PowerPoint Presentation

Assistance Team

Booster Clubs and Parent

Organizations Workshop

SCHOOL CONNECTED

ORGANIZATIONS

• Booster clubs and parent organizations are formed by parents,

community members, and staff members to support school activities

(e.g. music groups, athletic teams, debate teams).

• Booster clubs and parent organizations must have their own

separate Employer Identification Number (EIN).

• The primary role of a booster club or parent organization is to enrich

students’ participation in extracurricular school activities.

• Parent organizations and booster clubs are often referred to as

“school-connected organizations.”

Booster Clubs and Parent

Organizations

District Relationship

• Booster clubs and parent organizations:

• Are legally separate from the district

• Are not under the legal control of the district superintendent,

board of education, site administrators, other district staff or

students

• Must remain completely separate from district’s Associated

Student Body (ASB) organizations

• Must not administer or supervise ASB organizations

• Must never commingle funds with ASB or district funds

• Cannot keep funds in ASB or school safe

District Has Responsibility for Booster

Clubs and Parent Organizations

If booster clubs and parent organizations operate

separately from the district and are not controlled

by district officials or students, why should the

district care about their operations?

Education Code Defines District

Responsibility

Education Code Section 51521 states:

“No person shall solicit any other person to contribute to any fund or to

purchase any item of personal property, upon the representation that the

money received is to be used wholly or in part for the benefit of any

public school or the student body of any public school, unless such

person obtains the prior written approval of either the governing

board of the school district in which such solicitation is to be made

or the governing board of the school district having jurisdiction over

the school or student body represented to be benefited by such

solicitation, or the designee of either of such boards.”

District Policy

• Education Code Section 51521 means that a school-connected

organization may not legally operate unless and until it obtains

the prior written approval of the district’s governing board or its

designee.

• The district governing board should adopt board policies and

administrative regulations that booster clubs and parent

organizations must follow to operate as a school-connected

organization.

District Policy, cont.

XYZ Unified School District Board Policy 1240 states:

“The Board recognizes that school-booster organizations are separate

legal entities, independent of the district. However, to help the Board

fulfill its legal and fiduciary responsibility

to manage district operations

and in accordance with Education Code 51521, any group wishing to

operate a school-booster organization that will conduct fundraising

activities to benefit a school or its students shall submit a written

application to the site administration, who shall approve or deny the

application.”

District Policy, cont.

XYZ Unified School District Board Policy 1240 - continued:

“Any fundraising activities initiated by an approved school-booster

organization shall be submitted to school administration for approval

prior to the fundraising activity. In addition, the Superintendent or

designee shall establish appropriate procedures, guidelines and

internal controls for the operation of school-booster organizations and

the relationship between school-booster organizations and the

district.” (emphasis added)

District Policy, cont.

So what is fiduciary responsibility?

Fiduciary responsibility, more commonly referred to as a fiduciary duty,

is the legal duty to act solely in another party’s interests. This legal

duty includes the duty to act with care, competence, and diligence. A

fiduciary duty is the strictest duty of care recognized by the US legal

system.

Operating in the District

• Booster clubs and parent organizations must be authorized to operate

within the district through an application process.

• All booster clubs and parent organizations are subject to revocation by the

superintendent or designee if deemed necessary.

• To operate in the district, each booster club or parent organization should:

• Provide evidence of California state and federal 501(c)(3) tax-exempt

status (IRS Determination Letter and while waiting for the IRS letter,

Form 1023 should be presented)

• Provide proof that each parent organization or booster club has its own

EIN. (Form SS-4)

Operating in the District, cont.

• Submit a signed Booster Club Manual Acknowledgement form.

• Submit the district’s signed Hold Harmless Agreement.

• Submit a copy of the booster club/parent organization’s

constitution, or bylaws.

• Submit complete, up-to-date financial statements (Balance Sheet

and Income Statement) to the school site principal or designee

twice each year.

Operating in the District, cont.

• Ensure that the school-connected organization’s officers attend a

district-provided Annual Booster Club Workshop.

