P2P profits from Youth Soccer & the DA...

MWN said:
@espola,
Generally speaking, how its done is you create multiple entities, with 1 of those entities as the non-profit. The entities I generally recommend are:
  1. Intellectual Property, LLC - Holds onto the intellectual property / club name, marketing-website, etc. We generally separate out the IP because we can treat this differently and domicile the IP LLC in states that are friendly.
  2. Fixed Assets, LLC - Holds onto all real assets, such as, equipment, office buildings/space, lease rights, etc.
  3. Non-Profit, Inc. - Operates the youth clubs/teams.
The trick is to keep Non-Profit, Inc. a break even operation. It will pay license rights to use the IP to IP, LLC, and rent/lease/sub-lease all fixed assets from Fixed Assets, LLC. The only entity the public sees is Non-Profit, Inc. Any monies that Non-Profit, Inc. needs as capital will come in the form of loans from Fixed Assets, LLC, which may also have a secured interest.
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And, of course, hide all of this from the parents.
 
MWN said:
@espola,
Generally speaking, how its done is you create multiple entities, with 1 of those entities as the non-profit. The entities I generally recommend are:
  1. Intellectual Property, LLC - Holds onto the intellectual property / club name, marketing-website, etc. We generally separate out the IP because we can treat this differently and domicile the IP LLC in states that are friendly.
  2. Fixed Assets, LLC - Holds onto all real assets, such as, equipment, office buildings/space, lease rights, etc.
  3. Non-Profit, Inc. - Operates the youth clubs/teams.
The trick is to keep Non-Profit, Inc. a break even operation. It will pay license rights to use the IP to IP, LLC, and rent/lease/sub-lease all fixed assets from Fixed Assets, LLC. The only entity the public sees is Non-Profit, Inc. Any monies that Non-Profit, Inc. needs as capital will come in the form of loans from Fixed Assets, LLC, which may also have a secured interest.
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cool insight. on the tax return, or other public docs, any way to track/trace? was thinking the loan from FA llc.
 
Kante said:
cool insight. on the tax return, or other public docs, any way to track/trace? was thinking the loan from FA llc.
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Non-profit company has to file an IRS form 990. You can usually find those online and decipher some of the structure. If you want to find out how your kids club is doing, just search the legal company name and 990 in Google at least some of those links will have a copy of the PDF, if you're not sure on the legal company name then just search the EIN number. In addition all of these non-profit companies should be registered with the state of California Attorney General's office in the charitable registry
 
Wez said:
What's your point? Despite a 501c3 structure, Clubs still operate like a business. They charge for access to "professional" coaching and field space, among other items. Their "charitable" status doesn't mean they give away the farm. Most clubs have scholarship programs, but that's not enough to get everyone playing who wants to be playing.
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In my experience with actual not-for-profits (martial arts studios in NYC where everyone worked volunteer), you couldn't actually charge people for your services. We had to have memberships with "suggested donations" (which were suggested strongly). I don't know if that was the law or just the way we had to do it for tax reasons, but never have I signed my kid up for a soccer club and had any indication that it was anything but for profit.
 
focomoso said:
In my experience with actual not-for-profits (martial arts studios in NYC where everyone worked volunteer), you couldn't actually charge people for your services. We had to have memberships with "suggested donations" (which were suggested strongly). I don't know if that was the law or just the way we had to do it for tax reasons, but never have I signed my kid up for a soccer club and had any indication that it was anything but for profit.
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Not a legal expert on this topic, but my understanding is, club dues are to provide the service received. As long as the Board of Directors and Club leadership can provide proof that they have a charitable aspect to the organization, they are acting within the laws. If a club's leadership is pocketing excess earnings from club dues, each year, they would likely run into trouble. Most clubs pay their expenses and give the rest of the money out as scholarships ("giving the rest of the money out" is symbolic, it's more a matter of providing scholarships by not charging people and hoping not to have unpaid bills at the end of the day/year).
 
Wez said:
Not a legal expert on this topic, but my understanding is, club dues are to provide the service received. As long as the Board of Directors and Club leadership can provide proof that they have a charitable aspect to the organization, they are acting within the laws. If a club's leadership is pocketing excess earnings from club dues, each year, they would likely run into trouble. Most clubs pay their expenses and give the rest of the money out as scholarships ("giving the rest of the money out" is symbolic, it's more a matter of providing scholarships by not charging people and hoping not to have unpaid bills at the end of the day/year).
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When I was on the club BOD and had insight into those things, we paid the coaches and DoC a regular monthly salary, with the team manager (a parent volunteer) responsible for collecting any extra money for the coach's travel expenses and coaching beyond the 9 or 10 months covered by the standard contract. We also paid coaches a small bonus if they won their league circuit or did well in State Cup. Looking at it team by team, some made a "profit" for the club (income from player fees minus coach's pay), and some ran at a loss. Overall, we stayed close to the zero level, with sometimes a boost into our rainy-day fund from a successful tournament.

Some clubs are organized differently, with a self-perpetuating BoD that meets the letter of the law but is non-profit only in the sense that the bank account is emptied with bonus payments or higher salaries to those in charge at the end of every year.
 
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