From Parent Booster USA comes this warning about fund raising accounts:
Do not use individual fundraising accounts (IFAs) without a legal review. The IRS has strict rules on any activity that benefits the individual members of a group. The IRS generally finds IFAs to violate its rules. IFAs are activities in which parents/students engage in cooperative fundraising activities, providing “credit” to the individual “accounts” of those who participate in the fundraising activity(ies). Only in very limited circumstances are IFAs considered legal fundraising activities of booster clubs. Parent Booster USA can provide assistance in obtaining a legal review of an organization’s IFA policy. See also Individual Fundraising Accounts.
I agree with Parent Booster USA, the IRS does not allow nonprofits to establish individual fund raising accounts, where an individual or family get a part of the fund raising proceeds for their personal use.
To learn more about fund raisers for your homeschool group, read my article “Easy Fund Raisers for Homeschool Groups” here
and my blog posts on fund raising here.
Carol Topp, CPA