Season 3: Episode 4: Booster Groups and School Boards

Booster groups are parent and community-led organizations that support and fundraise for various programs offered by public school districts, such as sports, drama, etc. Some booster groups are official and others are not, but any group’s activities can raise challenging legal questions for school boards. Who is liable if a child is injured at a booster group event? Can booster events feature alcohol and gambling? What are Individual Fundraising Accounts and are they even legal? Can students be required to pay a fee if they don’t want to sell chocolate door to door? Join Lisa, Miriam, and Peter to learn about booster groups and various federal and state laws that govern these organizations. We also discuss policies and practices that school boards should be implementing when working with booster groups.

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Miriam: Welcome back to Class Act: Updates in Education Law. I’m Miriam.

Lisa: I’m Lisa.

Miriam: We’re attorneys at Walter | Haverfield in Ohio. We practice school law. Every few weeks, we get together, we talk about the most recent legal developments in education that are relevant to boards, administrators, teachers, anybody who works with the kids in our schools. We’ve had Peter here for an interesting discussion on technological developments and how they affect school districts. Today, we’re switching gears and we’ll be talking a little bit about booster groups, parent organizations, and other third-party school support groups. Student activities are increasingly expensive and districts can be cash strapped, so these groups can be very effective and helpful at raising money to offset activity costs. At the same time, as Peter will share with us booster group misconduct gets a good number of headlines. Even though many people probably don’t know much about these booster groups and the various regulations that they are required to conform to. Peter’s back with us today to talk about these booster groups and explain some of the legal issues that districts should be aware of. Welcome back, Peter!

Peter: Thank you. It’s good to be back! Truly.

Lisa: Hi, Peter. Why don’t we just dive right into explain what booster groups are, how they function in a typical school district, start with the background piece?

Peter: The booster groups are typically organizations that are organized by parents who have a strong affiliation with the school. They’re there to support dramas, to support sports, maybe a particular sport, maybe the athletic department in general. It really depends on what the parents want to do, but they’re not part of the district. They shouldn’t be a part of the district. Because they’re not part of the district, they don’t really have any accountability, and that’s the problem. When there’s booster groups that are doing their own thing without any sort of control or regulation or structure, then they can abuse the system to suit their own ends.

Lisa: Because these booster groups aren’t part of the school district, they don’t have to follow the school district’s policies, all these laws we talked about in earlier episodes that school districts have to follow, they’re their own separate entity?

Peter: Yes. There are times when they will agree. There’ll be a written agreement to follow the board’s policies, but they don’t have to. In general, the booster group isn’t legally obligated to follow the policies of the district. If there’s a good relationship between the board and the booster groups, then oftentimes, the booster groups will have no problem complying.

Lisa: Okay, so is it going to make a difference in any type of analysis of their activities, whether or not they are a nonprofit organization or are more of an informal group?

Peter: Well, it does, if they want to fundraise and that’s typically why the booster group has organized, “Anyway is to fundraise,” so that it’s centered degenerate money is that whoever donates can then deduct that donation for tax purposes. It’s key that the booster group does become a 501(c)(3) organization. They file the proper paperwork with the IRS. My understanding is, it’s not too involved at all. Then they get the letter back from the IRS saying you’re officially 501(c)(3), now you can go fundraise.

Lisa: That basically just means they’re registered as a nonprofit organization.

Peter: Correct.

Miriam: Who’s responsible just to oversee that and make sure that they comply with all the initial filings? Is that a board member’s job?

Peter: No, it’s not the board member’s job is not the treasurer’s job. It’s a good idea that the treasurer somehow get confirmation that the booster group is a 501(c)(3) compliant, just so they have that knowledge. If it turns out that this booster group doesn’t have 501(c)(3) yet it’s accepting all these donations, and people trying to deduct these taxes and the district’s name is included in various correspondences and notices and fundraising activities, then it can be problematic from a PR standpoint.

Lisa: Then is it also going to make any difference if that group is officially recognized by the school district and board or if they’re not?

Miriam: Peter, can you explain the difference between officially recognized groups and non-recognized groups or informal groups?

Peter: Officially recognized groups would have approval from the board. They would pass a resolution saying this is an official booster group that supports this particular activity.

