This week, Mo’Ne Davis made Sports Illustrated history: she became the first Little League player to make the cover of the sports magazine in its more than 60 year history.
The 13-year pitching phenom from Philadelphia captured the hearts and minds of many baseball lovers over the past few weeks as she – and her Taney teammates (she wouldn’t want you to leave them out) – lit up the Little League World Series. The Taney Dragons ultimately bowed out on Thursday night after losing earlier in the week to the power bats of Nevada and finally falling to the pride of Chicago, the Jackie Robinson West All-Stars.
This year, the Little League World Series has attracted attention like never before. A whopping 34,128 sports fans attended the Pennsylvania-Nevada game in Williamsport (including newly elected Major League Baseball Commissioner Rob Manfred), with another million people watching from home. To put that into perspective, nearly 10,000 more fans showed up to watch Pennsylvania play live than showed up to watch the Philadelphia Phillies.
Today, you can’t swing a bat in Philly without running into someone talking about Little League baseball, despite the fact that the Dragons are now out of the running for the championship. It might have a little something to do with that grit in Mo’Ne Davis’ eyes. Or that smile on Erik Lipson’s face. Or that swagger that Zion Spearman showed by challenging the Phillies’ Ryan Howard to a home run derby. Or maybe we just love a great underdog story.
That’s one of the cool things about Little League. They’re all sort of underdogs. Since the advent of the Little League World Series in 1947, only two teams, Monterrey, Mexico, and Seoul, South Korea, have won back to back championships (though a number countries, have won consecutive championships).
Little League originated in the United States but can now be found in more than 100 countries. The organization was created in 1938, when Carl Stotz promised his nephews that he would find a way for children to play baseball like the Major Leaguers. In the little town of Williamsport, Pennsylvania, the first Little League game was played on June 6, 1939, on a field about two-thirds the size of a baseball field. Today, nearly 2.4 million kids play Little League Baseball.
Unlike Major League Baseball which is not tax exempt (it dropped its status in 2008), Little League Baseball, Inc., is tax exempt. In 1981, Little League received a group exemption letter from the Internal Revenue Service that allows local eagues to take advantage of Little League’s status by inclusion under their federal group exemption number. Local leagues also have the option to apply for their own tax-exempt status with IRS: a quick search with IRS Select Check reveals that dozens of leagues have done exactly that.
Group exemption letters are generally issued to organizations as administrative convenience for the organization and the IRS. Under the IRS rules, qualifying exempt organizations that have or plan to have related organizations that are very similar to each other may apply for a group exemption.
The rules for group exemption have been clarified with Rev. Proc. 80-27 (downloads as a pdf) which explains that a central or lead organization (in this case, Little League Baseball, Inc.) must apply for its own exempt status first.Next, the lead organization must establish that other organizations to be included in the group exemption letter are affiliated with the lead organization and subject to its general supervision or control. The other organizations must be exempt under the same section of the Tax Code and not private foundations. Finally, they must all be on the same accounting period if they are to be included in group returns and meet certain time considerations.
You can read more about group exemptions in IRS Publication 4573 (downloads as a pdf).
Affiliates and subs are generally still responsible for their own tax filings. That goes for Little League teams, too. On the federal side, local leagues under the Little League umbrella must file an annual information return. If the local league has gross receipts greater than $50,000 but less than $200,000, they must file a form 990-EZ. If the local league raises revenues greater than $200,000, they must file form 990. If a local league has gross receipts less than $50,000, they must file the form 990-N, generally called the e-Postcard. For tax purposes, gross receipts for Little League teams include donations and gifts, grants, sponsor fees, registration fees, membership dues and assessments, fund raising and other income. They don’t include ticket sales for the World Series: it’s free to attend (though they will happily accept your donations).
And like all other similarly-situated charitable organizations, failure to file those information returns for three consecutive years will result in a loss of tax exempt status.
Little League Baseball, Inc., has filed its most recent form 990. The group reported revenues of $24,531,629 for fiscal year ending September 2012. They spent $21,694,953, including funds for leaving them in the black for the year (they dipped into the red the year before when revenues were down). More than 85% of expenses were directed to programming: just 14% was spent on administrative expenses, earning the organization a 85.59 rating (out of 100) by Charity Navigator. Overall, the organization reported a healthy $78,465,028 in assets for the last fiscal year.
Of course, that doesn’t mean that everyone is happy with Little League and their tax-exempt status. Last year, Sen. State Ricardo Lara of California introduced SB 323, the Youth Equality Act, meant to strip tax-exempt status from organizations in the state that were found to be discriminatory “on gender identity, sexual orientation, nationality, race, religion or religious affiliation.” The bill was eventually tabled but Sen. Lara vowed to bring it back. On Sen. Lara’s list of potentially discriminatory organizations included in the text of the law? In addition to those you’d expect (Boy Scouts, Cub Scouts, Girl Scouts, YMCA, YWCA, Boys’ Clubs, Girls’ Clubs), there were some surprises (Future Farmers of America, Future Homemakers of America, 4-H Clubs, Future Business,Leaders of America). Tops on the list? Little League.
I guess Sen. Lara hadn’t heard about Mo’Ne Davis. Or Kayla Roncin from Toms River, New Jersey. They’re playing in the League now alongside Emma March of Vancouver, Canada. They follow in the footsteps of “hundreds of thousands” of girls who have played in Little League since 1974 like Jenny Fuller, Victoria Ruelas, and Meghan Sims.
My girls, however, know all about Mo’Ne. They don’t quite get the fuss since, as hockey players and soccer players, they don’t think it’s odd to see a girl play in what is considered by many to be a male sport. They just love the game. Which is exactly as it should be.