What is a booster club?
A booster club is an organization that is formed to support an associated club, sports team, or organization. The booster club can support this through raising funds or coordinating events.
While each operates differently, many booster clubs are organized and run by parents of the students in a particular organization.
Booster clubs are not social clubs. Rather, their main purpose is to develop support and raise funds for the student program. Many times booster clubs are formed to help enhance programs that may have shrinking budgets.
How to start a booster club –
One way for parents to support their child’s sports team or organization is to join that group’s booster club. But what if there isn’t one? How can you start one?
Forming a booster club is the same process as creating any type of tax-exempt nonprofit organization. Here are some steps that will guide you in starting your new nonprofit booster club:
1. Make a plan.
- As you begin, make sure that a new organization is needed. Is there a system in place with your school or district to help with this?
- Develop a plan. How will you serve the students and the program? How will you raise funds?
2. Select a name.
- Usually, school-based booster club simply call themselves “(Name of Team) Booster Club.”
- You should check with your state’s secretary of state or corporations office to see if that name is available.
3. Recruit an initial board of directors.
- Who is a part of your initial planning team?
- Remember! No one owns a nonprofit. Not the founders, not the board, not the coach, not the parents.
- If there are no owners, who manages this? A board of directors or members of some type?
- You will need to set out who manages this very clearly in your formation documents – the articles of incorporation (sometimes called certificate or formation) and in your bylaws.
- Nonprofits are often managed by a board of directors. This governing board is legally accountable for its actions. They are accountable to the public, to your supporters, and to your beneficiaries to oversee the accomplishment of the organization’s purposes.
- Some nonprofits are member-managed; those members may have certain rights, such as voting on a board.
- You will set out clearly in the formation documents the type of entity this is.
- Each state has different requirements on the number of directors; check with the secretary of state.
- Each state sets out legal duties for the directors and officers.
4. Select and file as a business – nonprofit corporation.
- The most common legal structure for a nonprofit is a nonprofit corporation. Less common options include a B-corporation, nonprofit LLC, L3C, unincorporated nonprofit association, and a trust.Draft and file documents to become a state nonprofit corporation (or other appropriate state entity). Check with your state’s secretary of state on business options.
- Texas nonprofit certificate of formation link: Form 202.
- If you file as nonprofit corporation, you probably will include in that filing document:
- Purpose of organization
- Name of initial directors
- Name of incorporator
- Name and address of registered agent. This individual or company receives notice of lawsuit and other legal service for the corporation.
- Statement on membership (members or no members).
5. Prepare internal governance (bylaws) and hold an initial meeting.
- Hold an organizational meeting.
- At this meeting, the organization should approve the bylaws, elect additional directors, appoint officers, and approve initial resolutions such as opening a company bank account. Keep minutes of this meeting
- Bylaws are your organization’s operating manual.
- They set out the rules that govern the internal management of an organization.
- The initial board of directors should prepare and adopt bylaws for the corporation simultaneously with the preparation of the certificate of formation or soon thereafter. A copy of the bylaws, signed by a corporate officer, are submitted when applying for the federal tax-exemption.
6. Apply for a federal Employer Identification Number – EIN (similar to a social security number, but for a business).
- Your organization will obtain an EIN regardless of whether it will hire employees. This number will be used on all federal tax returns and receipts.
- The EIN is also needed to open a bank account.
- The organization should complete IRS Form SS-4, available on the IRS website, to request an Employer Identification Number (“EIN”) from the IRS.
7. Apply for 501c3 tax-exempt status with the IRS, so that you can raise funds for the organization and your projects.
- To become a public charity that is tax-exempt [often called a 501(c)(3) charitable organization], the organization needs to file IRS Form 1023 with the IRS. This is most difficult and costly step of setting up a nonprofit. The IRS will return a Determination Letter which officially recognizes your exemption.
- There are different applications and fees, depending on your expected annual revenue. Check the IRS Form 1023 and the IRS Form 1023-EZ to determine the best application for your organization.
8. Apply for state exemptions and other needed permits.
- The state comptroller oversees collection of state and local taxes, fees, and assessments. Many state laws allow 501(c)(3) exempt and various other types of organizations to be exempt from paying sales tax, hotel occupancy tax, and franchise tax. You must apply for this state exemption; it is not automatic.
- To run your business legally, you may need to obtain applicable licenses and permits.
- Many states require registration prior to soliciting funds or hiring solicitors.
Whoa…this is a lot more complex than just raising funds for a special project…
Yes. If your donors want to donate to your cause, you may need this special IRS 501(c)(3) tax-exempt status.
Why can’t the school do this?
In many states, there are certain regulations on what types of fundraising the school can be engaged in. And in many states, high school level school administrators cannot be involved in the booster club organization (other than approving activities held at the high school).
- Who owns a nonprofit?
- What is the difference between articles of incorporation and bylaws?
- What are the duties of nonprofit directors?
The Cullinane Law Group works with a small number of larger Texas booster clubs (those with expected annual revenue of more than $50,000).