What is the difference between parents/relatives/friends purchasing new kids clothing (non-taxable in my state) from a reputable fundraising based supplier and purchasing the usual products i.e. Logo'd T-Shirts, Cookie Dough, Magazines, Greeting Cards or Wrapping Paper? These suppliers are profit based.
As long as a decent set percentage of each purchase goes from the supplier to the PTO/PTA or other designated school group as a donation, I do not see a legal or accounting conflict. :confused:
I would think it's doubtful. Whether formalized dor not, PTOs see them selves as charitable organizations. As such, if they get involved in a business activity unrelated to to their exempt educational and charitable purpose, the income from those activities can be subject to federal/state income tax at normal corporate tax rates.
And if they get too heavily into theses areas of unrelated business income (UBI), it might jeopardize how people view them or their non-profit status.
Would any PTA/PTO be interested in a fundraiser that continues on an ongoing basis? It is a way parents can save a bundle on name brand, new kids clothing and it pays 10% to the non-profit org. for fundraising. In essence, both the PTA/PTO wins and the parents win as well and there is no inventory to maintain, no orders to process because that is all handled by the company!
