We do things a little differently in that we raise money a year in advance, so next year's expenses are paid by this year's fund raising.

We had a wildly successful fundraiser this year, making about 3 times what we have needed/spent in past years. And then we were left trying to decide what to use it for. Yes, it is an enviable position to be in, but it feels like chasing money for the sake of money, which I hate.

One thing that we ended up doing was putting away some money into a 'savings' line item for a long term purchase in the future. Now my goal is to get people thinking about what our mission can become now that we're rolling in some dough.

Hi AUU -

Your worry is a very common misconception.

There is no regulation that a nonprofit can not have money left over. None.

The technical term is "not for profit", meaning the excess dollars of your group are not intended to wind up in the pockets of the "owners" of your group (as the profits would in a business). Doesn't mean you can't have money left over, just regulates what you can do with the money that's left over (you can't distribute it to owners).

You can absolutely carry over those funds. In fact, groups thinking long-term often mandate that a certain amount of dollars be carried over every year so that the new school year doesn't have to start with a flurry of fundraising.

Your last question is a great one that you should start discussing now. You're in an enviable position: you can start planning a ton more involvement/community/enrichment activities and/or you can plan to fundraise a good bit less.

I'd suggest meeting somewhere in the middle: add activities and dump your worst fundraiser or two. The end result will be a changed group where involvement takes center stage over fundraising. Nice.

Critter,
Thanks for your detailed response but I still have more questions.

It was my understanding, that as a 501(3)c we are non-profit. Therefore, we have to disperse or appropriate all monies from year to year. Is this not correct. How we can show a year end net-gain that gets rolled over into the general funds? Isnt' that essentially a profit?
As I understood it, you could underwrite or appropriate specific line items to get past the whole profit thing.

The reason I am asking is because we have alot of surplus money left over, like $22,000. We don't want to appropriate so much money that the next years board can 'skate' but we also don't want to buy alot of foolish stuff for the school either.

I know this may seem rather eviable position to be in but it also brings me to another rhetorical question:
Why exactly are we doing all this fundraising?

have to agree that critter couldn't have said it any better!

Here's what we do, maybe this example will help. At the end of the fiscal year (for us, July 31), any money left in our checking account becomes the beginning balance for next year. Let's say it's $4,000. We then project how much money we'll make on our fundraising for the next year. Let's say that's $12,000. We add those two figures together to get all the money we have to allocate for the new budget, $16,000. We treat that total as one big pot of money from which we build our annual budget.

In our PTO, we create a balanced budget, so every dollar of the $16,000 is allocated to some expense line item (we have about 20 different categories). That's not to say that we'll actually spend it all...we have atleast 3 different miscellaneous categories that might not get tapped, and a category for our bylaw-mandated carryover ($2000) so we'll never run completely out of money. However, we do balance income to expenses for planning purposes.

If you make a plan to raise more money than you expect to spend, you'll build up a balance that no one will ever enjoy. On the other hand, if you plan to spend more than you expect to raise, you'll have to cancel programs because there won't be enough money to cover their costs.

The only time we might pre-allocate money from one year to the next is if we were saving over several years for a long-term project (ex: playground), but we would still show the balance on our monthly treasurer's report. Even though the money is "off limits", it's still one of the PTO's assets.

Audit trail as I define it (I'm an engineer, not an accountant) is a path of information that can take you from end back to source for any money or financial transaction. For example, if you start with a cancelled PTO check written to a vendor and work backwards, you should be able to match the actual check to the bank statemetn, also to the entry in the check register, match that to the invoice, identify appropriate PTO authorizations that allowed the invoice to be paid, match that to the originating event such as a scheduled assembly or vote in the minutes of a PTO meeting. Conversely, if you have a cancelled PTO check and no substantiating paperwork or information to explain the check, you have no audit trail. Accountants (and volunteer auditors) love audit trails. So should PTO Treasurers.

Hope this helps, engineer to scientist.

Does anyone out there in PTO cyberspace know exactly how to do this?

Here is my understanding...Tell me if I am wrong. I am a scientist, not an accountant.
Surplus monies are identified after every outstanding committee invoice is dispensed for the year. These monies can be earmarked toward specific line items for next years budget, right? Does the $ being appropriated have to EXACTLY MATCH the line items?
Say you want appropriate assemblies and classtrips line items, which adds up to $10,000. Can you appropriate more $? Say $12,000 and have a 'fudge factor' of $2000 to be used in Miscellaneous line item?
And how exactly should these appropriated monies be managed? In a separate report or mixed in with newly generated money?

Am I being clear??? Hope so.
Our final PTO meeting where this budget will be presented will be next Tuesday.
All feedback is greatly appreciated.

Background: Treasurer assures us that in her previous life, she was an accountant responsible for millions of dollars. You would think she would know this stuff, but she doesn't.

Also, what does 'audit trail' mean??