Athletics Fundraising and Unrelated Business Income Policy

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Policy Name:  Athletics Fundraising and Unrelated Business Income Policy

Policy Number: STU-7003

Effective:  08/2020

Revised: 08/2019

 

Policy Statement

Athletics Fundraising and Unrelated Business Income Policy

Holy Family University's intercollegiate athletics program is focused on the educational well-being and academic success of its student-athletes.  The contributions from individuals and businesses help to provide student-athletes with the opportunity to compete at a high level while excelling in the classroom and engaging with the community.

The purpose of this policy is to ensure that revenue from athletics fundraising is reported by Holy Family in compliance with prevailing American Institute of Certified Public Accountants Not-for-Profit guidelines, IRS regulations, and the University's policies and guidelines, including the Gift Acceptance Policy.

The Office of University Advancement is responsible for receiving, processing, and acknowledging gifts made to the University in a timely, accurate, and personal manner.  These include cash gifts, which can take the form of currency, check, or credit card contributions; gifts of stock; and in-kind gifts and gifts of personal property.  University Advancement ensures that all donations comply with IRS regulations, and is solely responsible for issuing tax-receipt letters on behalf of the University.

 

Team Fundraising

All fundraising activities must benefit an individual team as a whole or a group of teams.  No fundraising may be conducted for the benefit of a specific student-athlete. 

The net revenue from fundraising activities that are to benefit an individual team or a group of teams will be considered budget-enhancing and will be added to the amounts budgeted by the University to support the teams.  All expenses and revenues associated with these activities are to be allocated and booked to a team's custodial fundraising account(s).  Startup funds and expenses for these activities should be paid from a team's custodial fundraising account(s) and not the Athletic Department's operating budget.

Any direct mail/email solicitations that ask for monetary contributions must be coordinated with University Advancement to ensure the messaging/timing works in context of overall University fundraising strategy.

Teams must complete and submit the Athletics Fundraising Approval Form to receive approval to hold fundraising activities.  Below are fundraising guidelines that must be followed by teams:

  • Alcohol may be served at a fundraiser. The Director of Athletics or his/her designee is required to attend the event and be present during the entire period alcohol is served. This person shall be responsible for compliance with Pennsylvania's liquor laws and the University's Alcohol Policy.
  • Games of chance, including 50/50 drawings and raffles, cannot be held without a proper license.
  • All fundraising materials/advertising need to be created or approved by the Sports Information Director.
  • The use of off-campus facilities to host a fundraiser requires a contract between the facility and the University. The facility may ask for a certificate of insurance (COI). Only the Vice President for Finance and Administration can sign contracts and provide a COI on behalf of the University.
  • Any payments with a charitable gift portion must be sent for deposit immediately upon receipt to the Office of University Advancement, which will issue tax-receipt letters to donors. All other payments are to be deposited immediately upon receipt with the Business Office. Checks must be made payable to “Holy Family University.”

 

Athletics Department Fundraising

Contributions that are not restricted by a donor to an individual team, a specific Athletics Department fundraising initiative, or are designated to “General Athletics” will be considered budget-relieving, and will be used to help offset the amount the University has budgeted for the Athletics Department.

Fundraising activities that have a revenue goal of $20,000 or more require the approval of the vice presidents for Student Affairs and University Advancement.

The revenue from the activities below may be budget-enhancing for the Athletics Department, an individual team or a group of teams, or budget-relieving for the University.

  • Sponsorship Opportunities (e.g., game programs, scorer's tables, scoreboards, field signage, Athletics website) — Managed jointly between Athletics and University Advancement, qualified sponsorship payments are charitable contributions to the University.

Revenue will be 100% budget-enhancing for the amount raised up to $10,000 by each team and the Athletics Department in a fiscal year.  Revenue over $10,000 per team and the Athletics Department in a fiscal year will be split 50% budget-enhancing/50% budget-relieving.

  • Naming Opportunities — Managed by University Advancement, the naming of athletic facilities are charitable contributions to the University.

Revenue will be 100% budget-relieving.

