Fiscal Management of a Local PTA

PTA Funds

The primary focus of the local PTA should be the promotion of the PTA Purposes and the Mission. The real value of PTA lies in its members, not in its bank account. PTAs do not exist to raise funds; rather they raise funds to exist. Administrative VPs and PTAs should work together to determine what programs will benefit their students and improve homes, schools, and communities. Appropriate use of funds includes student oriented programs in priority areas such as literacy, health, safety, parent/family involvement, and cultural arts, as well as advocacy efforts on behalf of children and youth. PTA funds must not be used to fund school system responsibilities, including curriculum materials, salaries, and infrastructure needs.

PTA’s Tax-Exempt Status

Utah PTA has secured a 501(c)(3) exemption status from the Internal Revenue Service (IRS) recognizing it as a charitable organization exempt from income tax. Each Local PTA in good standing is covered by this group exemption. The IRS requires Utah PTA to submit a list of its subordinate units in good standing annually.

One major advantage of exempt status under section 501 (c)(3) of the Internal Revenue Code is that contributions to Utah PTA and its subordinate local PTAs may be treated by donors as charitable contributions for income-tax purposes. Another significant advantage is that most PTA fundraising activities—income from activities that are substantially related to the exempt purpose—are exempt from federal income tax.

What restrictions does 501(c)(3) status impose? Œ

• Operation exclusively for exempt purposes Œ
• Absolutely no participation in the political campaigns of any candidate for local, state, or federal office Œ
• Restrictions on lobbying activities to an insubstantial part of total activities Œ
• No inurement of earnings to the benefit of any private individual

What responsibilities accompany 501(c)(3) status? Œ

• Keep books and records detailing all activities, both financial and non-financial. Œ
• File an annual information return—Form 990 or 990EZ—or electronic notice—Form 990N (also known as the e-postcard). Œ
• File Form 990T if there is $1000 or more of gross receipts from an unrelated trade or business. Œ
• Meet requirements of substantiation and disclosure for charitable contributions. Œ
• Further information about these responsibilities can be found in the Utah PTA Treasurer Handbook

Charitable Solicitations Act

In Utah, under the Charitable Solicitations Act, charitable organizations are required to be registered with the Utah Division of Consumer Protection before soliciting charitable donations. “Charitable solicitation” means any request, direct, or indirect, for money on the representation that it will be used for a charitable purpose. Additional information about the Charitable Solicitations Act can be found at consumerprotection.utah.gov/registrations/charities.html

The law provides an exemption from the registration requirement for a PTA organized within and authorized by a school in support of the operations or extracurricular activities of the school. Local PTAs do not need to submit anything. It is done by the Utah PTA Treasurer. The Administrative VP of the school is required to review and sign each check request and pre-funded spending card form for the PTA. This is a requirement of the Utah Charitable Solicitations Act.

Financial Grant Agreement

The Financial Grant Agreement is found in the Utah PTA Treasurer Handbook If the PTA board votes and approves the gift of money to the school a financial grant agreement must be filled out and signed by the school Administrative VP, PTA president and PTA treasurer. The grant must be used for the sole purpose of what the money was approved to be used for. The agreement is between the PTA and the school.

Utah PTA also has received an exemption from sales tax from the State of Utah. State law requires every PTA to pay sales tax on purchases under $1000 and then request a refund. Utah PTA has an established process for applying for a refund. Instructions can be found in the annual Utah PTA Treasurer Handbook (www.utahpta.org/treasurer). The PTA tax-exempt number can be used for PTA purchases over $1000. Vendors may request a tax-exemption certificate, which can be obtained by calling the Utah PTA office. No PTA purchases should be made using the school tax-exempt number.

Budgeting Process

Each local PTA must operate according to an annual budget that has been approved by the general membership. The budget is the PTA’s road map for the year. The budgeting process should be taken seriously, but it does not need to be complicated. Only expenditures in accordance with the approved budget may be made. Any substantial change to the budget must take the form of an amendment approved by the general membership.

