My son participates in a baseball team that incorporated as a 501(c)(3). We have never seen the bylaws of the organization. I was told at the beginning of the season that we had to pay a $300 fee. The director of the organization was ousted by his own board and I no longer want to be a part of this team. When I asked for my money back, I was told it was a donation and could not get it back? Is this true? Also, our team currently has a surplus of funds. Do we get that money back at the end of the season if we do not continue with the team?
This question raises a fundamental question that arises in most of these sports leagues: how do you characterize the payment asked of participants and their families in connection with their participation on the team? It may not make a big difference in your specific question, but it makes a big difference in whether the payments are deductible for federal income tax purposes. Are they charitable contributions for the benefit of the team as a whole (and therefore deductible) or are they a required fee to play, like the monthly charge at a fitness center to use the equipment (and therefore a personal expense that is not deductible)? There is a lot of misunderstanding, probably some intentional misinformation, and not much enforcement of the law on these questions.
A true donation goes to support the team, and is not recoverable by the donor. But if a kid can’t play without making the payment, it is hard to say that is really a donation, made with benevolence and no expectation of personal benefit. Saying the amount must be paid by the child or raised by the child and the family doesn’t change the situation and cause the payment to be a donation. If the child asks a neighbor to make a “contribution” so that the child may play, that rules out a donation for the neighbor because one can’t get a donation deduction if the payment is earmarked for the benefit of a specific individual. If the child and the family have a fundraising “goal,” but can still play whether or not they meet the goal, you could argue with justification that the payments are in fact contributions to support the team as a whole. But a lot of leagues have an absolute minimum for eligibility to play, and in that case, the payment is not a contribution.
In your case, if it is a contribution you can’t get it back at the end of the year because you gave it away, and if it is a required payment, it is probably a payment to participate and not returnable even if your son doesn’t play the whole year. In the latter case, it is a little like walking out in the middle of a movie and trying to get your admission fee back.