Riverside Unified School District Booster Club Training April

Riverside Unified School District Booster Club Training April 24, 2019 By Shaila Chamberlain, CPA

Welcome and Thank You! Booster Clubs fulfill an Important role in the lives of our children. By fundraising in the community, booster clubs can significantly improve the Quality of our kid’s high school experience. Thanks to your dedication, commitment and hard work, our kids get more equipment and training, travel to better tournaments and compete at a higher level than they would otherwise with District funding alone. 2

Your Goals are Our Goals RUSD strives to give our children the best educational experience possible. We work hard to keep them safe and try to ensure that all kids are treated fairly and with the respect that they deserve. We want our children to be competitive and to be recognized for their achievements. 3

What is a Booster Club? v. Booster clubs are formed by parents, community members and staff members to support school activities, such as athletic teams, band or mock trial. v. Booster clubs’ main activities are raising money and recruiting volunteers. v. Booster clubs are legally separate from Riverside Unified School District (RUSD). v. Booster clubs are legally separate from Associated Student Body (ASB). 4

If booster clubs are separate, why does the district care what we do? 5

The district and the boosters overlap ▪ The district sends the band on a trip to Disneyland, but the band boosters pay for the transportation. ▪ The football boosters run a snack bar on school property. Many booster activities take place on school property and almost all non-fundraising activities take place during school events. ▪ The debate club boosters bring lunch to kids before a meet (provided it’s not during the instructional day). (Activities held on school property must have prior approval) 6

The district is governed by State Law ▪ Ed Code 51521 requires the district to approve booster clubs before they can legally operate in connection with a school. Called Education Code or “Ed Code”, it regulates everything that may or may not take place on a school campus or on a school sanctioned trip or event. If your booster club is on campus, YOU must follow Ed Code, too! ▪ Ed Code 49530 -49536 requires the district to maintain certain nutritional standards during school hours. ▪ Ed Codes cover school safety, liability, equity and more. 7

How does a booster club apply for board approval? 8

District policy governs approval RUSD policy # AR 1230(a) addresses School. Connected Organizations • Requires a school-connected organization to receive permission from the school principal prior to starting operations. RUSD’s school board writes policies that school employees must follow. These policies follow Ed Code requirements. • Basic information, such as names and contact information for officers. • Copy of the bylaws • Where will funds go if club closes or is not renewed. • Application for Booster Club / Parent Organizations http: //riversideunified. org/cms/one. aspx? portal. Id=5 80805&page. Id=951477 ▪ Applications should be submitted by 5/15/19 if your club would like to operate over the summer. 9

Breaking Down the Application v. Name of Organization: Ideally, the organization should have a name that does not reflect the name of the school it represents v The Mean Green Football Machine Boosters is preferable to Washington High School Football Booster Club v. Mailing Address: Should not be the school’s address or the district office. Remember, the booster club is a separate entity v. Board of Directors: Please make sure that you fill this out completely. Your school administration needs to be able to contact you if any problems arise. v. Purpose: What is the purpose of the organization? If you are incorporated, you can find this statement in your articles of incorporation. 10

Breaking Down the Application II v. Annual Objectives: Your organization should have a rough idea of what you want to accomplish in the coming year. v Some examples: Purchase score board for the gym, send band to the Rose Bowl parade, buy trophies for tournament winners, etc. v. Banking information: Each booster club must have its own tax id # (EIN) in order to open a bank account. The club may not use RUSD’s EIN or bank account or an ASB bank account. v. Sellers Permit #: In some cases, a booster club may be required to collect and remit California sales taxes. https: //www. cdtfa. ca. gov/industry/nonprofit-organizations. htm 11

What Documentation is Required? v. Constitution: If your organization is incorporated, you’ll need the Articles of Incorporation (Form ART-PB-501(c)(3)). Otherwise, no constitution is required. v. Bylaws: Every charitable organization must have By-Laws. It addresses at least these 6 elements: 1. 2. 3. 4. 5. 6. Duties and Powers of the Executive Board and Officers The composition and membership of committees (including an audit committee) Successions – how will board members be replaced. Elections and qualification for office Finances – internal controls, authorization of purchases, approval process Meeting schedule – time, manner and frequency, as well procedures for special sessions; who conducts the meetings and what constitutes a quorum. 12

What Documentation is Required II? v. Proof of Tax ID – v 501(c)(3) Federal Determination letter – The IRS will send this letter once. Keep it forever. v. Proof of State Tax Exempt Status – The FTB will send this after you file Form FTB 3500. v. Seller’s permit – No, you are NOT exempt from paying sales tax. If your organization sells t-shirts, programs, candy bars, runs a snack bar or sells any other food or tangible item, the club may be required to obtain a seller’s permit and remit sales tax to the CDTFA. 13