A school may make approved purchases for the local PTA and request reimbursement from the PTA in accordance with established procedures for cash disbursement (use of check request forms with approval signatures and proper invoices and/or receipts). A local PTA may also gift the school money for an approved purpose in the form of a grant, with a written, signed grant agreement and full accountability of expenditures made after board approval. No check should ever be written directly to the school without appropriate supporting documentation. Neither should any distribution be made to the school to “clean out” the PTA account at the end of the fiscal year; carrying forward to the subsequent year a reasonable “reserve fund” is an integral part of each PTA’s planning and budgeting process. PTA fundraising activities must also comply with school district policies.

More information about the budgeting process can be found in the Utah PTA Treasurer Handbook or the Treasurer Page 

Basic Fiscal Management Procedures

It is an unfortunate fact that non-profit organizations are susceptible to fraud. One of the most important things that PTA leaders can do for the well-being of the local PTA is to implement and follow a system of internal controls. Good internal controls guard against both errors—unintentional mistakes—and irregularities—deliberate attempts to misuse or misappropriate the assets of the PTA.

All elected officers of the local PTA, including the Administrative VP, and the fundraising chair(s) must verify by their signature that they have read and understand the “Basic Fiscal Management Procedures” outlined in the Utah PTA President's Handbook . This form is also available on the Treasurer Page . These procedures have been established to protect the PTA’s assets— its volunteers and the good name of the PTA and the school, as well as its funds.

Among the important internal controls that should be in place are the following: Œ

• All PTA monies are kept separate from school and personal funds. Œ
• The Treasurer maintains custody of the checkbook at all times. Œ
• Bank signature cards are kept up-to-date with at least three signatories who have been approved by the board. Œ
• Authorized signers on the checking account are not related by blood or by marriage, nor do they reside in the same household. Œ
• All checks have two authorized signatures and the signing of blank checks is prohibited. Œ
• Three people are present for all counting of cash. Œ
• All funds are deposited in a timely manner, and money is never left overnight at the school, in a car, or in a home or workplace. (The bank’s night depository should be utilized for events concluded after banking hours.) Œ
• Monthly bank statements are reviewed by the president and reconciled in a timely manner. Œ
• The Treasurer prepares and presents a treasurer’s report or financial statement at each general membership meeting and at executive committee and board meetings as deemed appropriate.

Conflict of Interest Policy 

Members of the Board of Directors (board members) of any local PTA/PTSA serve in a fiduciary capacity and owe a duty of care, a duty of obedience, and a duty of loyalty to the PTA/PTSA. Board members shall conduct themselves with integrity and honesty and act in the best interests of the PTA/PTSA. Disclosure by a board member of any potential or actual conflict of interest is required by the standard of good faith and for the benefit of the PTA and protection of each individual.  Each fall, all PTA board members are asked to sign the conflict of interest policy found in the Utah PTA President's Handbook     

Policy:

In consideration of our local PTA/PTSA affiliation with the Utah Congress of Parents and Teachers (Utah PTA), for the protection of its integrity and its 501(c)(3) status and for our protection, we, the undersigned officers, individually, during our term of office, shall:

