The end of this fiscal year will be the end of our PTO's tax-exempt probationary period of four years since inception. We have had a very good couple of years from a fundraising perspective, plus tight budgetary controls, so we've built up a combination of carryover and operating reserve of almost $100K. Our school is about to enter a major remodeling/building phase when we know there will be surprise opportunities/challenges -- but we're a little bit worried about hanging on to an accumulation of funds. Will the IRS review board ask why we haven't spent everything we've earned? Does anyone know what the requirements are for *spending* assets? We are a 509(A)(2) with 501(C)(3) status -- so I've found all sorts of requirements about raising money from people (not too much from any one) -- but nothing about spending it. Help?!! Do we have to spend it right away? Or can we build up reserves for unspecified future expenditures? (For the tax code purists, we will not breach the 30% investment income limit -- or even get near it.)
