Raising money for your own kid is not charity!

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Fellow CPA Peter Reilly, a journalist at Forbes.com, emailed me about a recent court case involving individual fundraising accounts (IFAs).

IFAs are when you share or distribute your fundraising proceeds among the families who raised the money.

IFAs are illegal and a booster club recently lost a Tax Court case and their tax exempt status for using IFAs.

Read Peter’s blog post on the court case. It’s a very good summary (I read the entire court case!)

Parent Booster Clubs – Raising Money For Your Own Kid Is Not Charity

Here’s the bottom line:

Do NOT set up individual fundraising accounts.

If you have them now, STOP!

If you conduct fundraising, do not record how much each family brought in.

Do not have a system where tuition or dues are reduced by the amount of fundraising a family conducts.

 

All fundraising proceeds should go into your general fund to be used for the common expenses of the group.

We’re all in this together folks!
Carol Topp, CPA

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