managing athle,c boosters & other outside groups athle… · boosters and a youth wrestling...
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ManagingAthle,cBoosters&OtherOutsideGroups
PeterT.ZawadskiJune24,2016
Whydoesthisma;er?• Boostergroupsandparentorganiza>onsprovidefundsthatdistrictscouldnotgenerateotherwise
• Theyalsoprovideanavenueforparentsandthecommunitytoplayaroleinthedistrict
• Boostergroupscanvaryinthenatureoftheirrela>onshipwithschoolboardsbasedonhowthegroupisorganized
• Aboostergroup’sorganiza>onalstructure,aswellasfundsitgenerates,dictatesthatgroup’slegalrequirementsunderbothOhioandfederallaws
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OhioBoosterClubMisdeeds• June2006:Findingforrecoveryof$1,800againsta
cheerleadingadviserovershoesandcampfeespaidforbycheerleaders.
• October2008:AKePeringwomanwaschargedwithstealingmorethan$5,000fromtheFairmontAthle>cBoostersandayouthwrestlinggroup.
• January2010:Aformersuperintendentwassentencedto8yearsinprisonforstealingalmost$300,000inClyde-GreenSpringsExemptedVillageSchoolDistrictfunds,including$161,725from6differentboostergroups.
• November2011:TheformertreasureroftheFranklinHighSchoolbandboosterswasorderedtorepay$12,999forstealingcampfundsandconcessionstandreceipts.
OhioBoosterClubMisdeeds(cont’d)• December2011:APorneyGeneralfiledacivillawsuitclaiming
moneylaundering,theaandracketeeringbytrusteesofaMansfieldsportsboostergroup.
• March2012:TheformertreasureroftheNorthmontbandboosterswassentencedtoayearinprisonandorderedtorepaytheclub$10,136.
• July2012:Theformertreasureroftheathle>cboostersintheClinton-Massieschooldistrictwasindictedongrandtheachargesinvolving$55,000missingfromtheclub’sgeneralandstadiumfunds.
• September2012:Theformerpresidentofanathle>cboosterclubinNiles,TrumbullCounty,appearedincourtonchargesthathestolemorethan$21,000thatwassupposedtobeusedtosupportthevarsityfootballteam.– SOURCE:LawrenceBudd,BoosterClubsFundsFaceStateScru2ny,DAYTONDAILYNEWS,Sept.25,
2012.
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GovernanceandStructure• TherearenoOhiolawsthatspecificallyapplytoboostergroupopera>onorforma>on
• Whileboostergroupscansupportpublicschooldistrictac>vi>es,theyarenotpublicen>>esandtheirofficersarenotpublicofficials
• Also,despitethefactthattheymayraisefundsthatsupportdistrictac>vi>es,theyarenot(andshouldnotbeviewedas)extensionsoftheschooldistrictorboardofeduca>on(BOE)
Non-ProfitOrganiza,ons• ThetypicalboostergroupisanNPO,alsoknownasa501(c)(3)becauseitisgovernedbythatsec>onofthefederaltaxcode
• AllNPOsmustbeformedforcharitable,educa>onal,religious,scien>fic,communitydevelopmentorothersociallybeneficialpurpose
• NPOscanhaveavarietyofcorporatestructures(i.e.unincorporatedassocia>ons,limitedliabilitycompanies),butmostpopularisthenonprofitcorpora>on(NPC)
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• AnNPCisdefinedinOhiolawasacorpora>onformedforotherthanpecuniarygainorprofit,andwhosenetearningsarenotdistributabletoitsmembers,directors,officers,orotherprivatepersons
• NPCs,likeotherNPOs,canhaveemployees,butthentheNPCissubjecttopayrolltaxes,workers’compensa>onrequirements,andotheremploymentregula>ons
