Should our booster club be incorporated?
Although there is no legal requirement that a school booster club incorporate, there are a number of advantages to incorporating.
Advantages to Incorporating
Decreases personal liability of officers/members of the group.
If a parent/booster group is not incorporated the individual members/officers of the group may be held liable for the activities of the organization. Therefore, if a legal claim is brought against an unincorporated parent/booster group and there is a judgment against the group, the personal assets (houses, cars, etc.) of the officers/members may be used to pay the judgment. This liability may be reduced by purchasing insurance for the parent/booster group. In addition, it is possible that the school's insurance policy may provide liability coverage. HOWEVER, you should never assume that the school has insurance covering the activities of the parent/booster group. Always check what policies the school has, whether they cover the parent/booster group and its officers/members, and whether any exceptions in the insurance policy exclude coverage for the activities that you believe are most vulnerable to legal claims. It's always a good idea to review the actual policy. It is a common misunderstanding that the school's insurance covers a parent group when it really doesn't.
Increases the control of the parent/booster group over its activities.
As a separately incorporated, tax-exempt entity the parent group, its officers and members will generally have greater control over the group's activities and operations. As an unincorporated school entity, the parent group is more subject to the control of the school, the school principal, the superintendent and other school officials.
Many groups find that their parent group and its activities are taken more seriously by all involved if the group is incorporated.
Disadvantages of incorporation
The primary disadvantage is the paperwork involved. To incorporate a group must file Articles of Incorporation in its state and pay a filing fee (generally $100 or less). Once incorporated the group must file a report each year with the state. Most state reports require that the organization's address be updated, if changed, and that the names and address of the current directors be listed. The report is generally simple to complete. Most states require a small annual fee of $50 or less. Failure to file the annual report with the state can lead to losing corporate status.
How does a parent group incorporate?
Most states have a form online that can be completed and filed to incorporate a parent group. Incorporation is fairly straightforward — just fill in the blanks. However, if a group plans to apply to the IRS for federal tax-exempt status or to join Parent Booster and obtain federal tax-exempt status, certain special language must be included in the Articles of Incorporation. This special IRS language is frequently NOT included in the state fill-in forms.
If desired, PBUSA will provide assistance to your group to complete and file for state incorporation. Simply apply for incorporation assistance when you complete the membership application.