A year or so back, I volunteered for my son’s school activity booster club, and was asked to serve as Fundraising Coordinator. One of the first tasks asked of me was to investigate the possibility of getting the organization signed up for Amazon Smile, a program designed to allow NonProfits to partner with Amazon, and earn a % for any items purchased from Amazon. During the research phase, I unfortunately discovered that the organization had been operating without an EIN or Exempt status for several years, due to their failure to file the appropriate required forms – specifically their annual Federal IRS Form 990.

So I thought it might be a good idea to write a post on exactly HOW an organization such as a school booster club should go about obtaining their exempt status. Please keep in mind that this is general information only; the below should not be considered formal legal or financial advice, and you should ALWAYS discuss your specific situation with your lawyer or accounting professional. Also please note that I’m detailing how an Oklahoma organization would register as of the date of this post; the rules for your situation or state may differ.

Here in Oklahoma, there are four steps involved in the initial formation of a school booster club.

• Write Articles of Incorporation and Bylaws
• Register your Organization with the State of Oklahoma
• Apply for an EIN with the IRS
• Apply for Exempt Status with the IRS

Looked through these steps, and have a headache forming? You are welcome to contract us to do these steps for you. Check out our Entity Creation Services. (Does not include filing fees)

After your organization is successfully formed, click here for details on the the activities that must happen each year to KEEP your organization in good standing.

Articles of Incorporation and Bylaws

For a tax exempt organization, the IRS requires certain provisions to be included in the Articles of Incorporation. You can find details of these provisions here. In general, these provisions certify that the organization was formed for a not-for-profit purpose, will operate for a not-for-profit purpose, and if the organization ends/is dissolved, the dissolution of assets will be distributed for not-for-profit purpose. All of these provisions are designed to guarantee that no one sets up a not-for-profit in order to use the “bonus” of being tax exempt to make money for personal gain. The IRS provides a sample document for Articles of Incorporation here, and you are absolutely allowed to use these instead of writing your own. Just fill in the blanks, have your board sign them, and you’re done.

The IRS does not have any specific guidelines for Bylaws, but it is best to include details in your bylaws that describe the organization, its mission, its governance structure (i.e. what positions constitute the board, are they appointed or elected, for what length of term, etc), the duties of the board, policies and procedures relating to documents, finance, events, etc. Basically, the bylaws lay out how the organization should function, BEFORE questions arise within the organization. Here’s a sample document you are welcome to use for your bylaws that contain “Best Practice” policies for booster clubs. You can add or remove items as needed, but I’ve highlighted some of the areas that probably need to be reviewed before presenting them to your board/membership for approval. And apologies for repeating this ad nauseum, but it is YOUR responsibility to verify these documents, when complete, meet applicable state and federal laws – I’m providing them as a courtesy, and do not guarantee their function. I am not a lawyer, and I am not your accountant.

Register Your Booster Club with the State of Oklahoma

In order to apply for Federal Tax Exempt status, you must first register your organization with a state regulatory body. In Oklahoma, that would be the Secretary of State. This section walks you through the screens (as of the date of this post) you are required to complete in order to file. Once your application is submitted, it will be reviewed, and if approved, you will receive a formal notice from the State certifying you’re a “legal” organization.

Start your application process here. (You may need to register as a user on the site first. Make sure you SAVE your registration details somewhere because you will use them again to pick up a copy of your certification should your application be approved).

You must first determine whether your organization name is already in use by searching the database of registered corporations. Type your proposed name into the search box and click the magnifying glass. If your name is not in use, congratulations, you will be able to click the “Next” button to move on.

This page asks you to describe your organization – specifically its purpose, the date it will “begin”, and the date the organization will “end.” The good news is – if you’ve completed your Articles of Incorporation and Bylaws, you already have this information. Simply copy your purpose below.

Choose the Start Date (usually the day you are filling out the form OR the first of the month/year)

It IS possible to set up an organization for a specific time frame. But in the case of School Booster Clubs, the goal is typically that the organization will exist for years to come, and therefore, you will probably want to choose “Perpetual.”

The next page asks you questions about how to get in touch with your organization. A registered agent is any person over 18 years of age (or another legal business entity) that is designated as the person (or business) that is the legal contact for the organization, and can receive mail, communications, etc on behalf of the organization. They need to have a physical mailing address – not a P.O. While most booster clubs designate a board member as the registered agent, sometimes your CPA or Lawyer will consent to be the registered agent. Make sure you choose someone familiar enough with your organization that they will recognize any mail addressed to the organization.

At least three people must be willing to sponsor the organization for incorporation – generally these are members of your initial organization’s board of directors, though it does not have to be a board member. It’s not typical that a business is an incorporator of a school booster club, but it is allowed if you choose. You will enter their information (one at a time) into the form. They will be required to Electronically SIGN the application in later steps. (By typing their names into a form field).

