Refresher Course on Non-Profit Rules for Clubs, and IRS Tax Liabilities

PHOENIX, Arizona, August 23. SWIMMING World recently became aware of some fundraising boundaries for non-profit clubs and booster organizations as it relates to IRS tax liabilities and deductions.

It should be known that governing bodies, such as USA Swimming, do not generally provide tax advice or opinions to clubs other than providing very basic information. It is strongly recommended that clubs utilize the services of a tax professional.

However, in order to help with the education process, the following two links clearly show the boundaries that USA Swimming members can claim as tax donations when "fundraising" for a club in exchange for regular payments of club or booster dues:

- http://www.irs.gov/pub/irs-tege/pmta-booster_club_11-24-10.pdf
- http://www.irs.gov/pub/irs-tege/booster_club_field_directive_6-27.pdf

Clubs cannot require families to donate in lieu of paying dues under the guise that it is tax deductible. However, if the funds donated exceed the value of the dues, then it could possibly become tax deductible. In other words, anything that is tax deductible must exceed the value of dues required (read; equal to value of services received) by the club in order to be tax deductible AND the club must generate a statement back to the donor whenever those deductions exceed $250.00.

"(We) briefly address (this) subject of required fundraising in our Club Leadership/Business Management School. We often have questions and interesting discussion on this topic. The primary teaching point conveyed in this section is that it is not legal to take a deduction for any fees paid for which the club member receives return value. You can only take a deduction for a true gift," said Pat Hogan, USA Swimming's Club Development Managing Director.

When contacted by Swimming World, Hogan took the opportunity to point out another common mistake made by clubs who try to motivate members by offering an incentive to raise funds.

"Although there are variations, the most common incentive that we see is offering to credit an individual's Entry Fee and/or Travel Fund account with a percentage of all dollars raised in excess of the required fundraising amount."

For example, if the annual family fundraising requirement is $300 and a family raises $800 in a Swim-A-Thon, the club would credit the family's entry fee account with 60% of the dollars that exceed the $300 requirement. Thus, the family would receive a $350 (cash) credit."

In this instance, it is not legal for the family to receive a direct financial benefit for funds raised in the name of and on behalf of a non-profit organization," said Hogan.

Most of the education on this matter takes place when USA Swimming's Sport Development consultants visit clubs and become aware of situations where a club might be at risk for unknowingly violating the tax rules.

If you would like more information on how a USA Swimming Sport Development Consultant can work with your club, contact clubdevelopment@usaswimming.org.

Comments Off

Author: Archive Team

Current Swimming World Issue


Trouble Viewing on Smart Phones, Tablets or iPads? Click Here