When Should a Booster Club Borrow Money?

Throughout the life of every booster club, there will be times of major expense. During periods of growth within your student program, you may have to expand your facilities or purchase new equipment. To simply maintain operations, you’ll have to replace uniforms and equipment as they reach the end of their useful lives.

These big ticket items usually exceed the funds you have available in your annual budget. With such a daunting task ahead, you may be tempted to pursue a loan. You may even have a parent within the organization who is willing to loan you the money at a competitive interest rate.

The rich rule over the poor, and the borrower is servant to the lender.Proverbs 22:7 (NIV)

So the question is, “when should a booster club borrow money?” Here’s the short answer: never. I have serious reservations about a booster club borrowing money, and many local school boards do too – they prohibit it altogether. Let’s look at three reasons a booster club should never borrow money.

  1. Your local school board ultimately owns everything your booster club purchases. Regardless of who pays for your student program’s equipment, it all belongs to the school board. For example, if your parents raise money to purchase a new trailer for your student program, the trailer belongs to the school board as soon as the purchase is made. Similarly, if a booster club borrowed money for a major purchase, the school board would ultimately “own” the debt that accompanied the purchase.
    School boards must approve all booster club financial activities in advance, including fundraisers and major purchases. Likewise, before borrowing money for any reason, seek approval from your local school board.
  2. Booster clubs are high risks for lenders. Even if your school board approves your loan, it may be difficult to find a lending institution willing to loan to a booster club. With the frequent rotation of families in and out, lenders may feel that booster parents don’t have the sense of ownership, or obligation, to the organization. At best, the organization may qualify for an unsecured loan, but that comes with high interest. Since the loan would not be guaranteed by any type of property, the lender would assume higher risk.
  3. Personal loans are bad business. What if a parent offers to loan the booster club money at a competitive interest rate? Sounds good, doesn’t it. No complex forms, no red tape, no hassle. Well, while that may sound like a kind and generous offer, it is still a business deal. You would need a written agreement, or contract, clearly stating the terms of the loan to protect both parties. But even with a written contract, it’s still bad business.
    Proverbs 22:7 tells us, “…the borrower is servant to the lender” (NIV). Attitudes can change after a loan is made. For example, the lending parent may expect preferential treatment, like more playing time for his son. If you want more reasons not to make a person to person loan, listen to the Dave Ramsey show. You’ll hear many callers’ horror stories about personal loans – real life fiascos that may not have crossed your mind.

Since borrowing money is out of the question, booster clubs must take a proactive approach to fundraising for big ticket items. When you prepare your annual budget, assess the condition of your equipment and uniforms. With about three years remaining in their useful life, establish a multi-year capital campaign. Planning early will prevent you – or your successors – from the headache of funding large projects with a short lead time.

To learn more about planning for the midterm and developing budgets, check out my book, The Booster Leader: 35 Leadership Essentials for a Thriving Booster Organization. You’ll find chapters dedicated to these topics, and much more. The Booster Leader is available on Amazon in Kindle and paperback formats.

Question: How will you fund your booster club’s next big ticket item? You can leave a comment by clicking here.