Can Our Booster Club Be a Nonprofit and Not Be a 501(c)(3)? 

Whether you are just starting a booster club or have been managing one for some time, you should know the difference between non-profit status and 501(c)(3) status. Both have different qualification requirements and benefits that booster club members should be aware of.

What Is the Difference Between a Nonprofit and a 501(c)(3)?

Some people use non-profit and 501(c)(3) interchangeably, but they are not the same. 

Nonprofits are usually corporations that exist for a nonprofit purpose, like museums, public hospitals, and public schools. On the other hand, a 501(c)(3) is a nonprofit organization that has tax-exempt status from the IRS. The IRS generally only grants 501(c)(3) status to nonprofits that run charitable programs. 

There are special requirements to gain 501(c)(3) status. For example, an organization may not:

  • Distribute earnings to any private individual
  • Attempt to influence legislation
  • Participate in any campaign activity
  • Be operated for the benefit of private interests

It is possible that your club is registered as a nonprofit but has not taken the steps to become a tax-exempt 501(c)(3) organization at the federal level. However, this means that any revenue made by the club would be considered “profits,” which can be taxable. 

Depending on how much revenue you are bringing in, failing to file for 501(c)(3) status can be a significant oversight in managing your booster club.

Advantages of Becoming a 501(c)(3)

There is no requirement for booster clubs to file for 501(c)(3) status. However, doing so can help the club grow and protect the hard-earned dollars raised through fundraising. 

There are a number of benefits of gaining 501(c)(3) status, including:

  • Tax-deductible contributions
  • Exemption from federal income tax
  • Tax-exempt financing
  • Exemption from federal unemployment tax
  • Possible exemption from state income tax
  • Reduced postal rates

Your club may be able to save a substantial amount of money in tax liability by gaining 501(c)(3) status. This additional revenue can help the club grow and invest in upgrades like gear, equipment, booster club accounting software, and more.

Not Sure What to Do? Contact an Expert

If your booster club hasn’t filed for 501(c)(3) status, it’s probably because no one has taken the time to research and file the paperwork. Dealing with the IRS and tax questions can be overwhelming for anyone, especially volunteers who are already stretched thin. 

To help you with the process, you can find a nonprofit accounting firm or consult an expert who can help you understand the benefits and implications of filing and can assist you with the paperwork. 

While your club may be hesitant to take on another expense, utilizing a filing service like Parentbooster USA Inc. is worth every penny. Parentbooster USA is a one-of-a-kind service that handles tax paperwork for booster clubs. It helps with school booster club tax-exempt status filing and takes the burden off your plate.

If you’ve been putting off catching up on your booster club’s tax status, now is the time. It is well worth the effort to ensure that your organization is getting all the benefits it is entitled to.