It's feasible. Whether or not it's realistic is unique to your situation. You'd want to really explore the options and probably get some sound professional advice.

I don't know that this complex of a project could be adequately managed with your typical PTO volunteers, no matter how dedicated.

Questions I'd have include:

• How far can you go with this and what are the limitations before it will impact your 501(c)(3) status?
• Do you have the current resources to get it up and running?
• Will you have the continuous, future resources to sustain the initiative over time? (And that's a big one, for me.)
• What would be the oversight process/authority to make sure this continues as intended?
• Will private sector stakeholders in the marketplace see it as unfair competition? Even as an independent entity, your PTO will be seen as affilitated with the school. If it's a public school, then that's part of "government". People sometimes get really skittish (and vocal) when they perceive government related entities as moving into their slice of the market.

You would also have to be really clear to consumers which transactions were charitiable contributions and which were merely purchases (and thus not deductible). For instance, with Goodwill - consumers pretty much understand the difference between donating goods/cash to Goodwill versus purchases from a Goodwill store. Both benefit the organization, but both are not write-offs. You'd have to be careful to educate your consumers as to the difference in the programs.

Keep us posted.

P.S. I also wonder if your organization shouldn't something more than a PTO; perhaps an educational foundation.

Thanks JHB. I was referring to UBI. But I'm glad you raised the sales tax issue, because I hadn't considered that. In our school district (as in many others) there are several schools in low income areas, where tax rolls are low, school supplies and equipment are in need of repair and replenishing, morale is low, and so is parent involvement. There has been some discussion of using network marketing business opportunities as a means of fundraising. This idea seems to have merit on many levels. If a PTO purchased participation in the "right" business opportunity, this could be a source of ongoing income, even after the current student body moves on. Supporters of the PTO could chose to launch businesses of their own, thereby seeeking to improve their own circumstance, but indirectly providing long-term financial support. Those with no interest in starting a business, could simply be customers, and in purchasing what they normally would anyway (as opposed to yards of wrapping paper, sweets or magazines) they would be subsidizing the PTO. This income "could", at some point, be substantial enough to cover expenses not covered by current state or county allocations. Perhaps more importantly, income for participating families in the area could increase. Schools with this level of financial support could actually become appealing. Participation eligibility could be dependent upon PTO participation and volunteering in certain civic events. The business model itself could serve as a modelling alternative for students who are currently tempted by gang affiliation, theft, the drug trade and other less savory activities aimed at "having more". A PTO of this type could be a beacon of hope to many for a myriad of reasons. And, since this model is based upon the collaboration of individual, independent, business owners, it does not require employees, nor would the success of fundraising efforts be dependent upon the efforts of one particular business entity. However, I would presume that PTO income derived in this manner would be considered UBI and such a PTO would need to hire someone to prepare and file tax returns. I like this idea because I envision a collaborative agreement between PTO's of this type and existing PTA's (where one is already present), allowing the PTO to donate a portion of its funds to the PTA while retaining authority over the balance in order to pursue its own school related agenda. And, the PTA agrees to promote the business opportunity for the betterment of the community it serves, while having more funds with which to pursue legislative and political issues. What are your thoughts?

What do you mean by for-profit, taxable strategies for fundraising? Taxable as in IRS income tax on unrelated business income (UBI) or taxable as in activities subject to state sales tax?

Unrelated Business Income is the income from a trade or business activity that is regularly carried on by an exempt organization and that is not substantially related to the performance by the organization of its exempt purpose or function, except that the organization uses the profits derived from this activity.

So if a PTO decides to open a clothing store or start a business cleaning houses, those might be examples. (Again - something that is "regularly carried on".) No - I haven't come across any of those examples, at least not blatent ones. There are some grey areas such as the sales of advertising in PTO materials (newsletters, yearbook, directories). If you read the IRS regs, it seems to me those could be UBI. But the IRS reps told me not to worry about it.

As far as state sales tax - yes, many of us pay sales tax. That's a routine function, even for a many non-profits. In Texas a tax exempt entity can have two tax-free fundraisers per year. But we pay tax on the rest. So, for example, when we sell t-shirts or school supply kits, we collect and remit sales tax to the State Comptroller.

My biggest concern would be that the organization moves away from its core mission or that it jeopardizes its tax-exempt status. And the more business-like the activity, the more likely you need employees, which can get complicated. Many 501(c)(3) organizations have employees, but PTOs usually don't have the infrastructure and knowledge to properly manage and account for employee issues.

Can you tell us more what you had in mind?

Hello, I am new to this group. I have been searching the boards for an answer to two burning questions, so I will post them here. I have participated in PTA's in the past. PTO is a new experience for me. Does anyone know of PTO's that utilize for-profit, taxable strategies for fundraising? And, for those of you with more extensive experience, do you forsee any problems with such strategies?