• Not imply any form of responsibility for or sponsorship of its

fundraising events by the district, school site or ASB unless

authorized by the district, school principal or principal’s designee.

Operating in the District, cont.

• Be responsible for maintaining its own tax-exempt status, accounting,

financial records and income tax reporting to both the federal and state

government.

• Never be allowed to use the district’s EIN.

• Not use the ASB or district funds as a pass-through account.

• Maintain a Seller’s Permit if selling merchandise or goods, because

booster clubs and parent organizations are not sales tax exempt.

• California Department of Tax and Fee Administration

• http://www.cdtfa.ca.gov

Operating in the District, cont.

• Annually submit a Certificate of Liability from its insurance

company to the principal or designee and carry liability insurance

in an amount equal to or exceeding the minimum coverage

amounts determined by the district.

• Annually submit a member roster of names and a contact list of

officers to the principal or designee complete with addresses,

phone numbers and email addresses.

Operating in the District, cont.

• Have its own bank account in the name of the organization separate

from the district and/or ASB.

• A copy of the bank account statement and list of authorized

signers must be annually submitted to the principal or designee.

Operating in the District, cont.

• Not allow any individual to personally benefit from the booster club or

parent organization’s activities.

• Upon termination, provide through the school-connected

organization’s constitution for the distribution of any excess funds

and assets to another nonprofit organization; e.g., the booster club’s

or parent organization’s school site, the ASB or the district.

Operating in the District, cont.

• The booster club or parent organization must submit a proposed budget

and list of proposed fundraising activities to the school site principal or

designee at the beginning of each school year for a determination to be

made that there are no fundraising conflicts with other school activities,

including ASB.

• Booster clubs’ or parent organizations’ ability to use school district facilities

is regulated by California Education Code 38130-38139, otherwise known

as the Civic Center Act.

• All fundraising activities at any district school site, including booster club

and parent organizations, must be approved in advance per the district’s

Facility Use Policy.

Operating in the District, cont.

• Students may volunteer for or assist booster clubs or parent

organizations when it does not interfere with students’ other school

site obligations.

• A booster club or parent organization may never discriminate against

students on the basis of a family’s membership in, contributions to,

or fundraising for the booster club or parent organization, or the

family’s time spent on booster club or parent organization activities.

Operating in the District, cont.

• When a booster club or parent organization donates or raises funds

for a school site, ASB or the district, it should state the specific

purpose for which the funds are being donated on all applicable

literature.

• Once funds are donated and accepted by the district, the funds

are the property of the district and may not be returned to the

parent organization or booster club.

Operating in the District, cont.

• If a booster club or parent organization wants to operate bingo or

raffle fundraising events, the organization must understand that

these events are strictly regulated by California Penal Code Sections

326.5 and 320.5, and by county and city ordinances.

• Operation of bingo games, raffles, or poker night fundraisers

without legal authorization to do so is considered gambling under

California law and can be charged as a crime by the District

Attorney.

Operating in the District, cont.

DON’T FORGET:

Just because something is for a good cause does not mean it is

allowable or an illegal activity is acceptable.

Games & Gambling

California Penal Code Section 330 provides that:

“Every person who deals, plays, or carries on, opens, or causes to be

opened, or who conducts, either as owner or employee, whether for hire

or not, any game of faro, monte, roulette, lansquenet, rouge et noire, rondo,

tan, fan-tan, seven-and-a-half, twenty-one, hokey-pokey, or any banking or

percentage game played with cards, dice, or any device, for money, checks,

credit, or other representative value, and every person who plays or bets at

or against any of those prohibited games, is guilty of a misdemeanor, and

shall be punishable by a fine not less than one hundred dollars ($100)

nor more than one thousand dollars ($1,000), or by imprisonment in

the county jail not exceeding six months, or by both the fine and

imprisonment.”

Games & Gambling, cont.

• Nonprofits may register with the Attorney General for promoting

nonprofit organization gambling under the fundraiser registration

program at

https://oag.ca.gov/gambling/charitable.

