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Hey Guys,

I am a parent who helps out with a local travel ball team. We would like to take corporate donations to help offset the cost of tournament fees and the like. Here are some questions for you:

- De we need to file a 501c3? I would guess we would only take in @ $1000/year. I believe that there was something about < $4K not needing to file paperwork (which was $850ish, ouch).

- I think we need an EIN to make donations tax deductible. Is this normal and necessary for a non-profit baseball club?

- Any examples of approach letters to companies for fund raising? Is it normal to offer items in exchange for money such as banners or some other form of recognition? What other things can be used as enticements other than just good community relations?

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The accountants and attornies on the board can provide more detail, but I've been through this.

If a company/corporation donates money beyond a certain dollar amount they need proof you're a not for profit (NFP) to legally take the tax deduction. There are fundraising events you can't get a permit for or are illegal without NFP status. We ran a daily numbers game based on the state's daily number, casino nights, football pools and a March Madness pool (check your own state for legality of this).

From a personal protection standpoint if there's a lawsuit you want the team to be sued, not you. It's better to lose the team bank account than your house.

I agree incorporating through AAU is the easiest, least expensive way. The team needs to join AAU. You don't need to play AAU. Incorporating can cost a lot of money. We did it through AAU a few years ago inexpensively for a few hundred.

Don't forgot to get a one million dollar liability insurance policy. And whatever you think it will cost to run the team add 15% or you will end up paying for things out of your pocket. It's easier to return money at the end of the year than grovel for more during the season.
Last edited by RJM
The long and the short of it is if the team organizer is trying to make money of the team don't bother with 501(c)(3) status it could lead to all sorts of other issues and conflicts.

As you are only talking about $1,000 there no reason why you have to go to the trouble to become a non-profit as the business's are generally deducting their "donation" as a marketing type expense. I don't think most businesses will care if you are a non-profit or not, it should still be dectable to them.

Generally speaking organizations such as Little League allow you to get an automatic determination as a non-profit as long as your organizing documents follow the standard dictated by the organization and prre-approved by the IRS. Automatic determinations do not however make your organization a corporation. If you feel you need the added protection of a corporation then you must file organizing documents with the CA sectretary of State. I would guess most little leagues are NOT incorporated and that 1/2 the boards have no clue about it. Most think they are "incorporated" under little league or some other organization (AAU) but they are not. They are technically their own organization that is merely using some standard non-profit organizational documents preapproved by the IRS. AAU or Little Leagues HQ corporate status will not provide any corporate shield to a local team or league.

Good luck.

btw I am not a lawyer, so you should consult one if you really need to know. Plus most board members and team managers have no clue about non-profits so do not rely on Joe Blow for "advice" unless he has experience. I used to be the tax manager on a number of large well funded non-profits, however every well intended parent/coach involved in LL that wasn't getting their way thought they knew more and could intimidate me into believing them about how money s/b spent etc.....There is a ton of bad information/advice on non-profits out there.
A couple of thoughts based on a few years ago dealing with AAU...I thought (very well may be wrong) that each player / coach had to join ($14-$20 each) to get that level, but you could have as many teams under the umbrella as you wanted...

Also, make sure to read - AAU has specific things that they do NOT permit under their 501c3 such as casino nights and other "gambling" related fund raisers.

Lastly, I agree that AAU is probably the cheapest way to get the 501c3, but they'll need you to have the EIN and a few other through it first...worked well for several teams I was involved with, but not for all...

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