MOUNT PLEASANT – The Westlake Athletic Booster Club has been raising money for local high- and middle-school sports programs for a decade, helping to fund such items as a new scoreboard, exercise and track-and-field equipment, and seminars for student athletes.
But in recent years they’ve been raising the money illegally. And they may not be the only booster club playing loose with IRS regulations.
Run by parents and athletic officials in the Mount Pleasant school district, the booster club has been soliciting tax-deductible contributions for years after it was stripped of its federal tax-exempt status. In fact, the club has not filed an annual financial report with the IRS since 2009.
The Westlake club is part of a booming national growth of parent-founded educational, cultural and athletic booster clubs. They have become an important — and, some parents contend, influential — source of additional funds for budget-strapped school districts. But they’re largely unregulated.
“What kind of an organization can you propose yourself to be when you can’t even do the simple things like file your tax returns?” said John Carminucci, a longtime Thornwood business owner who has become a vocal critic of the club. “If they had not done it for a year, that’s an ‘oops.’ But to continue year after year after year to collect public funds and donations under false pretenses of being a tax-exempt organizations, that’s an issue.”
“It’s called fraud,” said James Fishman, a professor at the Pace University School of Law who specializes in nonprofit law. “That’s not an administrative oversight if they know what they’re doing and that they shouldn’t be doing it. It’s charity fraud. It’s very plain that you cannot give out fraudulent information.”
“I thought I was giving money to a tax-deductible charity,” said parent Mike Nicosia. “I was claiming it on my taxes. Everybody who did that, I would assume, now has to worry about an audit or a liability as far as interest and penalties.”
In a message to parents last month the club called it “an unfortunate administrative oversight.”
Few are registered
Every high school in the country has, on average, seven booster clubs, and each raises $20,000 a year on average, said Steve Beden, executive director of the National Booster Club Training Council. And middle and even elementary schools are increasingly seeing booster clubs, something virtually unheard of a decade ago.
But Beden said only 12 percent are registered as federal 501(c)3 tax-exempt organizations — a designation that’s not required unless the clubs claim they have it, as with the Westlake club.
For the vast majority of booster clubs, not having the status is an innocent oversight: Beden said many club members simply don’t know that they can qualify for tax-exempt status, or are intimidated by the 26-page application the IRS used to require. A move by the IRS in July to streamline the process may help.
There are no state or federal regulations governing the operation of school-affiliated booster clubs, and few states have pushed for oversight. One exception is Ohio where, in 2012, a series of booster-club controversies prompted the state Attorney General’s Office to require those that raised $25,000 or more to register with the state.
“The challenge is you’ve got the wild west,” Beden said. “You’ve got an industry that for literally decades has self-controlled itself and nobody’s dictated to them. Over the last 20 years we’ve been pushing really hard, but it’s one of those things that it’s got to continue to change.”
A review by The Journal News of 30 Lower Hudson Valley booster clubs showed how loosely and inconsistently they are run — and how quickly they are growing. A check against a nonprofit database showed that only 22 of the local clubs are listed as active 501(c)3 nonprofit organizations.
Of those, four had not filed reports in up to four years but had not yet reached the threshold for having the status revoked. The rest were granted nonprofit status so recently that they have not yet been required to file.
Of the final eight local booster clubs reviewed by the newspaper, six were not on the IRS database but did not claim to have 501(c)3 status. The other two — the Ossining Athletic Booster Club and the Westlake Athletic Booster Club, which last filed in 2007 and 2009, respectively — were listed as revoked.
No nonprofit claim
The Ossining club had been raising money since 2007, but did not claim to be a 501(c)3 nonprofit until December 2013, when it applied for and was granted the status, said club President Jackie Kopera. The club has not been required to file with the IRS since it was granted the status but will file as required, she said.
“We never touted ourselves as tax-exempt or nonprofit,” she said. “We only recently received our 501(c)3 status. We never had it and, prior to that, we never touted or advertised the club as a nonprofit.”
Groups like the Ossining club that don’t claim tax-exempt status aren’t doing anything wrong, assuming they are upfront in how contributions are used. Hence the issue with the Westlake club.
The gaffe was uncovered by town resident Frank Morganthaler, a private investigator who was asked to look into the club by a group of local parents. He found is that the club had been stripped of 501(c)3 status in May 2013, although the club’s donation forms continued to claim that “donations are tax deductible.”
Officials at the state Attorney General’s Office, which oversees the state’s Charities Bureau, told The Journal News that they had no record of the Westlake club registered with the state as a active nonprofit.
The club is registered as a not-for-profit corporation with the state Department of State, but that is simply a first step in a process that requires nonprofits to register with the IRS to collect tax-exempt contributions.
Mount Pleasant schools Superintendent Susan Guiney said Thursday that the booster club was not affiliated with the school district, and therefore “they are responsible for monitoring themselves.”
Booster club President Anthony Sardo said Thursday that it was an innocent oversight and that club members were working with the IRS to bring their paperwork up to date.
“We’re glad it was brought to our attention and now we just want to rectify it, fix it and move on,” Sardo said. “We’re out there just to assist the schools, the kids, the programs, and do good things. There was no intent, no harm meant or anything. It was just a total, misfortunate accident.”
Staff writer Michelle Almonte contributed to this report.
Booster club national averages
7: Number of clubs at each high school
$20,000: Yearly amount each club raises
The Journal News reviewed 30 Lower Hudson Valley booster clubs and found that only 10 were listed as active on an IRS nonprofit database. Only five of those were up to date on required financial reports.
School-affiliated booster clubs, which are not regulated by state of federal laws, are entitled to raise funds without registering as federal 501(c)3 tax-exempt organizations — as long as they don’t claim they are.
How can you be sure a donation you make to a booster club is legally tax-deductible?
Ask if the club is a registered 501(c)3. You can also research the club yourself on the IRS database at www.guidestar.org
“You’ve got an industry that for literally decades has self-controlled itself and nobody’s dictated to them,” Steve Beden, executive director of the National Booster Club Training Council
“It’s charity fraud,” James Fishman, a professor at the Pace University School of Law who specializes in nonprofit law.