• The OAG website states, “The State of California’s Business and

Professions Code Sections 19985-19987 allow for eligible nonprofit

organizations to hold “charity poker night” fundraisers. Qualified

nonprofit organizations and suppliers of equipment and/or services

for such fundraising events must submit an Annual Registration

Form to the Bureau of Gambling Control for prior approval.”

Raffles

• Always file this form annually if you are

going to have a raffle.

• $20 fee.

• Complete by September 1.

• Registration period is September 1 to

August 31.

Raffles, cont.

• Must be a nonprofit

• One year qualified

• FTB entity status letter

• 90% of profits per raffle must be distributed

to a beneficial or charitable purpose (This is

why 50/50 raffles are illegal)

• Detached tickets must have #’s

• Only adults supervise drawing

• Cannot be conducted over the internet

• And More, so read the rules

Raffles, cont.

• Two page report

• Report each year there is a raffle

• NEW: Report aggregate for all raffles,

not each. Penal Code 320.5

• Due October 1

Bingo

• California law and city and county ordinances provide that it is

a criminal misdemeanor to violate bingo ordinances, or to

pay or receive a profit, wage, or salary from any bingo game.

• City ordinances, rules, and forms apply. Check your city bingo

ordinance.

Bingo, cont.

Operation of Bingo generally requires: (Research your specific

city and county requirements)

• Only operated by a California tax-exempt nonprofit organization

(Proof = FTB Tax Exempt Determination Notice/Letter)

• Completion of the licensing application and receipt of a valid

license from the city, and where applicable the county, prior to

conducting any games

• Minors are prohibited from any participation in any bingo game

• Total value of prizes awarded cannot exceed $250 in cash or kind,

for each game held

Forming a Nonprofit - Booster Club or

Parent Organization

• Great Resource

https://oag.ca.gov/sites/all/files/a

gweb/pdfs/charities/publications/

guide_for_charities.pdf

Checklist: Forming a Booster Club or

Parent Organization – The Basics

STEP ONE

 Determine the name of the booster club or parent organization.

 Elect booster club or parent organization officers.

Checklist: Forming a Booster Club or

Parent Organization – The Basics, cont.

STEP TWO

 Prepare a constitution and bylaws.

STEP THREE

 Prepare and file Articles of Incorporation.

 File a Statement of Information with the California Secretary of State.

Checklist: Forming a Booster Club or

Parent Organization – The Basics, cont.

STEP THREE, cont.

• Obtain an Employer Identification Number (EIN).

https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-

an-employer-identification-number-ein-online

• Apply for federal tax exemption with the Internal Revenue Service (IRS).

Form 1023 https://www.irs.gov/pub/irs-pdf/f1023.pdf

• Apply for California tax exemption with the California Franchise Tax Board

(FTB). Form 3500 or 3500A https://www.ftb.ca.gov/forms/misc/3500.pdf

Checklist: Forming a Booster Club or

Parent Organization – The Basics, cont.

STEP THREE, cont.

REMEMBER - Parent organizations and booster clubs need both federal

and state tax exemptions to conduct certain fundraisers (e.g., raffles).

 File the initial registration form with the California Attorney General’s

Registry of Charitable Trusts. https://oag.ca.gov/charities

Checklist: Forming a Booster Club or

Parent Organization – The Basics, cont.

STEP FOUR

 Obtain district site principal or designee approval.

Naming Your Booster Club or Parent

Organization

• A booster club or parent organization’s name may not imply any form of

responsibility of the district, school site, or ASB.

• It is recommended not to use the name of the school or school mascot in

the name of the booster club or parent organization but if used, must add

“Booster” to the name.

• Must not use the school or district address on its letterhead or any

correspondence.

• Should create a unique logo/mascot, separate and distinct from the

school site logo or the district logo.

Membership in Booster Clubs or

Parent Organizations

• Membership is limited to parents, community members, and school staff.

Students may not be members but may volunteer.

• Membership fees may not be required for membership in the parent

organization or booster club.

Membership in Booster Clubs or

Parent Organizations, cont.

• Fees must never be required from students or from parents of

students for the student to participate in school activities.

• A booster club or parent organization may not unlawfully discriminate

against any parents, community members, or staff who wish to participate

in the booster club or parent organization’s activities.

