Delaware Booster Club Filing Requirements

Forming a Nonprofit Corporation in Delaware

The Division of Corporations (Department of State) files certificates of incorporation. A booster club forms as a nonstock corporation, which Delaware’s fee schedule treats as “exempt.”

1. Check name availability with the Division of Corporations.
2. Draft the Certificate of Incorporation for a nonstock corporation, including the purpose and dissolution clauses the IRS requires for 501(c)(3) status.
3. Name a registered agent with a Delaware address. A registered agentRegistered agentThe person or company designated to receive lawsuits and official state notices for the corporation at a street address in the state. Some states call it a resident agent or statutory agent.All terms is the person or company that accepts legal papers for the club.
4. File with the $109 fee, which covers the filing, indexing, data entry, and county recording fees for a one-page document. Each additional page adds $9 in county recording fees. A certified copy costs $50, and same-day or 24-hour service is extra.

Annual report

Every active domestic corporation files an Annual Franchise Tax Report by March 1 for the prior year. An exempt domestic corporation pays a $25 filing fee and no franchise tax calculation applies. Reports are filed online only. The Division states that failure to file the report and pay required taxes results in a $200 penalty plus 1.5 percent interest per month; the club confirms with the Division how that penalty applies to exempt corporations. Changing the registered agent of an exempt corporation costs $5.

State Tax Exemption

Delaware exemption from corporate income tax is automatic. Title 30, Section 1902(b) of the Delaware Code exempts corporations organized for religious, charitable, scientific, or educational purposes. There is no application and no fee. A booster club with unrelated business income (income from a regular business unrelated to its purpose) asks the Division of Revenue whether a Delaware return is due.

Sales Tax

Delaware has no sales tax, so there is no exemption certificate to obtain and no tax to collect on concessions, spirit wear, or catalog sales.

Delaware instead taxes businesses through license fees and a gross receiptsGross receiptsThe total amounts the club receives from all sources during its fiscal year, without subtracting any costs or expenses. Gross receipts decide which Form 990 the club files.All terms tax. A booster club with 501(c) status is exempt from both:

• Retail sales. Title 30, Section 2909(j) states that the retailer license and gross receipts provisions (Sections 2905, 2906, and 2912) “shall not apply to non-profit organizations exempt from federal income tax under § 501(c).”
• Services and other occupations. Title 30, Section 2301(p) exempts 501 nonprofits from the license fees and the gross receipts fee in Section 2301(a), (b), and (d).

The statutes exempt the fees; they do not say whether an exempt club must still hold a business license. A club that runs a year-round store or regular paid services asks the Division of Revenue whether a license registration is needed. Delaware vendors charge no sales tax on purchases, but out-of-state online purchases may include another state’s tax.

Charitable Solicitation Registration

Delaware has no general charitable solicitation registrationCharitable solicitation registrationRegistration with a state office, usually the attorney general or secretary of state, before asking the public for donations, typically renewed each year with a financial report. Whether it is required, and the thresholds and fees, vary by state.All terms requirement, so a booster club makes no state filing before asking Delaware residents for donations. The club still files its federal Form 990-series return each year. A club soliciting donors in other states, especially through online campaigns, may need to register in those states.

Raffles and Gaming

Raffles are legal in Delaware for qualifying organizations with a license. Article II, Section 17B of the Delaware Constitution permits lotteries not under state control when sponsored by volunteer fire companies, veterans’ organizations, religious or charitable organizations, or fraternal societies that:

• Have existed for at least two years
• Use net profits solely for the organization’s purposes
• Qualify under Section 170 of the Internal Revenue Code (contributions to a 501(c)(3) generally qualify)

Title 28, Chapter 15 of the Delaware Code sets the licensing rules, administered by the Delaware Board of Charitable GamingCharitable gamingRaffles, bingo, and other games of chance that state law allows a nonprofit to run to raise money, often under a state or local license with limits on prizes and on how proceeds are used. Whether a booster club may hold them varies by state.All terms:

• Per-occasion license. $15 for each occasion on which charitable gambling is conducted. Applications are written and notarized.
• Annual raffle license. $300, allowing up to 20 raffle events per year without separate Board approval of each event (notice requirements still apply).
• Who runs it. Active members of the organization, without unreasonable compensation.
• Report. A sworn statement within 60 days after each raffle, listing receipts, expenses, net profit, prizes, and the name and address of each prize winner.
• Online and 50/50. A 50/50 drawing is a raffle and needs a license. The statutes reviewed do not address online ticket sales; the club asks the Board before selling online.

The Constitution also ties lawful lotteries to voter approval in each of four districts (Sussex County, Kent County, the City of Wilmington, and the rest of New Castle County). The Board confirms whether raffles are licensed in the club’s district.

Annual Compliance Calendar for Delaware