• Theperson(s)desiringtostartaboostergroupwillberesponsiblefordeterminingitscorporatestructure;adecisionmadeen>relyindependentlyfromaBOE
• RequiredfilingwiththeOhioSecretaryofStateandapplyingfor/maintainingtaxexemptstatuswiththeIRSaretheresponsibilityofthegroup’sdirectors,nottheBOE
• NPOsneedtoobtaintheirowntaxIDnumbersandpostalpermits
• Nonetheless,soundBOEpolicywouldhaveadministra>onconfirmthatboostergroupsareincompliancewithallrequiredfilings
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Rela,onshiptoBoardofEduca,on• BoostergroupscaneitherbeofficiallyrecognizedbytheBOEortreatedasothercommunitygroups
• Ifthegroupisofficiallyrecognized:– BOEpassesaresolu>onannuallyrecognizingthegroupasaschool-sponsoredorganiza>on
– WriPenagreementexecutedbetweenBOEandgroup– Approvaltouseschoolname,logo,emblem,mascot,etc.forfundraisingpurposes
– Chaperonesandvolunteersmustbefingerprinted– BOEpolicyshouldrequireadministra>veapprovalofboosterevents/ac>vi>esandpermitadesignatedofficialtoaPendboostergroupmee>ngs
• Ifgroupdoesnotgetofficialrecogni>on:– Treatedlikeanyothercommunitygroup,i.e.BoyScouts,4-HClub,MADD
– MustcompleteBOEfacilityuseformsandcomplywithallrules
– Mustbeclearinadver>singandateventsthatthegroupisnotBOE-sponsored• Iftheshowchoirboostersareraisingmoneyforcostumes,theycannotusetheBOElogoonflyerswithoutpriorapprovalfromtheBOE
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AgreementforRecognizedGroups• Setsforthinwri>ngthetermstheBOErequiresforofficialrecogni>onandmaintenanceofthatrecogni>on– Compliancewithstatutes– ProvideBOEwithcopiesofallfilingswiththeOhioSecretaryofState,OhioAPorneyGeneral,OhioDept.ofTaxa>on,andtheIRS
– ProvideBOEwithcopiesofallannualtaxandauditreports
Addi,onalItemsinAgreement! UseofBOEname,emblem,mascot,etc.! Requirementtopar>cipateinannualNPOtrainingputonbytheOAG
! Reimbursementforinsurancecoverage! Handlingoffunds! DegreeofoversightbyBOE• Boardneedstoensureit’sprotected,andshouldhavehandsinboostergroupfunds
! Employeeinvolvementinboostergroups
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• BEADVISED:theOAGrecentlyissuedarulerequiringboostergroupwithgrossreceiptsof$25Kormoretoregisterannually
• Boostergroupsmustsubmit: ! Annualreportsandtaxinforma>on! Ar>clesofincorpora>on! Bylaws! Cons>tu>on! IRSdetermina>onoftax-exemptstatusandno>ceifstatusisrevoked
! No>fica>onofdissolu>on! Annualfeebetween$50-$200dependingonassetsheld
BoardPolicyandBestPrac,ce• TheBOEshouldhavepoliciesregula>ngtheac>vi>esofthesegroups
• TheBOEmaywanttoincludelanguageinthepolicyregardingtheuseofdistrictname,mascot,etc.,andcompliancewithOhiorulesforcharitableorganiza>ons
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• Policyshouldsetforth:– Appropriateseongsandac>vi>esforboosterfunc>ons,i.e.gambling/alcohol,insurance
– Whetherfunc>onsandfund-raisingac>vi>esmustbeapprovedbytheBOE
– Useandcontrolofboosterfunds– Righttolookatbookstoensurefundsarehandled,maintained,documentedandspentappropriately" Valuingin-kinddona>ons,incomestatements,expenses
" Sinceschool/districtisabeneficiaryofthefunds(i.e.newbanduniforms),ithasaninterestinwhetherthefundsareproperlyhandled
ShouldaBOEmemberordistrictadministratorbeaboostergroupofficer?