The State also needs a record of all the Board Members and their contact information. So if you have a President, Vice President, Treasurer, Secretary, and maybe a couple of “Directors at Large” or other voting members of the board, you will need to list them along with their contact information. Add a record for each board member, and then add the total count of directors you plan to elect in your first meeting.

The next section asks for any attachments to your application. I recommend you attach a copy of your Articles of Incorporation and Bylaws here so the state officials can refer to them when reviewing your application.

You’re in the final stretch! Next up, it’s time for the three individuals/businesses who sponsored this application to sign the application document. You will need to add a signature for each person, and have them type their name to sign.

You will need to provide payment details for the filing fee – the initial filing fee is $25. Congratulations, you’ve successfully applied for a not for profit business certificate with the state! Now all you need to do is wait for the State to make a decision on your application. You should get the results of their decision via the email address you registered for the site. Processing times will vary, but I typically see these processed within 5 business days.

Register for an EIN with the IRS

Once the Secretary of State has approved your application, you can now apply for a Federal Employer ID Number, or EIN. You will need this EIN to file your annual tax forms, hire and pay employees (if applicable), and pay sales tax (if applicable). In many cases, you’ll also need an EIN to open a bank account for the organization.

Start this application process here. (Again, you may need to register as a user of the site before accessing.)

You start by designating the type of organization you’re filing for. You will need to Choose “View Additional Types, Including Tax-Exempt and Governmental Organizations”

Depending upon the mission of your booster club, select the appropriate type of organization. I normally see these set up as “Community or Volunteer Group”, “PTA/PTO or School Organization”, or “Other Non-Profit/Tax-Exempt Organizations”. You can click the names of these types, and see a brief description to help you choose.

You now need to provide the IRS with a main contact. I recommend choosing either your registered agent, or a member of your board, such as the Treasurer or Secretary.

Provide details of your organization – most of this can be pulled from your Articles of Incorporation or Bylaws.

The answers to these are generally No, but read and select the appropriate response for your organization.

School Boosters typically fall under Other.

Boosters probably should select Organization.

Choose the appropriate primary activity, and provide a brief description.

And that’s all! You now choose whether you want your EIN mailed via postal mail, or provided electronically via PDF.

Register for Federal Tax Exempt Status

So you’re now a legal entity in the eyes of both Oklahoma AND the IRS. The last thing to do is apply for federal tax exempt status. I highly, HIGHLY recommend that you apply for tax-exempt status, because I feel that it provides benefits to both your organization, and your supporters.

Benefits to Your Organization

• You will be able to participate in opportunities available only to NFPs, such as Amazon Smile, Giving Tuesday, GoFundMe, and other national or franchise charity programs.
• You qualify for many employers’ giving and volunteer matching programs. These programs allow employees to donate money or time to your organization, and they will MATCH a certain percentage of that donation with additional cash. For example, back when I was employed at HCA Parallon, I was able to donate $500 to my school’s Baseball organization, and HCA/Parallon matched that donation 100% and cut a check for an additional $500. They doubled my donation with no additional money out of MY pocket. It’s always good practice to ask your donors to check with their employer’s HR department to see if they have matching programs.

Benefits to Your Donors

• Your business donors can* deduct donations to your club regardless of whether they “get” anything in return. Sometimes, your club may offer advertising opportunities to local businesses in exchange for cash – i.e. placement of the business logo on a t-shirt, sign, event flyers, etc – these are typically deductible to the business as advertising expense. But if they aren’t getting any free advertising, and there is no business purpose for their donation, they cannot deduct their donations to you for income tax purposes UNLESS you are Federally recognized as a Tax-Exempt Organization
• Similar tax benefits apply to individuals. In fact, in 2020 and 2021, the COVID CARES ACT provided for a tax credit for folks who gave to a charitable organization, even if they did not itemize.

You’ll first want to verify you are eligible by clicking the link to Check Eligibility Worksheet (page 13 in this document).

If your organization does meet the requirements, here are the instructions. Start your application here. (you know the drill; register first) My comments are in grey.

Depending upon the expected size of donations you expect, your answers may vary from the below screenprints – make sure you read each question carefully and answer according to your situation.

If you followed the instructions above, you should choose Corporation below, and enter the date you filed with the State of Oklahoma for incorporation date.

Another section regarding mission and activities – have you noticed that they REALLY care that you’re operating as a not for profit in more than “name only”? 🙂

Your NTEE code will vary based on the type of booster club you are organizing. Take advantage of the instructions they provide and choose the one best suited to your org.

Your answers may vary from the below. Again, I recommend you take advantage of clicking on the small question mark icons near each question for clarification on how to respond appropriately.

If you’ve never before applied for Tax-Exempt/NFP status, leave this screen blank. If you are filing for a Reinstatement because your status has lapsed, select the appropriate response.

You need to have a board member or registered third party representative sign your application. After this page, you will navigate to payment, review, and confirmation.

CONGRATULATIONS!

Once you’ve completed these steps and received your approval documents, you’re officially a bona fide tax exempt booster club!