Are Booster Club Scholarships Legal to Give Out?

Introduction

Many booster clubs decide that giving out a scholarship is a worthwhile endeavor.  And it is- booster club scholarships can give a student a leg-up in the world and relieve financial stress. But are booster club scholarships legal to give out?

What is A Booster Club Scholarship and Why Are They Popular?

Booster club sponsored scholarships are simply scholarships, usually given to a student, for a legitimate academic or social purpose that is in line with the booster club’s mission.

There are many reasons why booster clubs and scholarships go together.  Booster clubs are volunteer organizations that raise money for schools and often raise money for school extracurricular activities. Most of the money raised is generally used to pay for things like equipment, transportation, supplies, and so on – as long as the expenditure is inline with the organization’s mission.

Additionally, since the majority of the money used to give out these scholarships comes from donations and fundraisers, there is an opportunity for a number of positive ways to use those funds. Because booster club scholarship funding comes from people in the community who help are looking to do more for kids in their community a scholarship makes sense as another way to help those students.

 

How to Properly Set Up a Booster Club Scholarship

Yay -You can go get your scholarship set up! Well, not so fast, like everything else when running a booster club, it is important to make sure you set up your booster club scholarship the right way. The IRS permits a Booster Club to create a scholarship with the following parameters.

First and foremost, the scholarship must be approved by the IRS. This can be done in two ways:

1. When setting up the booster club and applying for its tax-exempt status
2. After the booster club has been set up, by sending an official letter to the IRS.

It is easier to get a scholarship program approved when first applying, so that is the recommended course of action. However in many instances a scholarship fund is an idea that occurs later once a club is more established. Either way, the process is not too incredibly difficult.

 

How A Booster Club Can Give A Scholarship (The Right Way)

Now, in order to get your scholarship program approved by the IRS, you need to demonstrate a few things:

• Your scholarship is for legitimate charitable purposes, such as paying for tuition or school supplies. It cannot be used for just anything.
• Your scholarship is open to a large group of people- for example, all students in a school or community. It cannot be granted only to favorites. All people in the eligible pool must have a chance to apply.
• Decisions must be made based on impartial requirements for each applicant, such as a minimum grade point average or proof of community service. It is important that all applicants have a fair chance at receiving the scholarship.
• The group of people giving it out must be shown to be impartial- for example, it cannot just be members of one family or friend group.
• You must keep records for the IRS.

Finally, once the application process has been created and approved, you can begin accepting applications from students. You will need to create a schedule for reviewing applications and awarding scholarships. Once this has been set up, then you can begin accepting applications from students and awarding scholarships based on this schedule.

 

What is the Purpose of a Scholarship?

The scholarship is financial support that comes in the form of money or other incentives and is usually awarded to students who meet certain criteria that can include academic achievement, athletic ability, or leadership.

In addition, scholarships can help students to achieve their goals and make society better since many college students who receive scholarships go on to become leaders in the community and contribute to society. They can also help others who have not had the same opportunities as them through their leadership in many organizations and communities.

 

Reasons A Booster Club Wants to Set Up a Scholarship

A booster club can help with many different things such as financial support, new equipment, training opportunities, and other resources. Booster club scholarships can add another level of support by helping students succeed at the next level – college. An art, athletic, music, leadership or drama scholarship can not only help with some financial considerations when a student goes to college, but can provide that child with the extra incentive they need to pursue higher education.  Consider the following reasons for granting your booster club scholarship when setting it up:

• Financial support
• Recognition
• Fundraising
• Community Support

Setting up booster club scholarships can be great for your community! It is nice to have multiple scholarships for deserving students instead of only one scholarship for the entire school district or state. A scholarship program will also increase awareness about the booster club and its mission.

 

How to Fund Booster Club Scholarships

There are many ways to fund booster club scholarships that are used to help students in need. Generally, these are many of the same booster club fundraising channels you are already familiar with, including:

1. Individual donors
2. Corporate donors
3. Fundraisers and carnivals
4. Sponsorships and advertisements

Some additional ways to fund a scholarship that you may not be familiar with, but should consider:

• Foundation and grant-making organizations
• Government and corporate grants
• Donations from alumni groups at the school or from a student’s family members or friends who have graduated from the school before them

 

The Impact of a Scholarship on the Student

A scholarship is a gift given to a student for their achievements. These include service to the school and/or community, athleticism, grades, creativity, leadership, or any number of skillsets that might relate to your booster club supported activity.

Scholarships give the student the opportunity to focus more on their growth as a student and less on the cost of college. The cost of college continues to rise and scholarships help by paying for books, room, and board, and other necessary costs they will incur. Beyond the necessities, a scholarship’s financial support can help ensure a student graduates in a timely manner rather than extending college by additional years due to costs. In turn this helps students get into the workforce earlier so they can start building their career.

Even at the post college career level, scholarships make an impact by helping a student land a job. Having been awarded a scholarship shows an employer that they have the drive to achieve their goals and succeed. It is possible that the student with a scholarship will have an edge over another applicant who did not receive any scholarships.

 

Positives and Negatives of Booster Club Scholarships

The decision to give out a booster club scholarship is something that must be weighed on an individual basis. There are many positives and negatives to consider.

The positives are that you will be helping a student in need, contributing to a worthwhile cause. Additionally, your scholarship will help increase the visibility of your organization in the community. Local media often covers booster club scholarships, so you will be attracting more donations with the scholarships.

The negatives are mostly budgetary and legal. A booster club scholarship is money that could be utilized in another way. Before you set up your scholarship, you need to make sure it will not conflict with the core mission of the organization. Additionally, you need to make sure that your tax-exempt IRS status will not be jeopardized by the scholarship, which means you will have to be careful to follow all of the requirements. Finally, it is important for you to check your state’s laws on this issue and make sure that your  booster club and its scholarship program are operating within the legal boundaries of your state.

 

Conclusion

A booster club scholarship is absolutely legal to give out. If you are interested in setting up a scholarship, make sure you follow all of the IRS and your state (if there are any) requirements. A booster club scholarship can be a great way to help students, the community and increase the visibility of your organization!