1. Abide by and represent our PTA/PTSA bylaws, Utah PTA policies, positions, procedures, and National PTA Purposes and mission statement.
2. Discharge the duties and responsibilities of our individual offices with fidelity, integrity, and honesty and declare any and all personal and/or extended family conflicts of interest when PTA issues, decisions, and funds are involved.
3. Not misuse the PTA’s federal tax-exempt status or exemption from sales tax for personal or unauthorized purposes nor disburse funds for any purpose other than authorized, budgeted PTA programs, projects, and activities.
4. Refrain from making slanderous or defamatory comments regarding any individual or organization. Refrain from having disruptive arguments around children and on school property.
5. Follow Utah PTA and school district guidelines for fundraising.
6. Abide by the following conflict of interest policy: Œ
   1. Board members and/or their families shall not use their relation to this PTA/PTSA for financial, professional, business, employment, personal, and/or political gain. Œ
   2. A conflict of interest exists when a board member would have to participate in the deliberation or decision of any issue of this PTA/PTSA while, at the same time, the board member and/or his/her extended family has financial, professional, business, employment, personal, and/or political interests outside the PTA that could predispose or bias the board member to a particular view, goal, or decision. Œ
   3. Board members shall declare to the officers of this PTA/PTSA conflicts of interest (stating the nature of the conflict and pertinent information as appropriate) between their duties of this PTA/PTSA and their and/or their extended families’ financial, professional, business, employment, personal, and/or political interests. When a conflict of interest is declared, the board member shall not use his or her personal influence or position to affect the outcome of the vote and shall leave the room during deliberations and the vote. Œ
   4. The minutes of the meeting shall reflect that a conflict of interest was declared. Œ
   5. Board members shall not: ‚
      1. Use PTA’s name, influence, or resources for their benefit or gain when running for any public elected office or while serving as an elected official. 
      2. Directly or indirectly use their current PTA position, the PTA name, or the association for or against any specific candidate for elected office, which is contrary to federal tax laws and the guidelines and policies of the PTA. Past PTA experience may be listed in any brochures. Œ
   6. Be in violation of nor be in the act of violating any state or federal laws and/or court orders, including, but not limited to misdemeanors, felonies (e.g., trespass, possession or use of any illegal substances, public intoxication) and/or protective/restraining orders, while conducting any PTA/PTSA business and/or while participating in any PTA/PTSA sponsored activity or event, including, but not limited to activities for students, PTA/PTSA board meetings and/or conventions, nor while transporting themselves or others to any PTA/PTSA sponsored activity or event.
7. PTA does not recognize co-elected positions. Refer to local PTA bylaws (Article VI, Section 4a).

Fundraising Guidelines

PTA fundraising should be carried out within the framework of PTA’s noncommercial policy. This policy requires that the PTA not endorse any commercial entity nor engage in business activities unrelated to the Purposes of PTA. PTA fundraising activities must also comply with your school district policy.

Planning for PTA fundraising activities should occur after the planning of the programs and projects for the school year, as PTA does not exist to raise large amounts of money or supplement school finances. A general fundraising guideline is the 3-to-1 rule: for every fundraising activity, there should be at least three  non-fundraising programs or projects aimed at helping parents or children. The school and its PTA need to follow the district guideline for fundraising.

One well-planned fundraising event will usually raise enough funds to fulfill the goals and objectives of the PTA for the year. The following questions should be considered in selecting and planning a fundraiser that will be both successful and worthy of the PTA:

• Does it adhere to the PTA Purposes and Mission? Œ
• Does it conform to the noncommercial, nonsectarian, and nonpartisan policies set forth in the PTA bylaws? Œ
• Does it preclude the exploitation of children? Œ
• Will it create goodwill for the PTA? Œ
• Is it a type of activity that can serve as a positive example for children and youth? Œ
• Will it provide the revenue needed to meet the PTA’s goals? Œ
• Has a budget of required expenditures (e.g., cost of materials and publicity for the event) been provided? Œ
• Are special permits, such as food handling permits, required? Œ
• Are the PTA and its members protected through sufficient insurance coverage or otherwise? Œ
• Are contracts required; and if so, has the president signed contracts with vendors and/or manufacturers?
  • The president is the only person who can sign a contract binding the PTA, although the Administrative VP may make recommendations to the executive committee regarding contracts and their appropriateness with regard to school system regulations.
• Do contracts for products include responsibility for spoiled, damaged, or unclaimed goods? Œ
• Have procedures been established to safeguard the handling of products and money? Œ
• What requirements, if any, are involved in using a facility? Œ
• Are there applicable local, state, or federal laws; and if so, is care taken to see that no law is violated?

Annual Financial Reconciliation (AFR)

The books of the treasurer are closed no later than June 30—the end of the fiscal year—so that they may be submitted for an Annual Financial Reconciliation. An AFR is required by PTA bylaws. It is for the protection of the treasurer and the board and provides for accountability to the PTA membership, by assuring that the records are accurate. More information about the Annual Financial Review process, including who should perform the review, when it should be performed, and what it involves, can be found in the bylaws, in the Utah PTA President's Handbook and in the Utah PTA Treasurer Handbook .