Compare incentive models for club volunteers

In many sports clubs, a dilemma arises as tasks grow in scale: Should we reward our volunteers with financial incentives, or should we rely exclusively on the social community? The choice of incentive models for volunteers in sports clubs not only affects recruitment and retention but also the club's compliance with tax regulations.

Volunteer management in a modern club requires a balancing act. If you give too little, the regulars burn out. If you give too much — or in the wrong way — the club risks being considered an employer, with subsequent requirements for ATP (labor market supplementary pension), holiday pay, and withholding tax. This article compares the three most commonly used models to provide club management with a basis for decision-making.

The three primary models for volunteer rewards

Looking across Danish sports associations, three clear strategies for recognizing the crew emerge. Each model has its advantages in terms of operations, but they differ significantly when looking at the administrative requirements in bookkeeping.

Model	Description	Administrative Burden	Tax Status
Expense allowance	Payment of fixed rates for telephone, internet, and laundry.	Medium (requires a solemn declaration)	Tax-free up to fixed limits.
Membership fee offset	Exemption from or reduction of membership fees in exchange for work effort.	Low (but risky)	Often taxable B-income if directly linked to shifts.
Social benefits & perks	Clothing packages, regular events, and free catering during shifts.	Low	Tax-free when kept at a reasonable level.

Elaboration on expense allowance (Tax-free)

Tax-free expense allowance is the most professional way to support volunteers who put in many hours at the club, such as coaches or permanent coordinators. In 2024, Skat (the Danish Tax Agency) operates with specific rates that a club can pay out without the volunteer having to pay tax on the amount.

Rates and requirements in 2024

To ensure the payout remains tax-free, the total amounts must not exceed the set limits. It is crucial to understand that these amounts must cover actual expenses the volunteer has in connection with their role.

Tax-free allowance: Up to DKK 2,450 annually to cover telephone, internet, office supplies, and postage.
Laundry allowance: Up to DKK 2,450 annually (if the club does not wash the clothes itself).
Mileage allowance: Here, the club can choose between the state's low rate (DKK 2.23 per km in 2024) or the high rate (DKK 3.79 per km) for the first 20,000 km. Many sports clubs use DKK 3.79 to ensure the volunteer does not have budget gaps from driving to away games in their own car.

Operational tip: Even though the amounts are tax-free for the recipient, the club has a reporting obligation to E-income via field 48 (tax-free allowance). If exactly DKK 2,450 is paid out without documentation of actual expenses, and the volunteer has effectively had no expenses, Skat can invalidate the payout.

The pitfall of membership fee exemption

Many clubs are tempted to let volunteers avoid paying membership fees as thanks for their shifts in the kiosk or as a coach. This is the most dangerous of all incentive models for volunteers in sports clubs from a legal perspective.

If a club provides membership fee freedom as a direct quid pro quo for a specific work effort (e.g., "Take three shifts in the ticket booth and save DKK 1,500 in membership fees"), the value of the fee is considered B-income. This is because an employment-like relationship arises where payment is simply granted as a saving rather than a direct payout.

Example of tax consequence

If a coach has their DKK 2,000 membership fee paid by the club as wages for their effort, the coach must actually declare this amount on their annual tax return. For the club, this means that if the contractual basis is not in order, they could be met with claims for failure to withhold AM-contribution (labor market contribution) and withholding tax during an audit.

Solution: Separate membership fee payments and volunteer work. Instead, provide a tax-free allowance as mentioned above and let the volunteer pay their own membership fee via the club's normal payment flow. This ensures transparency in the accounts.

Social incentives: The value of community and equipment

For the broader crew who take on ad-hoc shifts, social incentives are often stronger than small monetary amounts. Here, it is about creating a sense of identity (crew care).

Comparison of material goods

Type of benefit	Value to the volunteer	Cost to the club	Tax Status
Club kit / Profile clothing	High (sense of identity)	Purchase price (often sponsored)	Tax-free (work clothes)
Catering on shift	Necessity	Low production costs	Tax-free (reasonable level)
Volunteer party	Very high (retention)	DKK 200-500 per person	Tax-free (social event)

A specific scenario in personnel management could be the choice between installing a modern coffee machine for volunteers in the lounge versus providing a fixed allowance. While the allowance covers actual expenses for the volunteer coach (e.g., wear and tear on IT equipment or extra heating at home during preparation), the coffee machine and social facilities create a gathering point that genuinely increases the chance of the crew sticking around after their shift.