• Nolawsprohibitthisprac>ce,butit’snotagoodidea
• Theopportunityforconflictsofinterestistoogreatandcreatesanappearanceofimproprietysincetheindividualwillbeservingtwomasters
• BOEshaveenoughissuesontheirplateswithoutinvi>ngaddi>onalscru>nybyhavingtheiremployeesandmembersserveonboostergroupssuppor>ngcertaindistrictac>vi>es
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Insurance• BoostergroupsandtheirofficersarenotprotectedbyOhio’ssovereignimmunitylawsortheBOE’sliabilityinsuranceevenifthegroupisofficiallyrecognizedsotheyshouldobtainadequategeneralliabilitycoverage
• Addi>onally,aBOEcanpurchaseapolicytocover“schoolsupporten>>es”againstliabilityfordamagesorinjurytopersonorpropertyifcertaincriteriaaremet
• A“school-supporten>ty”isanyNPOformedforthesupportofschooldistrictprograms
• Exceptforfindingsofrecoveryinanauditreport,aBOEmayindemnify,defend,andholdharmlessa“schoolsupporten>ty”againstacivillawsuit,andmayprovidefortheen>ty’sdefenseinacriminalproceeding,if:– En>ty/individualwasac>nginproperscopeofservice– En>ty/individualwasac>ngwithgoodfaithbeliefthatconductwaslawfulandinthedistrict’sbestinterest
– Expensesandobliga>onsmustnotexceedamountsappropriatedforsuchpurposesbytheBOE
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• BOEmustadoptaresolu>onspecifying:– Theamountofinsurance– Thenecessityofinsurance– Statementofes>matedpremiumasquotedinwri>ngbytwoinsurancecompaniesifmorethanonecompanyofferscoverage
• Purchasefromproperlylicensedcompanyofferingthelowestbid/pricequota>on
• BOEmustrequirethegrouptoreimburseitforcostofcoverage
BoosterGroupAc,vi,esOnDistrictPremises
• Whetherofficiallyrecognizedornot,uponrequestandpaymentofareasonablefee,aBOEshallpermituseofschoolbuildingandpropertytoholdeduca>onal,religious,civic,socialorrecrea>onalmee>ngsorentertainment– Mustbenonexclusiveandopentothepublic– MustfollowBOEpolicyforfacilityuse
• BOEcanrequiregrouptopayfordamageaboveordinarywearandtear,andactualexpensesforlight,heat,andjanitorialservice
• BOEmustmakedecisionaboutwhethertopermitgamblingandsaleofalcohol
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AlcoholSales• RequiresOHDept.ofCommercepermitsF,F-2orF-6andalcoholpurchasefromallowablesuppliers
FPermit:– Allowstheholdertosellbeer– Issuedtoanassocia>onof10ormorepeople,alaborunion,charitableorganiza>on,oremployerof10ormorepersons
– Permitgoodfor5daysmax– Nomorethan2permitsissuedtosameapplicantinany30-dayperiod
– Specialeventsincludesocial,recrea>onal,benevolent,charitable,fraternal,poli>cal,patrio>corathle>cpurpose
– Eventmustbenot-for-profit
AlcoholSales(cont’d)
• F-2Permit:– AllowsNPOstosellbeer,wineandmixedbeveragesforspecialevents
– Individualdrinksalesonly– Eventheldonpremiseslocatedinapoli>calsubdivision
– “Premises”isclearlydefined– Permitgoodfor4daysmax– IndividualNPOscanonlyreceive2permitsperyear
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AlcoholSales(cont’d)• F-6Permit:– Allowsforthedistribu>onofwinefor501(c)(3)en>>es– Permitgoodfor3daysmax– Costcanbeincludedinadmissionprice– Organizerscanassistwithpouring– Canreceive6permitsperyear
• Applicantsforpermitsmustno>fythechiefpeaceofficerofthepoli>calsubdivisionofthedate,place,>meanddura>onoftheevent
• ExceptforF-2permits,iftheeventisheldwithin500feetoflandcontainingaschool,church,library,publicplaygroundortownshippark,thenno>ceandahearingmayapply
• Restric>ons:– Permitgoodfor5daysmax– Nomorethan2permitsissuedtosameapplicantinany30-dayperiod
– Specialeventsincludesocial,recrea>onal,benevolent,charitable,fraternal,poli>cal,patrio>corathle>cpurpose
– Eventmustbenot-for-profit
Gambling• GamblingforprofitisillegalunlesspermiPedbystatute
• Twoclassifica>onsofgamblingunderOhiolaw:– “Schemeofchance”isaslotmachineorloPery(unlessotherwiseauthorizedunderanotherchapteroftheORC),numbersgame,poolconductedforprofit,orotherschemeinwhichapar>cipantgivesvaluableconsidera>onforachancetowinaprize,butdoesnotincludebingo,askill-basedamusementmachine,orapoolnotconductedforprofit.“Valuableconsidera>on”isseparatelydefined.
