Tax rules for booster club silent auctions

First: is your club actually tax-exempt?

Many booster clubs are not, and a surprising number believe they are because the school is. They are separate. Your club is exempt only if it has its own determination letter. Find out which you are before you print anything that implies a deduction, and state it plainly on the auction page either way.

The fair market value disclosure

If your club is a qualifying charity, a bidder may deduct only the amount paid above an item's fair market value, and you must disclose that value at the time of the transaction. Put it on every item page. If your club is not exempt, say that instead — parents notice when a receipt does not arrive.

Individual fundraising accounts: the issue clubs get wrong

This is the one worth reading twice. Many booster clubs credit fundraising proceeds to individual families in proportion to how much that family sold, raised or worked — a "student account" or "individual fundraising account" that offsets that family's fees or travel costs.

It is common, it feels fair, and it creates real problems. Distributing an exempt organization's proceeds to individuals based on their fundraising participation raises private benefit and inurement questions that can jeopardize exempt status, and the amounts credited may be taxable to the family receiving them. Clubs have lost exemption over this.

For an auction specifically: do not promise, before or during bidding, that proceeds will be credited to particular families. If your club currently operates individual accounts, get advice on the arrangement before you add auction revenue to it — the auction is a good moment to fix it, not a good moment to extend it.

The safer structure is straightforward: raise into the general program fund, and allocate need-based assistance through a documented policy applied without regard to who fundraised.

Donated items and what the donor claims

Acknowledge in writing what a business gave without assigning it a value — that is the donor's responsibility. If your club is not exempt, say so in the acknowledgement so the business is not misled about deductibility.

Raffles are different

Raffle purchases are generally not deductible at all, and raffles are regulated as charitable gaming in most states, often with registration requirements and restrictions on school-affiliated organizations specifically. Check before you attach one: rules, approvals and equity.

Where auction revenue may be spent: bylaws and revenue allocation.

General information, not tax or legal advice for your club. Rules vary by jurisdiction and change — confirm with your athletic director and your state association before you act on anything here.