Switching From PTA to PTO

Every year, lots of groups decide to drop their affiliation with the National PTA and become independent PTOs. Among the most common reasons that groups change: They want to keep their dues money at home; they disagree with or don’t want to support the PTA’s policy positions; or they want the independence to run their group in their own way, free of required PTA bylaws and rules.

In fact, there are more than twice as many independent PTOs in the United States as PTAs. So for groups thinking of breaking away, you aren’t alone. Tens of thousands of parent groups have taken the independent route with great success.

Switching from PTA to PTO involves two processes performed at the same time: closing your PTA unit and starting a PTO. Because your PTA is organized under the National PTA’s umbrella, you can’t necessarily just vote to become independent. There are a few official steps that should be followed.

Making the Switch

Because there are several steps involved in both starting your PTO and disbanding your PTA, it makes sense to be fairly confident that your group leadership and your general parent population is supportive of the change before you start the process. Some research, good communication, and open discussion is usually enough to determine informally if a change is likely to be supported. If so, then the next steps are fairly clear.

Step one is to get an employer identification number (EIN) for your PTO. An EIN, which some people call a “tax identification number,” is the way the IRS keeps track of businesses. It doesn’t mean that you have to be an employer. Obtaining an EIN is an easy process that establishes your PTO as a separate, independent organization. Just download Form SS-4 from www.irs.gov or fill it out online. It’ll only take a few minutes.

Next, draft a set of bylaws for your PTO. You can base them on your PTA bylaws, but you now have the freedom to organize your group in whatever way works best for you. If you don’t want to charge dues, you don’t have to. If you want to change the board positions, you can do it. It helps to read other groups’ bylaws. There are lots of bylaws examples on the File Exchange, including a sample set of basic annotated PTO bylaws. Don’t forget to include a clause on how to amend your bylaws in the future.

While you’re organizing your PTO, begin the process of closing your PTA. You’ll need to hold a vote of the executive board. If your board decides to move forward, schedule a general meeting. This isn’t a decision to spring on your members; take some time to build awareness and support before moving forward. You’ll typically need a two-thirds vote at a general meeting (check your current PTA bylaws) to dissolve your PTA unit.

This is a good time to check your state PTA’s bylaws. They include some procedures for dissolving your PTA unit. Among them, you’ll most likely be asked to notify the state PTA by certified mail that you plan to close.

The final step is to hold a general meeting and take the vote. Be sure to give members plenty of notice. You can run this like a regular meeting with an abbreviated agenda: whether or not to dissolve the PTA. If you expect a lot of discussion, limit comment time to 30 seconds or 1 minute per person. It’s also acceptable to put an overall time limit on discussion, say 30 minutes. At some point people will start to repeat each other and you will have heard all of the arguments on each side. In some states, you may be asked to let a representative of the state PTA speak. If you elect to do so, have her talk at the beginning of the discussion and place a time limit on her presentation. Five minutes should be sufficient. Once discussion has ended, take the vote. If it comes out in favor of dissolving, simply announce the result and adjourn the meeting.

What About the Money?

One of the most common questions groups have is what to do with money that remains in your PTA bank account when dissolving a PTA. The simplest recommendation is to have as few dollars as possible in your treasury before taking a formal disband-or-don’t-disband vote. In that way, if your group votes to disband, then there is very little to worry about financially (one less complication)—and if you vote not to disband, then you can just return to business as usual. For most groups, spending the treasury down to near zero is a matter of spending dollars on items that you typically support (teacher stipends or field trips or purchases for school, etc.) while perhaps postponing one fundraiser until after your vote. It’s also allowable for 501(c)(3) groups to donate funds to other tax-exempt organizations.

Make sure that any money coming in from this point forward is directed to the PTO, too. If you have a fundraiser planned, for example, confirm the change with your vendor so that any preprinted forms reflect your group’s new acronym—especially if it includes instructions for writing checks.

Building Your PTO

Once the bylaws are written for your PTO, you’re ready to hold your first meeting and elect officers. In many cases these are the same officers who have been leading the PTA, but they don’t have to be. By the way, it’s perfectly OK to operate a PTO and a PTA at the same time while you’re making the change.

As you move forward, you will most likely want to put some more formal structures in place, including incorporating and obtaining tax-exempt status. Incorporation is done through your state, usually the state corporations office or the secretary of state. Becoming tax-exempt under section 501(c)(3) of the federal tax code requires filling out a detailed application with the IRS. You have 27 months from your startup date (or incorporation date) to file, and approval is retroactive. PTO Today’s PTO Startup Toolkit walks you through the form question by question. We’ve spent many hours talking directly with the IRS to make this process easier for PTOs. There’s a one-time fee of $275 to apply for 501(c)(3) status using Form 1023-EZ.