– “Gameofchance”meanspoker,craps,roulePe,orothergameinwhichaplayergivesanythingofvalueinthehopeofgain,theoutcomeofwhichisdeterminedlargelybychance,butdoesnotincludebingo.
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• Gamblingconductedbyacharitableorganiza>onforfundraisingpurposesisallowed.
• Requirementstoqualify:– ReceiptofalePerfromtheIRSdeterminingittobea501(a)or501(c)(3)tax-exemptorganiza>on
– Thecharitableorganiza>onsponsoringtheeventmusthavebeenincon>nualexistenceinOhioforatleast2years
• Addi>onalrestric>onsongamblingfundraisers:– Gameofchancecannotbeconductedduringorwithin10hoursofanybingogame
– Gamblingac>vi>esmustberestrictedto“gamesofchance”or“schemesofchance”
– Fundraisingac>vitycannotbea“skill-based”ac>vity
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– CrapsandroulePeareprohibitedfromcharitablefundraisingac>vi>es– “Gamesofchance”canonlybeconductedduring“fes>vals”thatdonotexceed4daysandnotmorethantwiceayear,orforfes>valsthatlast5consecu>vedays,notmorethanonceperyear
– “Gamesofchance”canonlybeheldonpropertyownedbythecharitableorganiza>onorpropertyleasedtothembyagovernmentalen>ty
– Charitableorganiza>onsmustobtainalicensefromtheofficeoftheAPorneyGeneraltoconductabingogame
– Individualshelpingwiththegamblingfund-raisercannotbepaid,eitherdirectlyorindirectly
– Aaerprizesarepaidout,allmoneymustbegiventotheschoolorretainedbythe501(c)(3)organiza>onforuseincharitablepurposes
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IndividualFundraisingAccounts• IFAsarepopular,butusuallyillegal• IFAsareprohibitedin“charitable”organiza>ons,suchas501(c)(3)s,schools,andboostergroups
• Ifaboosterclubconfersabenefitonapar2cipantinreturnfortheirfundraisingac2vi2es...theboosterclubisprovidingaprivatebenefittothatpar2cipant.Consequently,suchprac2cescouldresultintheorganiza2onfailingtobedescribedinsec2on501(c)(3).2011IRSMemoranda
• Chari>escanonlybeoperatedforlimited,sociallybeneficialpurposesandallac>vi>esmustbeinfurtheranceofthosepurposes
• IRSinterpreta>onisthatanindividualisnotacharitablepurpose,soIFAsthatgivebenefitstoprivateindividualsdefeatthecharitablepurposeofthatorganiza>on
• IRSwantsanyfundsgeneratedtogototheorganiza>onasawhole
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• Thesameprohibi>onappliestovolunteerhours• BOEsshouldincludelanguageintheiragreementwithboostergroupsprohibi>ngIFAs
• Allfundraisingshouldbevoluntary– Studentsshouldnotberequiredtopayanon-par>cipa>onfeeiftheydonotwanttopar>cipateinafundraiser
– BUTstudentscanberequiredtopar>cipateinfundraisingasacondi>onofmembershiponthefootballteam,marchingband,chessclub,etc.