Lisa: The district basically…or the board is basically saying, “We acknowledge and accept– associated with the district.”

Peter: Typically, they would go beyond just acknowledging them. They would also consent to the booster group’s use of the school district’s name, the mascot. These booster groups who want to use the school colors and the logo. Yes, exactly the motto of the district. When the group is officially recognized, the board would grant consent to use those items. And then in exchange, the board will try to get some promises from the booster groups indicating, say, that they’ll comply with the board’s policies or the volunteers will be background checked.

Lisa: So the agreement between the board and the group really sounds like a pretty–

Miriam: –important piece of–

Peter: It is an important piece not legally required. It depends on the district whether they want to do that, but they can be quite helpful.

Lisa: You could see benefits really for both parties.

Peter: Absolutely. I mean, you could give the board an opportunity to have somebody in attendance at the booster group meetings or ensure that if they wanted, the board treasurer can have access to the financial books of the booster group. It could all be in that agreement and then the agreement be adopted at a board meeting.

Miriam: Okay, so and then what if a booster group doesn’t want to do this and they just want to remain unofficial?

Peter: Then they’re treated like any other outside organization, which includes Boy Scouts, 4-H clubs, MADD organizations, any community organization. They don’t have that preferential treatment. They would have to get in line to have access to school facilities. For example, they wouldn’t have a right to use the school’s name or the mascots in their flyers or in their fundraising activities.

Lisa: Between being official or not, and whether the district should recognize a specific group, are there are any really specific advantages, disadvantages one way or the other?

Peter: It’s all personal preference. It’d be nice– The advantage for not being recognized is, if the booster group does end up going its own way and conducts activities that the board doesn’t approve of, then the board can distance itself more from the activities of that booster group.

Lisa: Is there a way that the district should deal with setting what expectations that might have for these groups?

Peter: At a minimum, they should at least have a policy in place. You might not have that agreement with that school support entity or the booster group, but at least you have a policy setting forth your expectations.

Lisa: A policy the booster group wouldn’t have input necessarily on. I mean policies are adopted and developed just by the Board of Education.

Peter: The board itself, right. The school administrators would advise the board possibly of the content of the policy, but ultimately, it’s the board’s policy.

Miriam: Typically, I guess, Peter, what would you say, what kind of provisions are included in a board policy about a booster group?

Peter: Some of the big ones are requirement that the booster group be insured and not have students at certain activities, especially those activities have alcohol, gambling. Maybe there’s just a blanket, a “no” for any fundraising activity that involves gambling or alcohol. Those two things come with a social stigma, and not every district is comfortable being affiliated with a gambling event or any sort of event that alcohol is served at.

Miriam: I guess it depends on your community really.

Lisa: Right.

Peter: It does.

Lisa: Since the booster group isn’t part of this policy-making, they’re not agreeing to these things, how does the board go about really enforcing the preferences? Say, you put in a provision about fundraising activities. What kind of leverage does the board have?

Peter: Not much, but there is some. That’s a good question. You can draft cease-and-desist letters. If that booster group is using the board’s name, the district’s name, the logos, the motto or the mascot without authorization, it’s hard to do, but you can refuse the money that that booster group raised at the event that you didn’t approve of. You are limited. What you might want to start doing is having a representative involved in the booster groups. It’s key that you, board, are sending a representative isn’t going to have somebody on the board of the booster organization.

Lisa: That’s probably a good point to dive into. Sometimes boards think, “Well, we should have a board member or administrator be somebody, one of like the head officers, in the booster group so that we can help control and monitor what they’re doing.” That’s not always a good idea.

Peter: That’d be too much of a conflict of interest. I mean, there’s no law that prohibits that, but you really don’t want district administrator or board members serving as an officer.

Miriam: Yes. Just to clarify, Peter, you just said, there’s no law in Ohio that prohibits board members or administrators from being booster group officers, but a lot of our audience is from outside Ohio. I just want to remind everybody, that whenever we’re talking specifically about Ohio laws and regulations and if you’re not in Ohio, you as a district or district employee should take care to research and review the laws and regulations in your own state. You might have additional regulations relating to booster groups that we’re not covering here.