Protect Against Conflict of Interest

Allegations

• District school staff members CANNOT sign booster club or parent

organization checks or invoices for clubs located at the site at which

they work.

• Any district employee, coach, or teacher whose own children may

benefit from the operations of a booster club or parent organization

may not serve as an officer in that booster club or parent organization.

Electing Officers - Tips & Pointers,

Best Practices

• All booster club or parent organization officers should be elected annually.

• All booster club or parent organization officers must provide complete

contact information to the school principal or designee.

• The school principal or designee must be notified in writing of any change

in booster club or parent organization officers.

Electing Officers - Tips & Pointers,

Best Practices, cont.

• All members of a booster club or parent organization’s executive board are

legally obligated to be prudent and reasonable in conducting themselves

to preserve parent organization or booster club funds and legally protect

the organization.

• All booster club or parent organization executive board members must

actively participate in the management of the parent organization or

booster club including attending meetings, evaluating financial reports, and

reading minutes.

Electing Officers - Tips & Pointers,

Best Practices, cont.

• Compensation:

• No member, management, executive, governing board member,

committee member, etc. should be compensated to participate in the

booster club or parent organization.

Electing Officers - Tips & Pointers,

Best Practices, cont.

• District employees may not serve on the executive board for any booster

or parent organization located at the site at which they work. This includes

holding any booster club or parent organization board or officer positions

such as:

• Treasurer

• Bookkeeper

• Fundraising chairperson

• Check signer

• Person designated to collect any fees, donations, checks, or cash

Governance – Committees

Audit Committee

• Annual internal reviews or independent external audits of the booster

club’s or parent organization’s financial records must be conducted.

• The annual review should be performed by at least two individuals who

are independent from the booster club’s or parent organization’s day-to-

day financial activities. If two independent individuals are not available,

the treasurer may conduct the review with one other independent

individual. All review reports should be signed by those conducting the

review and the organization president.

Governance – Committees, cont.

Audit Committee, cont.

• An annual external audit conducted by a certified public accountant is

highly recommended.

• All financial discrepancies discovered during the review or audit must be

brought to the booster club or parent organization president’s attention. A

plan for resolving all review or audit exceptions and financial discrepancies

must be proposed to the booster club or parent organization’s governing

board immediately.

Governance – Committees, cont.

Audit Committee, cont.

• The organization must make all booster club or parent organization

financial records available upon request of the audit committee, any

organization board members or the school site principal or designee.

Payments to District Employees

• Booster clubs and parent organizations MAY NOT make direct payments

to any district employee for services performed for the booster club or

parent organization.

• This prohibition includes payments in the form of gift cards.

• If a booster club or parent organization wishes to compensate a district

employee (e.g., a coach for services provided at a summer camp), the

booster club or parent organization must consult with the school site

principal or designee for the appropriate steps to do so through the

district payroll.

Internal Controls

Booster clubs and parent organizations need internal controls just as do

ASBs, school districts and any other well-managed business.

Because booster clubs and parent organizations tend to experience a

higher turnover of management and business staff, consistently following

good business practices and internal controls can be challenging.

Such turnover, the collection of a lot of cash, and many other reasons are

also why booster clubs and parent organizations are often thought of as

good targets for financial fraud.

What are Internal Controls?

• Policies and procedures designed to provide the governing board and

management with reasonable assurance that the district, including ASB,

achieves its objectives and goals. They include:

• Segregation of duties

• Limiting access to assets

• Management review and approval

• Reconciliations

• Maintaining established policies, procedures and standards of conduct

• Ensuring appropriate management tone

• “Tone at the top”

• Ensuring efficient and effective accounting

and business practices, policies and procedures

Internal Controls Resource

To further assist in establishing and maintaining proper internal controls,

accounting policies and procedures, and other forms of best practices, we

strongly recommend a free PDF copy of the Fiscal Crisis and Management

Assistance Team (FCMAT) Associated Student Body Accounting Manual,

Fraud Prevention Guide and Desk Reference at

www.FCMAT.org.

