Minnesota Booster Club Filing Requirements

Forming a Nonprofit Corporation in Minnesota

A booster club files Articles of Incorporation under Chapter 317A with the Secretary of State: $70 by mail, or $90 in person or online (expedited). The articles need the purpose and dissolution language the IRS requires for 501(c)(3) status, the federal exemption for charitable and educational organizations. See How to Incorporate a Booster Club.

The corporation files a free Annual Renewal by December 31 of each calendar year, starting the year after incorporation (Minn. Stat. 317A.823). Missing it leads to involuntary dissolution. Reinstatement is free, but a dissolved club cannot produce the certificate of good standing that banks and the Gambling Control Board request.

State Tax Exemption

Minnesota has no separate income tax exemption application. Under Minn. Stat. 290.05, an organization exempt from federal income tax is exempt from the corporate franchise tax, except on unrelated business income (income from a regular business activity unrelated to the club’s purpose). A change in federal status must be reported to the Department of Revenue within 90 days.

Sales Tax

Purchases. Federal exemption does not carry over to sales tax. The club applies on Form ST16, Application for Nonprofit Exempt Status, and after approval gives vendors Form ST3, Certificate of Exemption. The exemption covers items used in the club’s charitable or educational work but never prepared food, candy, soft drinks, alcohol, or lodging. Goods bought for resale at a fundraiser can be bought on an ST3 as a resale purchase.

Sales. Two exemptions apply:

1. 24-day rule (any nonprofit). Sales at, and admissions to, fundraising events are exempt, including prepared food, candy, and soft drinks, if the club records all gross receipts, keeps a separate accounting for each event, and uses all net proceeds for charitable or educational purposes. If fundraising events exceed 24 days in a year, all gross receipts become taxable, not only sales after day 24 (Minn. Stat. 297A.70, subd. 14).
2. Youth group rule. A nonprofit that exists solely to provide educational or social activities for young people primarily age 18 and under may make its first $20,000 of fundraising sales each year tax-free, with no day limit. Whether a parent-run booster club fits this definition is unsettled; the Department of Revenue’s fundraising flowcharts are the place to check.

A club outside both exemptions must register and collect sales tax.

Charitable Solicitation Registration

A charity must register with the Attorney General’s Charities Division within 30 days after its contributions in an accounting year exceed $25,000, excluding the direct cost of prizes (Minn. Stat. 309.52). The fee is $25. Online donations count.

The small-organization exemption (Minn. Stat. 309.515) also requires that all work, including fundraising, be done by unpaid persons and that no officer benefit. Hiring a professional fundraiser ends it, and a club that pays a coach should confirm with the Attorney General whether the exemption still holds. The exemption for accredited schools does not extend to a separately incorporated booster club.

A registered club files an annual report by the 15th day of the 7th month after fiscal year end (July 15 for a calendar year; January 15 for a June 30 year end). The fee is $25, plus $50 if late. Total revenue over $750,000 requires an audit by an independent certified public accountant (CPA).

Raffles and Gaming

Raffles are legal for a nonprofit that can show an IRS 501(c) letter or a current certificate of good standing. The Gambling Control Board recognizes three tiers:

1. Excluded raffle (no filing). A 501(c)(3) club may award up to $1,500 in prizes across any number of raffles in a calendar year, or up to $5,000 at one event per year. The club keeps stubs, prize and income records, and proceeds records for 3.5 years. Local governments may add requirements.
2. Exempt permit. The club files Form LG220 for each event: $100, or $150 if received under 30 days before it. Limits are 5 events and $50,000 in prizes per calendar year, with 30 days’ notice to the city or county (60 in a city of the first class). Form LG220A, the financial report, is due within 30 days after each event.
3. License. Ongoing gambling requires a license, three years of existence, and 15 active members.

A club may use only one of the excluded or exempt categories in a calendar year.

At every tier, tickets may not be sold on the internet (online advertising is allowed) or paid by credit card. Persons under 18 may sell tickets but may not buy them or win. Share-the-pot (50/50) raffles are permitted with the split posted in the house rules. Electronic raffle systems are allowed by statute for licensed organizations only, and none is currently approved. See Online and Electronic Raffles.

Annual Compliance Calendar for Minnesota