The tests for 501(c)(3) charitable status focus primarily on the activities of the organization and the lack of private inurement, not the sources of funding to operate the program.  Programs that are entirely based on fees for services can qualify for (c)(3) status without obtaining a single dollar of contribution. Since kids’ sports activity is generally considered charitable and educational, this set-up should not be disqualifying.

The issues arise when parents seek to take charitable contribution deductions for their mandatory payments, which, since they are mandatory, are not charitable contributions.  Also, outsiders who make payments on behalf of specific individuals are not able to claim deductions, although many probably do so.  There may in fact be some gifts made for the benefit of the league as a whole and those gifts could be charitable.

If your league owns a playing field for which it seeks real estate tax exemption and is in a state that demands a certain amount of “subsidy” between the cost of providing the services and the fees received in return for the services (See Ready Reference Page: “Act 55 Defines Charity Eligible for Exemption”), it may not be able to meet the test unless it has a lot of real contributions from the outside.  Volunteer hours can often be counted in such calculations, but the parents are not “volunteers” when required to work in order for their children to play.