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PTO/PTA 101: To Be or Not to Be a 501(c)3?

A PTO (other schools have Parent-Teacher Associations, or PTAs) is a group of parents who come together to help raise funds and organize activities for a school. They typically have a leadership board of officers, including a President, Vice President, Treasurer, and Secretary. PTOs will often have a set of by-laws that they follow. PTOs and PTAs, with the help of teachers and administrators, work together to determine what materials or activities they need to raise money for and how they’re going to raise that money. When my son started school, I got all the requisite paperwork most schools probably send out – volunteer forms, pick up and drop off procedures, sign up sheets for Spanish club, etc. And of course, the call for volunteers for the Parent-Teacher Organization (PTO).

I haven’t been very active in the PTO – I would just prefer to give of my time in other ways. But before my kids went to school, I had no idea how involved the PTO is in normal school operations and, most importantly, how much time these parents devote to the PTO.

As you may be aware, a PTO (other schools have Parent-Teacher Associations, or PTAs) is a group of parents who come together to help raise funds and organize activities for a school. They typically have a leadership board of officers, including a President, Vice President, Treasurer, and Secretary. PTOs will often have a set of by-laws that they follow. PTOs and PTAs, with the help of teachers and administrators, work together to determine what materials or activities they need to raise money for and how they’re going to raise that money.

A PTO/PTA may operate as a charitable organization, with 501(c)3 status, and have its own tax identification number (TIN). This may help the PTO in soliciting funds, since individuals and businesses can use donations as a tax write-off when donating to an organization that has 501(c)3 status. It’s also easier for PTOs and PTAs who have 501(c)3 status to apply for grant dollars, since some grants are available only to organizations that have this designation.

PTOs/PTAs that choose to obtain 501(c)3 status with the IRS raise their own money and have their own bank accounts. This means members may make independent decisions about how their money is spent.  But, if your PTO or PTA is considering a move to become a 501(c)3, be sure to check out the rules and regulations for your state. Different states have different laws, like whether or not independent audits should be conducted.  Additionally, many states require charitable nonprofits to register with the state in order to fundraise in that state.

Each school’s needs are different. Many times PTOs have one specific big-ticket need in mind and that becomes the focus of the fundraiser. They will then supplement the big fundraiser with smaller ones throughout the year. Funds raised by the PTO/PTA can be used for a lot of things, like updated technology, field trips, school improvements, playground equipment, and more. Some PTOs/PTAs use funds to supplement school curricula, paying for extra activities and projects, classroom materials, online resources for teachers, and more. Many PTOs also set aside funds to give to teachers each year to supplement the cost of supplies for their classrooms.

Money from PTO/PTA fundraisers can also be used to provide support in ways I never realized. One PTO president told me they often purchase things for the school nurse, who has to have items like extra clothes, underwear, and personal hygiene supplies on hand that might not be covered in the budget. PTOs/PTAs also have their own operating expenses like insurance, paper and toner, etc.

Money can be raised a variety of ways, including traditional fundraisers that require the sale of items, sponsorship fundraisers where children ask friends and family to sponsor laps around the track or some other activity, bake sales, garage sales, rewards card programs from local businesses… the list is endless.

PTOs/PTAs sometimes apply for grant money instead of relying solely on traditional fundraising.  Let’s face it, getting a $4,000 grant with a single proposal certainly beats selling dozens… and dozens… and dozens of scrip cards or candy bars!

It can be challenging for those running the PTO/PTA. “We have to deal with parent burn-out, a lack of time, and some parents just don’t want to be involved,” one PTO president told me. “We have to listen to parent feedback that isn’t always supportive.” PTOs also have to walk the line between administration and school district red-tape and what they see in terms of the school’s needs. “We can sometimes get a lot of criticism from parents and the community. They might assume the schools have funds for everything they need or might question why the school is spending money on certain things, like sports. But so much of what schools do is reliant on fundraising and doesn’t come out of the school’s official budget. It would be great if all parents and the community as a whole understood the importance of giving.”

But overall, those devoted to the PTO/PTA give of their time for a reason. “It’s a blessing to me, and my kids love that I’m so involved. I’m good at raising money. I’m good at organizing and my skills are being valued.”

If you’re interested in learning more about obtaining 501(c)3 status, PTO Today has a simple, straight-forward article about one mom’s journey for her PTO. This article also discusses why a PTO/PTA may wish to incorporate, and provides a few really good pieces of advice for navigating the process of receiving an IRS 501(c)3 designation.

You may also want to review all the great information on www.irs.gov.  This website is relatively easy to navigate.  Just begin by searching for “charities and nonprofits” and go from there.

PTOs have a large and important role in schools. In researching this story, I gained an entirely new appreciation for PTOs and PTAs and the parents that run them. I’ll definitely be more giving of my time in the future.

What other questions do you have about PTOs/PTAs? Are you involved in your school’s PTO/PTA?

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