The FCMAT manual contains many useful checklists, forms, policies and

procedures, and other information that you may find very applicable,

adaptable, and useful for the successful operation of your booster club or

parent organization.

Examples of Internal Controls

• Complete purchase order/requisition prior to purchase

• Never pay expenses out of cash receipts

• Deposit cash and then write a check

• Keep the checkbook and extra check stock in a safe, secure place

• Void checks that are incorrect or not issued

• Never sign checks in advance -- have at least one backup signer (but can

be more)

• Use checks in proper sequence

• Never make check out to “cash”

• Ensure checks have two signatures

Examples of Internal Controls, cont.

• Receive the service/product/goods before making payment

• Original documents/receipts exist and proper authorization obtained

• Maintain a record of each meeting and the action(s) taken in them

• Reconcile bank statements within two weeks of receipt, with proper

review and approval afterward

• Always use cash controls

• Pre-numbered receipt books or tickets

• Adequately control where cash controls are stored

• Ensure financial statements are submitted and complete

• Maintain effective filing systems and records management

• Verify that proper signatures exist on all cash collection forms

Examples of Internal Controls, cont.

• Dual cash counts

• Always count funds with a witness/countersign deposit forms

• Use tamper-proof sealed plastic bank bags at all levels of custody

• Endorse all checks – “For Deposit Only …”

• Do not leave funds unattended on a desk

• If the person who normally receives cash is unavailable, assign another

individual and ensure they double count all cash

• Make timely deposits: daily if possible, but at least every 2-3 days

• Never leave undeposited money over weekends or holidays

• Never make payments to district employees including cash, check, or gift

card. (Doing so can cause serious IRS payroll tax issues for the

organization, the employee, and the district whether or not you issue a

1099.)

Examples of Internal Controls, cont.

• Always report overages and shortages in cash controls AND cash

• Maintain budgets for all activities

• Ensure proper cash handling and physical chain of custody for all cash

receipts

• No commingling of receipts from separate events

• Immediately deliver proceeds from all events to the bookkeeper

• Use pre-numbered tickets, receipt books, or tally sheets (e.g., cash

controls) at all events

• Complete cash receipts and deposit documentation for fundraising

events, concession sales, and other events

• Use cash boxes

Examples of Internal Controls, cont.

• Safe storage is a MUST

• The safest place for money to be is in the bank

• Second safest place for money is a SAFE

• If you cannot deposit the money in the bank that day - PUT THE

MONEY IN THE SAFE WITH A WITNESS PRESENT!!

What’s a Consultant?

• Not an employee

• Independent from the booster club or parent organization

• Disk jockey

• Photographer

• Is not paid as an employee in ANY other capacity

• If the proposed consultant is already a booster employee, they cannot be paid

as a consultant for this work

• Booster club must pre-approve the expense before the work occurs

• Paid directly by booster with a vendor check

• Fills out W-9 prior to working

• Income reported on IRS Form 1099 annually

Alcohol is Prohibited!

Possession and Sale of Alcohol

• NO ALCOHOL IS ALLOWED AT ANY BOOSTER CLUB EVENT ON

DISTRICT PROPERTY.

California Business & Professions Code Section 25680(a) states:

“Every person who possesses, consumes, sells, gives, or delivers to any other

person, any alcoholic beverage in or on any public schoolhouse or any of the

grounds of the schoolhouse, is guilty of a misdemeanor.”

• This prohibition includes possession and consumption of alcohol and

alcohol prizes, gift baskets and auctions.

Tobacco is Prohibited!

Possession and Sale of Tobacco

• NO TOBACCO IS ALLOWED AT ANY BOOSTER CLUB EVENT ON

DISTRICT PROPERTY.

• Under California Health and Safety Code Section 104420 and California

Labor Code Section 6404.5, United States Code Section 6083, the use of

any form of tobacco products at any time in district-owned or leased

buildings is prohibited on district property and in district vehicles.

• The prohibition of tobacco applies to all employees, students, and visitors at

any school-sponsored instructional program, activity, or athletic event held on

or off district property.

Questions?

Thank You For Attending