More Documents!!! v. Hold Harmless Agreement – Legal doc that says the district will not be held liable for the mistakes of your club. v. Booster Club Manual Acknowledgement – Another legal doc that says you and all the board members received, read and understand the manual. v. Roster of activities – RUSD allows the clubs to use their ASCIP insurance. The district needs the list of activities to ensure that all are covered under the plan. v. Certificate of insurance – for any activities not covered by ASCIP 14

How do I start a booster club? 15

How to Start a Club 1. Take a deep breath – This sounds intimidating, but it’s not that bad. 2. Ask around – Is a booster club needed, or does the team just need some volunteers? The administration, coaches, directors, etc. will have good opinions. 3. Ask the parents – It takes a bit of work to run a club. Do you have enough parents to help. Are there parents with some helpful expertise? 4. Write By-laws – We discussed the 6 elements on an earlier slide. You can find templates online. 5. Incorporate or not? 16

How to Start a Club - II 1. Get an EIN – It’s easy to apply and you can do it online via the IRS web site www. irs. gov. A booster club MUST have its very own EIN to operate. It may not use the District’s EIN. 2. File for tax exempt status with the IRS. Use Form 1023 EZ or Form 1023. 3. Receive your determination letter – If your booster meets all the requirements, they will send you a determination letter recognizing the club’s exempt status. Keep this letter FOREVER. 4. California does not automatically grant exemption. File California Form 3500. 17

Why are some booster clubs incorporated and others are not? 18

Pros and Cons of Incorporation ▪ PRO – Limited liability for officers and members ▪ PRO – More fundraising opportunities Most booster clubs incorporate to limit their personal liability. This can be pretty important in an organization whose membership and officers are volunteers with limited training and change often. ▪ CON - Costlier ▪ CON – More paperwork 19

Pros and Cons of Associations ▪ PRO – Easy to form. ▪ PRO – Somewhat less expensive. A booster club can still obtain 501(c)(3) status for an unincorporated association. They still must file annual returns with the IRS. ▪ CON – Officers can be held personally liable 20

How to Incorporate ▪ File Articles of Incorporation with the Secretary of State Form ARTS–PB-501(c)(3) ▪ Pay the fee ($30) Before filing, you’ll need to make sure that your name isn’t already taken. The Secretary of State website, www. sos. ca. gov , provides instructions for inquiring about and reserving a name. ▪ A Statement of Information (Form SI-100) within 90 days and every other year. 21

Insurance 22

Insurance ▪ The District provides ASCIP – B (Alliance of Schools for Cooperative Insurance Programs) General liability coverage for events taking place on school or district property. If ASCIP-B is in place, the club is not required to purchase additional insurance. ▪ Many activities are excluded from ASCIP-B Coverage: – – – Animal shows Blood drives Fireworks Skateboarding Trampolines And many more… 23

Insurance II ▪ Other activities, can be approved under special arrangements or circumstances, but may not take place on school sites: – Climbing walls – Laser tags – Garage sales ▪ And still others are allowed with an additional premium (paid by the booster club): – Music concerts – Professional sporting events – Filming 24

If ASCIP-B doesn’t cover an event, can we still hold it? 25

Sure, for a cost! ▪ If ASCIP-B determines that your event is not insurable under their terms and conditions, a club can consider purchasing a special events policy. ▪ Maybe consider “Plan B”? 26

Roster of Activities Make sure to complete your ASCIP Roster of Activities Form when you apply for recognition to the district. This is a legal document that bounds ASCIP to coverage. If ASCIP doesn’t know about it, the event IS NOT insured. 27

Fundraising 28

Fundraising 411 ▪ Fundraising is regulated by Ed Code and Federal, State and Local laws. Booster clubs should educate themselves in all applicable laws before conducting any fundraiser. Submitting a list to your school of proposed fundraisers helps ensure that your club is compliant with Ed Code and that the event is not in conflict from the school’s educational goals. ▪ Students should not be required to participate in fundraising activities. ▪ Proceeds from fundraisers should be deposited into the club’s account – not the ASB. 29

Food Sales ▪ State law mandates the types of foods and the nutritional content that can be offered to students during school hours. RUSD (and you, the booster club reps) must follow state law in order to receive funding. – Booster clubs may sell food products from ½ hour after school to midnight. ▪ Food handling – Every person who is an open food handler must have a Food Handler’s Card. One person on site must be Serve Safe Certified. ▪ If you operate a snack bar, you may need a seller’s permit: – See pub 18, “Nonprofit Organizations” at www. cdtfa. ca. gov. 30

