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May we charge for this?

  • 1.  May we charge for this?

    Posted Jan 28, 2019 14:42

     

    I am on the Board for our local Youth Basketball League. It is a 501 (c) 3 and all Board members and coaches are volunteer. We are adding to the program to add all sorts of groovy stuff to the organization. Some questions came up yesterday. One of the things we will be adding include private and semi-private lessons with a trainer. (also not paid) (Most of us are USAB certified)

    Are we allowed to charge for this or does it have to be a donation?

    In the same vein ( I started to think about this later.) Can we charge to play in the league? ( Money goes for uniforms, gym rental time, equipment (balls clocks etc.) The players have to register and pay each session.

    Do you know  and will you share the backup information?



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    Darryl Weiss
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  • 2.  RE: May we charge for this?

    Posted Jan 29, 2019 09:19

    This is getting a little off-topic for a technology list, but I'll give a quick answer, with the caveat that I'm not a lawyer, just someone who's spent a lot of time in the nonprofit sector. 

    Nonprofits can charge fees for activities directly related to their nonprofit mission, so league registration and intruction would be legitimate under your organization's educational mission. These would not be donations that are tax-deductible for the payor. 

    Private schools and universities are exmples of other 501(c)(3) organizations that charge for their primary services. One thing you might want to read up on is Unrelated Business Income - here's a good intro article: https://trust.guidestar.org/unrelated-business-income-tax-what-your-organization-should-know



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    Thomas Taylor
    Philadelphia PA
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  • 3.  RE: May we charge for this?

    Posted Jan 29, 2019 10:01

    Thanks!

     

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  • 4.  RE: May we charge for this?

    Posted Jan 29, 2019 09:38
    Yes, it is appropriate and perfectly legal to charge for services as a nonprofit. As a nonprofit you are allowed to make money and even generate a surplus - you just can't pay any of it to owners/investors.

    In fact, you should be careful about having a fee and calling it a donation - many organizations have fundraising diners and call the ticket price a donation. If there is a quid pro quo, there is no donation (meaning the person purchasing the services or buying the meal can't take a tax deduction). The IRS doesn't say much about donations from the perspective of a nonprofit, but the definitive guide for donors and thus what standards a nonprofit should make, are covered in publication 529: https://www.irs.gov/pub/irs-pdf/p529.pdfhttps://www.irs.gov/pub/irs-pdf/p529.pdf 

    Good luck

    Tim

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    Tim Mills-Groninger
    Whiting, IN
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  • 5.  RE: May we charge for this?

    Posted Jan 29, 2019 10:03

    Thanks!!

     

    This e-mail message as well as any and all attachments may contain privileged and confidential information intended solely for the use of the addressee(s).  If you are not an intended recipient, you should immediately stop reading this message and delete it from your system.  Any unauthorized reading, distribution, copying, or other use of this message or its attachments is strictly prohibited.  This message and/or any attachments may not be copied or distributed without this disclaimer. This email communication does not constitute an attorney client relationship unless a retainer has been signed by both attorney and client. If you received this message in error, please notify the sender immediately.

     






  • 6.  RE: May we charge for this?

    Posted Jan 29, 2019 10:39
    yes, you can charge a fee for service.
    Think of nonprofit summer camps. YMCA programs and most summer athletic leagues.  Your nonprofit will need strong financial controls policies to assure that the money is spent in designated manner and that no one embezzles the money.  As a nonprofit, you could also invest back in the mission by offering scholarships to those who can't afford, which means you'll need a system to determine how to determine scholarships. Charging  a fee for a service (private and semi-private lessons) is not illegal, but raises other questions: Does the individual trainer get the money or the organization?  IF the trainer, you must determine if contract or employee.  If the organization,  you would need to determine where the money from that semi- or private lesson fits into furthering your mission and building your budget.

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    Jeanne Allen
    Jeanne Allen Consulting
    Durham, NC
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  • 7.  RE: May we charge for this?

    Posted Jan 29, 2019 17:18
    Hi Daryl,
    You'd have to find the specific tax code which codifies this, but in general - absolutely you can charge for lessons, the league, etc. The key to remember is that any BENEFIT that the person recieved is not tax-deductible. For example, You get a t-shirt when you sign up for a tournament. The t-shirts cost $5 each.  The tax deductible amount for the receipt is the amount of the registration fee - the cost of the t-shirt(s).

    You may want to look in to Association of Fundraising Professionals and their website. They will have all sorts of in-depth discussions about what is allowable or not.

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    LisaLane
    Nonprofit Garden
    Lisa@nonprofitgarden.com
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