Originally posted by DaveP:
Gift??? Do you really want to be held liable? Let's try an expense account which has written rules on what the money can be used for!

This can be handled from your petty cash policy! you do have a petty cash policy right? You do have a petty cash expense form and track it right?

Ok here is what we do (and yes virginia this is a policy and guideline, voted on and approved by the board)

Hi Dave -

Glad you've found the site and are jumping in so enthusiastically.

One request -- the site gets tons of visitors from all sides of the PTO spectrum. Complete newcomers to very experienced vets. The come denominator is that all of our visitors are volunteers with really good intentions for kids and their schools.

With that in mind, I hope you'll continue to offer insight but perhaps with just slightly less of a -- how do I say? -- imperious tone. Practical and constructive? Yes. Critical and condescending? No.

Glad to discuss with you offline if you want to email me.

Tim
(Intrepid host)

Gift??? Do you really want to be held liable? Let's try an expense account which has written rules on what the money can be used for!

This can be handled from your petty cash policy! you do have a petty cash policy right? You do have a petty cash expense form and track it right?

Ok here is what we do (and yes virginia this is a policy and guideline, voted on and approved by the board)

Teach accounts are kept by the teacher! It does not matter where the money actually came from, it is entered on the PTO books and then signed out as a petty cash fund to each teacher. This includes any class fund raisers. In this way the money is accounted for.

Within the petty cash guidelines teachers may make expenditures, they then record the expense on their Petty Cash form and attach a reciept if required or a note reflexing the expense. Every couple of months myself or the Treasurer visit the teachers who have these accounts and reconcile their PC form. That means the balance showing has to be produced! We also check to ensure that each expense follows the PC guideline.

Sounds like work? Not really it takes about a minute for each teacher and if you spread them out over a week or so its not a problem. The problem is making sure they know what is and is not an authorized expenditure, again established in writting in your PC guideline.

We give each of our teachers a $200 allotment. The PTO writes a check to the school and the money goes into an account designated for these funds. The teachers have to fill out P.O.s or submit receipts to use their money. This allows the principal to see what the teacher is buying with the funds. We want the money to go for extra supplies and materials to enrich our children's education not be "fun" money. Also, if you give the money directly to the teachers without any accounting to show that the funds are being used for the classroom, I would think the IRS would consider this as income to the teacher and they would have to disclose it on their tax return.

Two years ago we moved from giving the teachers each a check up front, to requiring receipts and then reimbursing. No flack. Like JHB said, we changed our approach based on IRS recommendation - our teacher fund is nearly 25% of our total budget and we need proof the money is spent in accordance with our mission.

In June of each year, we give our teachers (and other staff) a pre-printed envelope in which they can collect their receipts over the summer or through the next school year. We attach a cover letter that explains the process and why we need receipts. It also assures the teachers that the PTO will not review nor deny the receipts (we trust them at least this far). The actual allocation amount is approved at our meeting in September, but we estimate it for the letter.

At any time during the next school year, when they have collected enough receipts, they turn the envelope in and we issue a check. As easy as this sounds, I am still amazed we have a couple of teachers who never turn in their receipts to claim their money!

I have the envelope design and cover letter on my computer if you like to see it by email. Later in the school year, I am going to survey the staff to see if they like the idea of Blackboard Bucks better. Sounds like a decent alternative if we have enough money in our account to buy all the cards early in the school year.

Per the IRS:

The organization must not be organized or operated for the benefit of private interests, such as the creator or the creator's family, shareholders of the organization, other designated individuals, or persons controlled directly or indirectly by such private interests. No part of the net earnings of an IRC Section 501(c)(3) organization may inure to the benefit of any private shareholder or individual.

I personally think giving $175 "gifts" to teachers is bad policy and possibly infringing on the PTO's non-profit status. (IF it's truly personal gifts.) I don't know how many teachers you have, but say it's 40. That's $7000 in personal gifts.

I spoke to an IRS rep about this not long ago, as some organizations take it too literally and claim a recognition gift or sending flowers to a funeral would be "illegal". The rep said those kind of things are okay, but you have to look at the big picture, how much money is involved, does it support the primary mission of the organization, etc.

Imagine a PTO (which is parents and TEACHERS, theoretically) that raised $7500 per year and then votes to give $7000 as "teacher gifts" with no expectation it's for classroom supplies. Well that pretty obviously sounds like a sham non-profit. (Not the case here, but just an example.)

The IRS expects non-profits to use good accounting practices and requiring reciepts is one of the most basic.

The others have given you some good advice here. Good luck!

[ 08-22-2003, 08:21 AM: Message edited by: JHB ]

we give each teacher a $100 allowance which they submit receipts throughout the year for. We give them gifts at teacher appreciation. our bylaws do have specific requirements for how our money is to be used and this includes the monies given to teachers for their classrooms. they can spend it on anything they like so long as it is for their classroom. i think that you could go back to your minutes when you established this "gift" and find out exactly what the intention was. i can't imagine that this much money was just to be given arbitrarily - added up this would be quite a sum not specifically earmarked for something to do with your mission statement.
lisa