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Accounting and Financial Disclosure in Youth Sports: Questions from Parents

Although most youth sports organizations are run like small - and, in some cases, not-so-small - businesses, with officers, boards of directors, bylaws and annual meetings, most operate with virtually no oversight beyond their volunteer boards of directors, and don't see the need to disclose their finances to their "customers" (you and your kids).

The following are answers to some e-mails I have received from concerned parents: 

Question: I am at odds with a booster club leader who'd been in his seat for 20+ years who simply refused to disclose financial info to the parents. Anecdotally speaking, how common do you think it is that parents and booster club leaders butt heads over financial disclosure?

Answer: Until recently, It was not all that common for sports parents and booster club leaders to butt heads over financial disclosure. In most communities parents make their donations in the form of a check and will simply write ‘tax deduction' in the item line. However, recent reports in the media have brought the problem of embezzlement in youth sports to the forefront and made the need for financial transparency more urgent - so much so that as more people hear me speak around the country on this topic they are becoming quite savvy and are beginning to ask for accountability.  I have been stressing the need for transparency and the need for public accountability in youth sports for years. The problems arise when parents are making donations in the form of cash. I tell all boosters-type organizations and "friends of sports" groups that they need to form as a non-profit 501(c)(3) charitable organization and to make sure there is full disclosure on their web site as to where the donations are going and how much they have brought in each year.  The best organizations are those which open their books and meetings to the public. If they are run in the dark or in the shadows, someone needs to get them out in the sunshine.

Question: What's the importance of member parents and the public having access to financial information, particularly in light of the fact that parents are pouring so much money into youth sports organizations?

Answer: When parents are able to view the historical financial statements of a youth sports organization they have a fuller appreciation of where and how their donations are being spent. This leads to trust, which my research shows, leads to higher and more regular donations by each family. All financial questions need to be answered voluntarily before they are asked. How do parents know if their money is going to uniforms, equipment, etc., or if  the people who are collecting the money and running the organizations are taking some of the money as salaries.  I am often amazed as I travel the country as a public speaker to be approached by student athletes asking for a five or ten dollar donation for their individual sport teams. When I ask why they need money and what it is being used for, they often don't have an answer. A properly run boosters club can eliminate any confusion about each team raising money by becoming the clearinghouse for all donations. If parents need to ask where their money is going then the booster-type organizations are doing something wrong. They should have a listing and breakdown of where the money goes. Many times parents are able to see that the money is being dispersed equitably to the teams who need the money. Problems arise when parents realize that all the money is going to one team in disproportionate amounts.

Question: I have seen parents who start to ask questions receive much more backlash than the booster club leaders who are being asked hard questions. I suspect many parents feel their children would lose the volunteers or the funding that helps the program to run. Do you think this kind of backlash prevents more parents from speaking up about where their dollars are going?

Answer: Parents should never have to ask where their donations are allocated; they should be told up front and should see it in writing. Anyone who is hiding financial statements should be questioned. The booster clubs need to be proactive. I myself headed up two Friends of Football fundraisers for my sons' high school team which raised $30,000 one year and $36,000 two years later for new equipment for the high school weight room. I and all of the other parents involved would never have worked as hard as we did if we did not know what we were raising the money for, or who was in charge of the finances, or, for that matter, if we knew that certain "volunteers" were actually taking a salary , which happens in many communities. I also attended the regular board of director meetings (as a non-board member) where the monthly statements and minutes and all books were open and available to anyone to inspect, not just the board of directors. There was a feeling of pride we had when we reached our fundraising goals which we would not have had if the money we raised was spent in secret.

Question: In your book and articles you noted Paolo David's thoughts about a sense of resistance to criticism and scrutiny among these organizations.  Why do you think that sense of resistance and defensiveness is so pervasive among these types of organizations? How are they able to get away with it for so long? How can parents and the public counter it?

Answer: Parents have to be very brave and confident in what they are doing when they are asking for open books. Many times the people who are heading the boosters clubs pull a lot of weight, they are fixtures in the local sports community and if word gets back that Mr. or Ms X is a trouble maker, that alone has turned many coaches and the administration against them and their kids. I was once aware of a community who were secretly raising money to provide additional funding for a coach and when the word got out the parents behind the "fundraiser" were in deep trouble. This is more common than people know about.  A call to the state's attorney general or a visit to its website can yield a surprising amount of information about a non-profit's fundraising activities.  For instance, in Massachusetts, where I live, public charities have to file annual reports disclosing their fundraising activities, which are searchable on line. In the event the organization fails to file annual reports, the Division of Public Charities of the Attorney General's Office publishes a list of non-compliant and de-activated organizations.

Updated November 20, 2011