Need advice - Youth Baseball fundraising questions?

[merekc]

We have received some sponsorship money for our youth baseball team. We also plan to hold some fundraisers. I wanted to open a bank account for the money and the bank really put up the red flags. Basically, they said if it is in my name I'll get taxed on it or the team needs to become a non-profit. I briefly talked to my tax guy and he told me I could fill out like a 30 page form and put out $150 to become non-profit. Then he said he would check into other options.

How do most teams handle this? I know we are not inventing the wheel here, but I called the league office and they were no help. I've googled and really didn't find anything. It isn't huge amounts of money so I'm thinking it isn't a big deal. I'm going to talk in more details to the tax guy but thought I'd see what my favorite online friends say.

Amount wise we are probably talking $2,000-$3000 through sponsorships/fundraisers and $2,000 league fees collected from parents so that I can make one payment for entire team (per league policy). So $5000 a year going into and back out of account. Does that make sense?

Also, if anyone has a spectacular fundraiser idea, feel free to share. Thanks.

 

[golfgal]

We have received some sponsorship money for our youth baseball team. We also plan to hold some fundraisers. I wanted to open a bank account for the money and the bank really put up the red flags. Basically, they said if it is in my name I'll get taxed on it or the team needs to become a non-profit. I briefly talked to my tax guy and he told me I could fill out like a 30 page form and put out $150 to become non-profit. Then he said he would check into other options.

How do most teams handle this? I know we are not inventing the wheel here, but I called the league office and they were no help. I've googled and really didn't find anything. It isn't huge amounts of money so I'm thinking it isn't a big deal. I'm going to talk in more details to the tax guy but thought I'd see what my favorite online friends say.

Amount wise we are probably talking $2,000-$3000 through sponsorships/fundraisers and $2,000 league fees collected from parents so that I can make one payment for entire team (per league policy). So $5000 a year going into and back out of account. Does that make sense?

Also, if anyone has a spectacular fundraiser idea, feel free to share. Thanks.

The team needs to become a non-profit, adopt by-laws and appoint club officers and then you can open a bank account. I would NOT put it in your own name-first for the tax reasons and second for the liability--not so much with you but what if down the road someone less honest takes over and steals the money. You need to have a treasurer and have your books audited on a regular basis. It is a pain to get started but you will be better off doing that. We are in this process right now with the Girls Golf Team Booster Club .

 

[MickeySP]

If the team is part of a league doesn't the league already have non-profit status?

I know our league had tax-exempt numbers & forms for fundraisers and purchases.

 

[Bearvet]

I disagree - I've filed (successfully) for 2 parent groups to become non-profts, so I have some experience. You can apply online or on the phone to get a tax ID (EIN) number. You do need to give a SS# to do this, but nothing happens with your SS#. Use this number to open your bank account.

If your GROSS RECEIPTS are $5000 or less, you do NOT need to apply to become a non-profit. If gross receipts are over $5000, you should apply. A wonderful site to visit is www.ptotoday.com they sell a start-up kit that tells you step-by-step how to fill out form 1023 to become a 501c3 organization (non-profit). It's well worth the $30 or $40 - it really helped us. They also have great online support.

It is still a good idea to have bylaws - this site also give some great examples to use. I'm in the process of working on bylaws for a football parent group.

It can be done (file for non-profit status) and we did it without an accountant or lawyer to help us. Good luck.

 

[merekc]

If the team is part of a league doesn't the league already have non-profit status?

I know our league had tax-exempt numbers & forms for fundraisers and purchases.

The league is non-profit, but when I spoke to them they were really no help. Their solution was for me to have sponsorship checks written out to the league name, they would cash them for us and give us the money. That of course in no way helps us figure out how to save the money (bank acct.).

If your GROSS RECEIPTS are $5000 or less, you do NOT need to apply to become a non-profit.

I know our gross receipts from sponsorships and fundraisers will be under $5,000. The league fee money would bump us near or over $5,000 and would be the issue. I could probably just get a money order with all the fee money and never run it through a bank account. We are suppose to collect the money and submit it as a team at one time.

So if I'm understanding you correctly then if our Gross Receipts are less than $5,000 we do not need to become a non-profit. What bank account option would I have then? Only to open it in my name?

