a) Current Contributions received
Booster Clubs may receive monetary or non-monetary contributions
from individuals or businesses. In addition, those Booster Clubs
that have received a Determination Letter from the IRS granting
501(c)(3) tax exemption are allowed to receive
tax-deductible contributions in accordance
with IRS Regulation 170. To allow the individuals or businesses
to deduct these contributions on their tax returns, the Booster
Club must send them a copy of the Club’s Determination
Letter indicating that the Booster Club is a 501(c)(3) organization.
If your Booster Club is not a 501(c)(3) organization,
contributions or donations are not tax-deductible. In addition,
you must inform the individual or business that the contributions
or donations are not tax-deductible.
501(c)(3) is the only IRS tax-exempt
category that allows contributions to be tax-deductible on the
contributor’s tax return.
For contributions received, the Booster Club may want to send a thank you note along with a copy of the Determination Letter. The thank you note may indicate what was contributed or donated. If the gift is monetary, you may indicate the dollar amount. If the gift is not monetary, the estimated value should not be included in the thank you note. It is the responsibility of the individual or business that provided the gift to determine the value that they would report on their tax return.
Even though contributions or donations received will ultimately support the student group at a school, the gift is still considered to be a gift to the Booster Club and not to the school or to the District.
b) Quid Pro Quo Contributions Received
According to the IRS, a charitable organization, such as a Booster Club that is a 501(c)(3) organization, must provide a written disclosure statement to donors who make a payment, described as a “quid pro quo contribution,” in excess of $75.
A quid pro quo contribution is a payment made partly as a
contribution and partly for goods or services provided to the
donor by the charitable organization. An example of a quid pro
quo contribution is where the donor gives a Booster Club $100
in consideration for a concert ticket valued at $40. In this
example, $60 would be deductible. Because the donor’s
payment (quid pro quo contribution) exceeds $75, the disclosure
statement must be furnished, even though the deductible amount
does not exceed $75.
Separate payments of $75 or less made at different times of the year for separate fund-raising events should not be aggregated for the purposes of the $75 threshold.
The required written disclosure statement must:
- inform the donor that the amount of the contribution that
is deductible for federal income tax purposes is limited to
the excess of any money (and the value of any property other
than money) contributed by the donor over the value of goods
or services provided by the charitable organization, and
- provide the donor with a good-faith estimate of the value
of the goods or services that the donor received.
The charitable organization (Booster Club) must furnish the statement in connection with either the solicitation or the receipt of the quid pro quo contribution. If the disclosure statement is furnished in connection with a particular solicitation, it is not necessary for the organization to provide another statement when the associated contribution is actually received.
A penalty is imposed on charitable organizations that do not meet the disclosure requirements. For failure to make the required disclosure in connection with a quid pro quo contribution of more than $75, there is a penalty of $10 per contribution, not to exceed $5,000 per fund-raising event or mailing.