I had a long chat with an IRS rep about this very topic. He told me that PTOs should just use good common sense in issues like this. He said it was a big myth that PTO's can't EVER buy gifts and it was fine to send someone flowers, buy a retirement gift, etc. and that there's no set value it can't exceed. But the cost/value should be reasonable for the situation, the budget, the purpose, etc.
Note - his comments referred to what's "allowable", not "policy" - that's a different issue for your group to decide. Do you take it on a case by case basis? Do you send a plant every time? How do you make sure everyone is treated equally...)
They're worried about your tax-exempt status because of the IRS language for tax-exempt organizations that says: "No part of the organization's net earnings will inure to the benefit of private shareholders or individuals." So if you take that very literally, no, you can't give flowers for a funeral.
Personally, I think that's a bit extreme, and it's not like the IRS is going to yank your exemption for buying someone some flowers. But I don't think you'll find anything in writing from the IRS to specifically say it's ok, either.
For regular businesses, the IRS allows you to deduct the value of nominal non-cash gifts to people without taxing them on the benefit of it--I think their definition of nominal is $25 or less, but I don't know for sure. A lot of tax-exempt groups use those same guidelines to be able to give gifts of some sort.
But you'll find a lot of strong opinions on this both ways on this board. Some people will tell you that there is no way any money raised by the parent group should be used for anything that does not benefit ALL children of the school. So they don't give gifts when someone retires, dies, etc. (Token gifts or meals for teachers--like during teacher appreciation week--are ok because they are given to all the teachers, which theoretically ultimately benefits all the kids.)
On the other hand, many parent groups have "sunshine" funds and/or committees where they recognize birthdays and other significant life events with a card, and keep a very small amount of money put aside for the occasional funeral arrangement or retirement gift. (In situations where I've seen this, the total amount set aside has always been less than one percent of the group's budget.) And the gifts are always nominal and non-cash (or non-cash-like; i.e., no gift certificates, either).
It's always kind of a tricky thing, because where do you draw the line? And how do you get notified about personal situations? You can really run the risk of things getting out of hand and people getting offended unless you have very clear guidelines.
We are tax-exempt and non proftit and heard we are not allowed to buy personal gifts with the PTO money or it will cause a problem with our tax-exempt status or non -profit status or something. What I mean by personal gifts is a gift basket for a teacher who had surgery or flowers to a board member for a funeral. End of year token gifts for teacher is another question brought up. Does anyone know about this? Also are cards sent an paid for by PTO allowed???
Any insight would be helpful - Thanks.