Peter: That’s true. One requirement in Ohio specifically is that if you’re a boost group and you raise over $25,000 and you have to register with the Ohio Attorney General’s Office.

Lisa: Okay. That’s a good point. Other states might have–

Peter: Other states might not have that requirement.

Lisa: Or Have a different one. What happens if something goes wrong? Say, a child is hurt at a booster event or sues the district?

Peter: That could be problematic because the booster groups and their officers are not protected by Ohio’s sovereign immunity laws.

Miriam: Would the board’s insurance policy cover that defense and liability?

Peter: It depends. Often times the board’s insurance policy does cover school-support entities. The district is the one to check its policy to see if a booster group might be covered. If the booster groups is covered and there’s an additional charge, it’s important that the district have the organization pay for the additional charge for insurance coverage.

Lisa: Does the district also have to allow all booster groups or they can set any limits on these group activities?

Miriam: I can imagine, Peter, that sometimes, the district is not going to want a particular booster group.

Peter: The district doesn’t have to recognize all of them. That’s another reason why The Board of Education might want to adopt a resolution specifying which booster groups it’s going to officially recognize. Some that aren’t, again, it may want to distance itself from certain booster groups that aren’t engaged in activities that the board might approve of.

Lisa: Really, they should try to be treating all these groups the same, right?

Peter: Right.

Lisa: To avoid any type of discrimination or claims.

Peter: That’s definitely the goal. Treat everybody the same. That’s definitely the way to approach booster groups but some booster groups have gone rouge. You see those headlines. If you want to distance yourself, then you already recognize them. Your board can actually withdraw your recognition. Just pass the resolution and do it.

Lisa: Along the lines of those rouge activities, are there certain things to keep in mind about alcohol sales or gambling or some of those types of events?

Peter: Absolutely. First, if you want to serve alcohol at a fundraising event, you need the right permit and there’s a number of permits involved. It’s a confusing area of the law actually so the booster groups should seek out a legal counsel who’s in the know regarding alcohol sales and nonprofit organizations and fundraisers and gambling, too. There are laws involved. There’s laws that govern bingo. If there’s a booster group that’s trying to raise money by gambling, then they want to make sure that they’re in tune with the law in Ohio.

Miriam: In whatever state you’re in.

Peter: In whatever state.

Miriam: You’re not in Ohio.

Peter: Right. In Ohio, laws to charitable organizations to conduct gambling activities for fundraisers but they have to be around for two years. You can’t just get your IRS letter and then open up a gambling hall.

Lisa: Let’s really dive into the fundraising aspect of it. That seems to be where a lot of the headlines come from of misuse of funds. Can you walk us through that and how funds should be accounted for?

Peter: The best thing is to have some sort of structure when it comes to accounting for your funds. Ideally, the booster groups would have multiple people looking at the books, multiple people reviewing how much money was raised, where that money is being deposited, have a bank account in the name of the booster organization and not just one individual.

Lisa: I hear a lot about individual fundraising accounts. Can you explain what those are and if they’re legal?

Peter: They’re very popular, but typically the way they’re structured, they are illegal and this is a more of a federal rule, too. This would apply to every state, not just Ohio because the guidance came from the IRS. What they found is that there are a number of booster organizations and even schools that have individual fundraising council. They may not be bank accounts, but there– It’s an organization that’s keeping track of how much money a particular student raises and then they would deduct how much money that student then has to put towards a certain activity, say, for athletic equipment or uniforms if it’s a school band or to go on a trip, then the student may not have to pay as much because they raised “X” amount of dollars.

Lisa: What makes these illegal?

Miriam: Yes, I was just going to ask that. Why is this illegal?

Peter: The IRS determined that the 501(c)(3) designation and the tax benefits that come with it are supposed to be geared toward and to promote the entity and the organization as a whole and not individuals.

Lisa: That kind of charitable concept?

Peter: Yes, a charity, it just benefits one individual and these individual fundraising accounts are essentially ways that only one individual benefits from the 501(c)(3) designation.

Lisa: Yes, that makes a lot of sense.