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IssuewithNon-Par,cipa,onFees• Aproblemwithrequiringstudents/parentstopar>cipateinfundraisingariseswhenpar>cipa>onisindirectpropor>ontothebenefitstheyexpecttoreceivefromafundraisingac>vity– “ShowChoir”Example
• Non-par>cipa>onfeesarepermissiblewhenstudentsarenotrequiredtoraiseaspecificamountandthenon-par>cipa>onfeeissetatasingle,fixedamountforallfundraisingevents
Non-Par,cipa,onFeeBestPrac,ces
• Anon-par>cipa>onfeeshouldnotequaltheamountastudentisexpectedtoraise
• Studentsshouldnotbeprohibitedfrompar>cipa>nginthebooster-supportedac>vityorfromreceivingadistribu>onofthetotalfundsraisedbecausetheypaidthenon-par>cipa>onfee,areexcusedfromthefundraiser,ordonotraisetheexpectedamountforapar>cularfundraiser
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IFAsCreatePoten,alforPenal,es
• IFAsmayresultinthelossoftax-exemptstatusandtheimposi>onoflargemonetarypenal>es
• Schooldistrictsarenotclassifiedas501(c)(3)sbutIRSregula>onsapplysimilarlimita>onstothem
• IfaschooloperatesIFAsoracceptsdona>onsthatconferaprivatebenefittoanindividual,thedistrictmaybepenalizedbytheIRSinasimilarmanner
Disincen,vesWillArise
• Thisconceptofcoopera>veorcollec>vefundraisingcreatesadisincen>ve,assomestudentsmaybelessinclinedtopar>cipate
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LiabilityandEthicalIssuesRiskManagement
• Boostergroupsshouldbeencouragedtodevelopariskmanagementprograminconsulta>onwiththeirinsurancecompanyandtheBOE
• Acomprehensiveprogramwillinclude:! Developmentofinternalcontrolsforfiscalmanagement
! FollowingBOEpoliciesandadministra>veguidelines
! Holdgroupofficers,employees,andvolunteersaccountable
! Trainingofficers,employees,andvolunteersonfiscalmanagementandliabilityissues
CriminalRecordsCheck
• Whilenotrequiredbylawforboostergroups,itisabestprac>cetorequirecriminalchecksforallboostergroupofficers,employees,andvolunteerswhowillhaveaccesstostudents
• Ohiolawrequiresthesheriff’sofficetoprovidesexoffenderno>fica>ontovolunteerorganiza>onshavingcontactwithminors,ortoanyorganiza>onthatrequestsno>fica>on
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TitleIX• TitleIXprohibitssex-baseddiscrimina>onineduca>onalprogramsandac>vi>es
• Boostergroupdona>onsmayresultinTitleIXliabilityforadistrictifthefundsarenotequallydistributedamongboys’andgirls’teams
• Boostergroupsoaengenerateanddesignatemoneyforaspecificsport,whichleadstoanimbalanceamongsexes
• ItistheresponsibilityoftheBOEtocorrectanyimbalance,whichmayentailalloca>ngitsownresources
• OCRstatesintheTitleIXAthle2csInves2gator’sManual:– Whereboosterclubsprovidebenefitsandservicesthatassistonlyteamsofonesex,theins2tu2onshallensurethatteamsoftheothersexreceiveequivalentbenefitsandservices.Ifboosterclubsprovidebenefitsandservicestoathletesofonesexthataregreaterthanwhattheins2tu2oniscapableofprovidingtoathletesoftheothersex,thentheins2tu2onshalltakeac2ontoensurethatbenefitsandservicesareequivalentforbothsexes
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Danielsv.SchoolBoardofBrevardCty.995F.Supp.1394(M.D.Fla.1997)
• Boostergroupmoneywasusedtogivehighschoolboys’baseballteamanelectronicscoreboard,baongcage,bleachers,signs,bathroomfacili>es,concessionstand,pressbox,announcersbooth,andfieldligh>ng
• Nofundswereusedforthegirls’soaballteam• Thecourtissuedapreliminaryinjunc>onorderingtheBOEtoprovidecomparablefacili>esforthesoaballteamincludingremovalofbarrierssothefacili>escouldbeaccessedbybothteams
• Priortoissuingtheinjunc>ontheCourtgavetheBOEanopportunitytosubmitaremedialplanaaerdetermina>onthattheBOEviolatedTitleIX
• Inissuingtheinjunc>ontheCourtwrites:...theCourthadhopedforconstruc2veinput,suchasalong-rangefiscalplantoremedytheinequi2esiden2fiedintheCourt’spriororder.UnfortunatelytheBoard’splanleavesmuchtobedesired;itcreatestheimpressionthattheBoardisnotassensi2veasitshouldberegardingthenecessityofcompliancewithTitleIX...TheBoard’splanessen2allyimposes“separatedisadvantage,”punishingboththeboy’sandgirls’teams,ratherthanimprovingthegirls’teamtotheleveltheboys’teamhasenjoyedforyears.