  • Apparel Sales — Managed by Athletics, non-Bookstore athletic apparel sales (in-person and online) are treated as unrelated business income, as is any revenue received from team apparel contracts.

Net revenue will be 100% budget-enhancing.

  • External Rental of Athletic Facilities — Athletic events managed by Athletics; non-athletic events managed by University Advancement. Revenue is treated as unrelated business income.

Revenue will be 100% budget-relieving.

  • Sport Camps/Clinics — Managed by Athletics, revenue is treated as unrelated business income.

Net revenue will be 100% budget-enhancing.

 

Definitions/Technical Information

Budget-Enhancing Contributions

Contributions that are restricted by a donor to an individual team or a specific Athletics Department fundraising initiative.

Budget-Relieving Contributions

Contributions that are not restricted by a donor to an individual team, a specific Athletics Department fundraising initiative, or are designated to “General Athletics” will be considered budget-relieving, and will be used to help offset the amount the University has budgeted for the Athletics Department.

 

From IRS Publication 526, Charitable Contributions:

Charitable Contributions

A charitable contribution is a donation or gift to, or for the use of, a qualified organization.  It is voluntary and is made without getting, or expecting to get, anything of equal value. 

Contributions You Can't Deduct

  • Contributions to Individuals

Contributions to individuals who are needy or worthy.  You can't deduct these contributions even if you make them to a qualified organization for the benefit of a specific person.  But you can deduct a contribution to a qualified organization that helps needy or worthy individuals if you don't indicate that your contribution is for a specific person.

  • Contributions From Which You Benefit

If you receive or expect to receive a financial or economic benefit as a result of making a contribution to a qualified organization, you can't deduct the part of the contribution that represents the value of the benefit you receive.

From IRS Publication 598, Tax on Unrelated Business Income of Exempt Organizations:

 

Unrelated Business Income

Unrelated business income is the income from a trade or business regularly conducted by an exempt organization and not substantially related to the performance by the organization of its exempt purpose or function.  Use by the organization, of the profits derived from this activity, does not, alone, make the activity substantially related to the performance by the organization of its exempt purpose or function. 

 

Qualified Sponsorship Activities

Receiving qualified sponsorship payments isn't an unrelated trade or business, and the payments aren't subject to unrelated business income tax.  

Qualified sponsorship payment.  This is any payment made by a person engaged in a trade or business for which the person will receive no substantial benefit other than the use or acknowledgment of the business name, logo, or product lines in connection with the organization's activities.  “Use or acknowledgment” doesn't include advertising the sponsor's products or services.  The organization's activities include all its activities, whether or not related to its exempt purposes

For example, if, in return for receiving a sponsorship payment, an organization promises to use the sponsor's name or logo in acknowledging the sponsor's support for an educational or fundraising event, the payment is a qualified sponsorship payment and isn't subject to the unrelated business income tax.

Advertising.  A payment isn't a qualified sponsorship payment if, in return, the organization advertises the sponsor's products or services.

Advertising includes:

  • Messages containing qualitative or comparative language, price information, or other indications of savings or value;
  • Endorsements; and
  • Inducements to purchase, sell, or use the products or services.

The use of promotional logos or slogans that are an established part of the sponsor's identity

isn't, by itself, advertising.  In addition, mere distribution or display of a sponsor's product by the organization to the public at a sponsored event, whether for free or for remuneration, is considered use or acknowledgment of the product rather than advertising.

 

From NCAA “Role of Boosters”:

Boosters play a role in providing student-athletes with a positive experience through their enthusiastic efforts.  They can support teams and athletics departments through donations of time and financial resources which help student-athletes succeed on and off the playing field.

Boosters, referred to by the NCAA as “representatives of the institution's athletic interests,” include anyone who has:

  • Provided a donation in order to obtain season tickets for any sport at the university.
  • Participated in or has been a member of an organization promoting the university's athletics programs.
  • Made financial contributions to the athletic department or to a university booster organization.
  • Arranged for or provided employment for enrolled student-athletes.
  • Assisted or has been requested by university staff to assist in the recruitment of prospective student-athletes.
  • Assisted in providing benefits to enrolled student athletes or their families.
  • Been involved otherwise in promoting university athletics.

