flouting the rules. Remember the trouble a few years back about all the multi-millionaire United Way Directors? Trust me, as I am representing someone who was charged with underpaying on a disputed $1600.00 discrepancy--the IRS is loaded for bear, and if someone makes an "anonymous" phone call and the books are cooked, these guys are sunk. That's the legal side-ethical side in my opinion-I pay my fees to run and support the org. that supports me and my team. If we fundraise over and above org. fees to help defray costs for MY team, then that is money each parent has earned, and not for the org. to spend on someone after declaring a forfieture. As I have stated before, NAME the org. in question so they can at least advocate for thier position. Can't have an honest debate without hearing both sides....

 

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Free Bump!!

Go to the football section and post your friday night high school football scores.

Follow the link...
http://www.game-ex.com/vb3/showthread.php?t=30521