Peter: It’s difficult and it’s hard because there are those disincentives that may arise and because if Johnny raises $500 but Joey only raises $10, it seems like Johnny should have a super discount when it comes to having to put money towards new football equipment.

Miriam: How does this relate to non-participation fees? I feel like this may be– Goes along with that. Can students be required to pay a fee if they don’t want to fund-raise?

Peter: This might overlap with the non-participation fees. They shouldn’t be required to pay a fee if they don’t fund-raise for a particular fundraiser. The non-participation fees aren’t outright illegal. They don’t receive the same criticism from the IRS, but there are some things that you want to do if you do have non-participation fees. One is to set the same fee for all the fundraisers that will occur for the entire school year and you don’t want to prohibit a student from participating in certain activities just because they paid the fee. Again, you want to treat everybody the same and if they’re excused from the fundraiser, they get to participate in the student activities just as much as everybody else who did engage in fundraising.

Lisa: Interesting. Do you have some kind of key points that our listeners can take away that they should keep in mind when dealing with these groups?

Peter: Booster groups really want to make sure that they have a number of checks and balances in place particularly when it comes to money. Make sure who is collecting the money, who is accounting for it, how’s it being deposited. You want multiple people involved there. Title IX is another big issue. Yes, booster groups sometimes that are designated to one particular sport, oftentimes, you’ll hear football boosters or baseball boosters and they could raise exorbitant amounts of money for these activities. Then they want to donate hundreds of thousand dollars to the district for the football program or the baseball program. The problem is Title IX requires that all the students for both genders and both sexes, male, female students are treated equally. If you have the baseball fundraisers receiving $200,000 for new AstroTurf field butsoftball players only getting no benefit at all, they’re just the same dirt field without the lights and without the grandstands, then there is a risk of Title IX violation.

Miriam: If softball is considered as a sport where there’s more girls? Is that what you’re saying?

Peter: Softball, right. That’d be the considered the girls sport in baseball. It’s the male equivalent. The district, in order to avoid a Title IX violation, would either have to refuse the money or come up with the money themselves to counter whatever the booster are giving to the boys team, or work with that boys booster group to ensure that the girls softball team gets some of that money from the benefit.

Miriam: Interesting. That’s interesting.

Lisa: Really kind of allocating those funds equally.

Peter: Otherwise, you’d have to refuse it.

Miriam: Is that what schools do? Districts, do they refuse it?

Peter: I would say in my experience, the schools typically work out an arrangement so that the girls also benefit from that money that’s raised. I would say more and more schools have the general athletic boosters so that the money is donated not to a particular sport. It’s donated to like a department general then the school has more control over how that money is going to be divvied up.

Lisa: That’s sounds like a good– The most simplistic way to do it, right? Like maybe just have it to a general versus this a football booster and there’s no girls’ football.

Miriam: Yes.

Lisa: I could see.

Peter: It really depends on the district. Some districts have a little bit more money in their budget so if the boys are getting $25,000 for a new scoreboard, they’re able to also dedicate $25,000 to the girls.

Miriam: Interesting.

Lisa: Any other last tips to focus on before we wrap this up?

Peter: Not really. Boosters are great. Don’t take away from this conversation that boosters come with a lot of baggage and you want to avoid them. They are great at generating money and schools are cash-strapped, so they need all kinds of different alternative ways to generate that money.

Lisa: Especially for all these extracurricular activities, districts are getting– Having to cut back on a lot.

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Peter: Absolutely. Boosters are great. Utilize them. Just be careful when you’re doing so.

Miriam: Peter, thanks so much for joining us today. Next time, we will talk about something else that’s interesting and relevant for school districts across the country.

Lisa: If you have other ideas, feel free to email us with your topics.

Miriam: Please subscribe to this podcast and rate us on Apple Podcast, Stitcher and Google Play Music or wherever you get your podcast.

Lisa: As always, thanks for listening.

Miriam: Have a great day!

Peter: Thank you.

Lisa: The content of this podcast is provided for general information purposes only. The podcast is not legal advice, does not create an attorney-client relationship, and should not be relied upon in making legal decisions. Actions on legal matter should be taken only upon advice of legal counsel. Walter | Haverfield does not guarantee the accuracy of information contained in this podcast.