Once an individual is identified as a “representative of the institution's athletics interests,” the person retains that identity forever.

Only institutional staff members are permitted to recruit prospective student-athletes.  Generally, NCAA rules prohibit anyone else from contacting (calling, writing or in-person contact) prospects or the prospect's relatives or guardian for recruiting purposes.

Students are still considered prospects even if they have signed a National Letter of Intent or any other financial aid agreement with a university.

Boosters are not precluded from continuing established friendships with families who have prospective student-athletes.  However, boosters may not encourage a prospect's participation in university athletics or provide benefits to prospects that were not previously provided.

If a violation occurs, it may jeopardize a student-athlete's eligibility for intercollegiate competition, jeopardize a school's membership status with the NCAA or cause a booster to lose access to all booster benefits.

 

Frequently Asked Questions

What are examples of impermissible recruiting activities?

As a booster, you may not:

  • Contact a prospect in-person on-campus or off campus.
  • Contact a prospect by telephone, email, Internet or letter.
  • Provide gifts or free or reduced-cost services to a prospect or the prospect's relatives or guardian.
  • Employ relatives, guardians or friends of a prospect as an inducement for the prospect's enrollment and athletics participation at a university.
  • Become directly or indirectly involved in making arrangements for a prospect or the prospect's relatives or guardian to receive money or financial aid of any kind.
  • Provide transportation for a prospect or the prospect's relatives or guardian.
  • Provide free or reduced-cost tickets for a prospect or the prospect's relatives or guardian to attend an athletic event.
  • Provide any material benefit (e.g., meals, cash) to the coach of a prospect, including high school, two-year college, AAU and summer team coaches.

 

What are examples of permissible activities?

Even though there are many rules prohibiting your involvement with prospects and the recruiting process, as a booster, you may:

  • Notify university coaching staff members about noteworthy prospects in the area.
  • Attend high school or two-year college athletic contests or other events where prospects may compete, provided no contact occurs.
  • Continue existing friendships.

 

What are examples of impermissible extra benefits for enrolled student-athletes?

As a booster, you may not provide a student-athlete or a student-athlete's friends, relatives or guardians:

  • Tickets to college or professional sporting events.
  • A special discount, payment arrangement or credit on a purchase or service.
  • Cash or loan or signing or co-signing of a loan.
  • Transportation, payment of expense or loan of any automobile.
  • Benefits or gifts based upon the student-athlete's athletic performance.
  • Free or reduced rent or housing.
  • An honorarium to a student-athlete for a speaking engagement.

 

What are examples of permissible benefits for enrolled student-athletes?

With the various NCAA rules and regulations regarding benefits to student-athletes, it may seem difficult to be a part of a university's athletic programs.  However, you can show your support as a booster in other ways. Boosters may:

  • Make contributions to university programs and other gift-in-kind arrangements.
  • Attend university athletic events and show student athletes you support their hard work and dedication to the university.

 

What is institutional control?

Institutional control of athletics is a fundamental requirement of NCAA legislation.  Specifically, the NCAA constitution states that the university must:

  • Control its intercollegiate athletic programs in compliance with the rules and regulations of the NCAA.
  • Monitor its program to insure compliance.
  • Identify and report to the NCAA instances in which compliance has not been achieved and take corrective actions.
  • Insure those members of university staff, student-athletes and other individuals or groups representing the university's athletic interests comply with NCAA rules and regulations. As a member of the NCAA, the university is responsible for the actions of its alumni, supporters and fans.

 

Are there any rules for the employment of enrolled student-athletes by boosters?

Student-athletes may only be compensated for work actually performed and at a rate commensurate with the going rate.  Compensation may not include remuneration for the value that the student-athlete may have for the employer due to the student-athlete's athletics status.  Transportation may not be provided to student athletes unless it is a benefit provided to all employees.