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• In2014,theU.S.Dept.ofEduca>ondirectsaMichiganschooldistricttoteardownbleachersbuiltbythePlymouthHighSchoolBaseballBoostersbecausethesoaballteamdidnotreceivesimilarfacilityrenova>ons.
• In2013,soaballplayersfiledsuitagainstaNewYorkschooldistrictbecausethesoaballfieldwasnotcomparabletotheboys’baseballstadium.
Add’lTitleIXLi2ga2onExamples
WhatDoesThisMean?• WhenaBOEno>cesaninequityexists,itmustremedytheproblem– Givegreateramountsfromthegeneralfundtothesexthatdoesnotreceiveboostersupport
– Seektocontroltheboosterbudgettoallocatefundsequally
– Rejectdona>onsifboostergrouprefusestoprovideequitablefunds,orthegeneralfundcannotcoverthediscrepancy
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OhioEthicsLaw
OECOpinionNo.2008-01• EthicslawprohibitsaschoolemployeecompensatedbytheBOEtoserveasacoachfromreceivingcompensa>onforthesameservicesfromanyothersource,includingboostergroups
• R.C.2921.43prohibitsapublicservantfromaccep>ng,andprohibitsanypersonfromgiving,anycompensa>onasasupplementtohis/herpubliccompensa>on
• Boostersmays>llmakegiasorendowmentstothedistrictforuseasthedistrictchooses
OECOpinionNo.90-003• Ethicslawsdonotprohibitaboardmemberorhis/heremployerfromdoingbusinesswithaboostergroup
• Boostergroupsareseparatelegalen>>esandarenotsubjecttotheprohibi>onsinR.C.2921.42(A)(4);however,boardmembersmaynotsellgoodstoboostergroupsifthegoodswillul>matelybeusedbythedistrict
• Boardmembersmaydonategoodsorservicestotheschooldistrictstheyserve,providedthatthememberreceivesnopecuniarygainfromthedona>onandhe/shedoesnotusethedona>ontosecureanythingofvaluefortheboardmemberorhis/herbusiness
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Booster-SupportedConstruc,onIfconstruc>onprojectisfunded100%byboosters,thenBoarddoesnotneedtofollowcompe>>vebiddingproceduresinR.C.3313.46.But,iftheBoardisresponsiblefor$25,000ormoreoftheproject,thenfollowcompe>>vebiddingprocedures.Boardoversightofbooster–supportedconstruc>onprojects:
– Verifyorganiza>onhassufficientfundstocompletetheirfiscalobliga>onsundertheproject;
– Ensuretheyobtainednecessarypermits,zoningapproval,etc.;– Provideinputandobtainagreementoverthedesignoftheproject;– Mayneedalicenseagreementforaccesstoschoolpremises;– Besureliabilityinsurancecoverstheconstruc>onproject;and– Obtainwaivers,releases,andindemnifica>onagreements.
BoosterBenefits• Money• Bandinstruments• Uniforms• FacilityImprovements&Construc>onProjectsIMPORTANTLY-HaveownershippasstotheBoardbywayofa“gia,”suchthattheBoardadoptsaresolu>onaccep>ngthegia/dona>on.