Use of Facilities Complete a Use of Facility form 2 weeks prior to your event. https: //rusd. civicpermits. com Booster clubs are Class 2 – Direct Cost (Youth-serving nonprofit group) 31

Raffles ▪ Charitable organizations may hold raffles, but must first register with the Attorney General’s “Registry of Charitable Trusts” (form CT-NRP 1). ▪ At least 90% must go to the organization. – Which makes 50 -50 drawings illegal by definition ▪ Are “opportunity drawings” exempt? – General and indiscriminate distribution of the tickets – Offered on the same terms and conditions as the tickets for which a donation is given – Do not have to pay to win ▪ For more information, visit the Attorney General’s website at https: //oag. ca. gov/charities/raffles 32

Best Practices 33

Did you Know? ? ? Keeping accounts of member contributions is not legal • There is no “pay to play” in California public schools. • Can’t require parents to contribute, fundraise, show up to meetings, “buy out” of fundraisers, etc. Therefore, the club cannot keep an account of each kid’s contribution 34

Did you Know? ? ? The District will purchase on your behalf • RUSD has relationships with hundreds of suppliers and access to the best rates. • RUSD can vet vendors on your behalf. • RUSD’s maintenance department can contribute valuable information about future operating costs and expected repair and maintenance of purchased property. • RUSD has legally binding contracts and union agreements with coaches and employees. 35

Did you Know? ? ? Records must be retained for every transaction • Permanent Records – Articles of Incorporation, IRS Determination letter • Three years – Records that support the income and expenses of your organization on the Federal tax return should be kept for 3 years after the return is due or filed, whichever is later. • Refer to the IRS website for more information: https: //www. irs. gov • A grantor, state agency, insurance company or creditor may require you to keep your records longer. Check your contacts for record retention 36 requirements.

Did you Know? ? ? Theft is a BIG problem in booster clubs • ALVARADO, Texas - The treasurer of the Alvarado High School Band Boosters has been charged with stealing thousands of dollars of the band's funds. ($46 k) • POLK COUNTY, Florida - On Tuesday, July 26, Detectives arrested Aaron Wilborn, 33, of Plant City for using the booster club credit card to spend over $9, 800 of their money, on himself from 2014 to 2015. • SANTA PAULA, California - High School band booster club official pleaded guilty to stealing $22, 000 and was sentenced to one year in jail followed by five years of probation. 37

Why is fraud so common in booster clubs? • It’s EASY: a lot of cash, little or no oversite, lack of internal controls, harried volunteers • So much TRUST: we are all friends here. We can’t imagine of our own betraying us. • Lack of TRAINING: A brand new board follows the example of the last board. 38

10 easy steps to fraud prevention 1. Never appoint a treasurer with known financial difficulties. If you have financial problems, politely turn down the position. 2. Two people should always count cash, then seal it up and deposit immediately. 3. Appoint an independent audit committee to review procedures and records once per year. 4. Board of Directors should study the financial reports, ask questions, view copies of checks written, inquire about unusual items 5. Create an annual operating budget and separate budgets for each fundraiser. Compare actual results against budgeted amounts and prior years. 39

10 easy steps to fraud prevention 6. Require 2 signatures for check-writing. 7. Standardize your procedures using preformatted forms, standardized email addresses, etc. Be organized. 8. Limit the number of cash handlers. Cash handlers should not be the same people who record the transactions or reconcile the bank account. No debit cards. 9. Reconcile the bank account every month. Inquire about anything odd. 10. Take minutes, read minutes, keep everyone involved and active and in the loop. Communicate!! 40

Finally… 41

Where to Go With Questions 1. www. irs. gov has a tab for Charities and Nonprofits with a huge amount of information and guidelines for nonprofit organizations. 2. www. riversideunified. org Forms are currently held under “Departments”, “Business Services”, Booster clubs 3. www. schamberlaincpa. com has a page dedicated to RUSD booster clubs, including required forms, instructions and tips, as well as templates for cash handling, reconciliations and treasurer reports. 4. www. reef 4 rusd. org for any club interested in forming a partnership with REEF in managing their club. 5. www. cdtfa. ca. gov for information on sales permits and taxes. Publication 18 specifically applies to nonprofit orgs. 6. www. ftb. ca. gov has information about CA tax exemption law. 7. www. oag. ca. gov/charities guides and resources for fundraising in California. 8. www. councilofnonprofits. org has a ton of information about nonprofits. I refer to this website often. 42

Thank you! 43