IRS Tackles Deductibility of Booster Club Contributions

By Marcia Richards Suelzer, Toolkit Staff Writer

Dues paid to amateur sports booster clubs may be tax deductible if you can establish what you paid was more than the experience was worth because you wanted to support the goals of a non-profit organization.

Booster clubs are the lifeblood of amateur and youth sports teams throughout the country. They require the payment of dues and some level of fundraising support in order for your child (or you) to participate in the sport. However, most booster clubs also provide members with the option of paying the fundraising amount outright or participating in various fundraising activities to generate the required fundraising amount. Regardless of the source of the money, if you don't pay, you don't play.

Example. Michael signs his son Nick up to play football for the Bulldogs, the community youth football team. In order for Nick to play, Michael must pay a $300 participation fee and a $100 fundraising fee. Michael has the option of selling raffle tickets to recoup his $100.

Recently, the IRS Chief Counsel provided a memo to IRS employees that applies the general rules regarding charitable contributions apply to fundraising amounts. To be deductible, the payment or contribution

• must be made with charitable intent, and
• must be more than the amount you received in goods or services in exchange for the payment.

The fact that the payment is required does not automatically mean there was not charitable intent or that the benefits received equaled the amount of the payment. The difficulty in claiming a deduction for the fundraising contribution amount turns on the difficulty in proving that the amount paid was greater than both the tangible and intangible benefits received by the participant. The Chief Counsel's memo indicates that "considering the substantial return benefits provided by the organization, it is unlikely in this example that the participants would qualify for a charitable contribution deduction." However, the door was left open for a different result based upon the facts in a specific case. Although not mentioned by the IRS, such factors might include the cost versus the amount of playing time.

Posted July 12, 2011.