Strategic choice: Which model suits your club?

The choice of model should depend on the volunteer's role and time commitment. A "One Size Fits All" model often fails in larger sports clubs.

Scenario A: The small community club

Here, the focus should be on the social aspect and clothing packages. The administrative burden of running reports for 50 volunteers, each receiving DKK 500, is too great compared to the effect. Instead, spend the money on a significant volunteer party and proper clothing with the club logo.

Scenario B: The elite club or large multi-sport association

Here, the need for continuity is great. Use a combination of tax-free allowances (up to the DKK 2,450 + DKK 2,450) for key people like department heads and head coaches. This recognizes their large amount of work from home and phone calls.

Scenario C: Large event days (Stadium shift/Cup)

For big match days where you need 100 people for four hours, the "voucher model" works best. Here, the volunteer receives catering and perhaps a ticket or a gift card to a value that does not exceed the triviality limit for small staff gifts (approx. DKK 1,300 total in a year in 2024).

Checklist for implementing incentive models

Review the statutes: Do they allow for paying out allowances to board members or coaches?
Create solemn declarations: Every time a tax-free allowance is paid, the volunteer must sign a declaration stating that the amount covers actual expenses and that they do not receive a corresponding allowance from other associations (for the same expense).
Digitization of mileage records: Use a system where volunteers register km themselves via an app, so the treasurer does not have to decipher handwritten slips before paying out the DKK 3.79 per km.
Budgeting: Remember to budget for social benefits. A volunteer party costing DKK 30,000 can be cheaper than losing 5 key volunteers who each contribute 200 hours a year.

FAQ: Questions about incentive models for volunteers in sports clubs

Can we give a gift card for Salling Group as thanks for the help?
Yes, but be aware that gift cards that can be exchanged for cash or have broad applications are, in principle, taxable from the first krone for the recipient. It is safer to give benefits in kind like clothing or a dinner.

What happens if we pay more than DKK 2,450 in expense allowance?
If the limit is exceeded, the entire amount becomes taxable as wages unless the volunteer can present specific receipts for every single krone. Therefore, most clubs stop exactly at the limit.

Can a volunteer receive both mileage and expense allowance?
Yes. The DKK 2,450 for telephony/internet and the DKK 2,450 for laundry are independent of the mileage allowance. One can easily receive both tax-free as long as the rates are observed.

Are helpers at tournaments covered by insurance if they don't receive payment?
Yes, most collective sports insurance policies cover volunteers working for the club, regardless of whether they receive an allowance or not. But always check your specific policies for large events.

Frequently Asked Questions

What tax-free allowances can volunteer coaches receive in 2024?

Volunteers in sports clubs can receive a tax-free allowance of up to DKK 2,450 in 2024 to cover telephone and internet, plus an additional DKK 2,450 for laundry. Furthermore, mileage allowance can be paid according to state rates, provided the payouts cover actual expenses associated with the volunteer work in the association.

Is membership fee exemption for volunteers in sports clubs taxable?

Yes, membership fee exemption is often considered taxable B-income if given as a direct quid pro quo for a specific work effort. To avoid tax issues, clubs should separate the finances by letting volunteers pay normal fees and instead pay out an official tax-free expense allowance to cover their costs.

How do the rules for mileage allowance for volunteers work?

Sports clubs can pay tax-free mileage allowance for driving in one's own car for club activities. In 2024, the club can choose to use the state's high rate of DKK 3.79 per km for the first 20,000 km. However, this requires the club to maintain precise control over the kilometers driven and their purpose in a mileage log.

Which incentive model is recommended for large sports clubs?

Large associations should use a combination model. Key personnel such as head coaches should receive tax-free allowances to cover costs for IT, telephone, and laundry, while the broad foundation of volunteers is best motivated through social benefits like clothing packages, catering, and joint events that strengthen club identity without creating administratively heavy tax conditions.

Read more: CRM for sports clubs