All your help is greatly appreciated. A couple of you mentioned by-laws, is anyone willing to email me samples of what they've had for their youth sports teams in the past to give me a starting point. If so, let me know and I will PM you my email. Thanks for your help.

I love how much the league charges for parents then to do half the work (and they don't give us any guidance). This is a huge league in our area, you would think they would offer online payment options for league fees. And have fundraising funds information available. I guess they don't want to deal with the costs and liability associated with these two things.

 

[Pakey]

I was a league president for a youth sports organization for many years. We strictly prohibited allowing any club or team to have their own bank accounts. Why? Because a club leader embezzled over $10,000 from her club because she had went and got her own non profit number, opened a bank account, deposited all of their fundraising money and then began writing checks out to her family members with different last names and stating that it was for club expenses.

Our league had one bank account with 13 clubs' money in it along with the league's money. The league treasurer kept track of it all, each club had someone doing mirror books to make sure that the league didn't put some of one club's money in with another club or with the league money. It worked fine, never had any problems. The club person presented their "savings" statements to the club just as if the money was in their bank account. The money was disbursed for the clubs' needs by the league treasurer with a valid receipt and approval from that club's voted officers.

And what happened to that woman who opened that bank account and helped herself? The league pressed charges, she was taken from her home in handcuffs in front of her children (we had no control over that and actually felt bad that it happened). In a deal that was made, her husband, who had known nothing about this, took out loans to pay it all back in exchange for us dropping the charges.

 

[merekc]

Pakey - I understand and it is sad that anyone would do that. In our situtation there are over 500 teams. The league has nothing to do with each individual team's finances. That is where I am struggling. I do prefer to set it up with a bank account so there is some form of documentation for the team's benefit and to protect myself as well.

Again, we are a young team and at this time only a league team so for the next few years our financial goals are to pay for uniforms and then move towards paying some or all of the individual player's league fees.

At this point the coaches have been responsible for securing all of the sponsorships so basically the team hasn't had much to say in the handling of the money. They appear to be happy with the financial goals we have established.

 

[Pakey]

The league wouldn't have anything to do with the individual finances but the league is under some umprella organization where league officers have liability protection. You, as a parent, coach, team parent, etc. have no liability coverage for handling these finances. Within our 13 clubs, we had 743 teams, well over a few hundred thousand dollars worth of money, and the only people who had liability coverage were the league board officers. To protect everyone, we insisted that all money funnel through the league account. This was done at the direction of the state youth board that governed our program (which then falls under a federal board).

Everything is great now but all it takes is one parent, maybe down the road, to complain about how that money is being spent, and you open up a hornet's nest of problems. My example I gave above was certainly not the only issue that came up regarding money through the years.

If you are going to open this account, I would recommend you vote annually on officers. Notice of meeting/annual vote of officers should be done in writing to all members of the team. Bank account should have dual signature required by both officers (in our case it was the president and treasurer). Monthly meetings of the board, with all participants invited to attend, should be conducted with minutes taken showing votes/approval by officers on expenditures. Attached to the minutes should be the bank reconciliation/statement of bank status that is reviewed and approved at each meeting.

This is, of course, after being approved for non-profit status.

 

[Bearvet]

To open a bank account - apply for an EIN http://www.irs.gov/businesses/small/article/0,,id=97860,00.html and use this number. You give your SS# when applying for an EIN, but it isn't used after that (it just verifies that a US citizen is requesting the Number). It's easy to do and only take 5-10 minutes - you'll get the number quickly. This does not make you a non-profit. It's only the first step in any of this.

As far as bylaws go, if you visit the pto today website you will find tons of examples (you do not need to be a pto to use this site).

HTH

 

[LuvOrlando]

I'm with everyone on here about getting the Tax ID ect. Once you have the tax id you set up an account(s) with a local bank. Put yourself on as a signatory and get some checks but ALWAYS keep the funds separate from your own money. Lots of people have gotten into a lot of trouble for embezzlement by failing to keep EVERYTHING separate, it's a huge crime which is fairly easy to prevent.

 

[merekc]

Thanks all for your help.