Planning for PTA fundraising activities should occur after the planning of the programs and projects for the school year. PTA does not exist to raise large amounts of money or supplement school finances. One well-planned fundraising event will usually raise the funds needed to fulfill the goals and objectives of the PTA for the year. Any funds generated by a PTA, including the local portion of dues, should be used for definite budgeted purposes that advance the PTA purposes, such as projects and programs, that benefit children and families, promote parentteacher cooperation, and enhance the school environment and curriculum. In addition, PTAs can work with community organizations to promote community-wide development projects. Leadership development through PTA conventions and conferences is also an appropriate and important use of PTA funds. Please use the PTA Event Checklist found in Appendix 2 to make sure all financial procedures are followed for PTA events.
Standards for PTA Fundraising
PTAs are often asked to finance programs and purchase needed equipment that tight school budgets cannot provide, and each PTA must decide what it will do. Before approving proposals for material aid to the school or community, a PTA should consider whether or not the proposed equipment or service is a public responsibility. Is it something that taxes are to be used for? For example, tax revenue is already being collected to fund textbooks, salaries, computers, playground equipment, classroom materials, and so forth. PTA’s role is to advocate for adequate and equitable funding for all public schools. In emergencies, PTAs may provide for the pressing needs of children and youth while they work to alert the public to its obligations.
A PTA renders a greater service by working to secure adequate funding for programs that have an enduring benefit than by purchasing equipment for schools. PTAs should not contribute to the problem of inequities within a school district by excessive funding.
The framework for how a PTA should conduct its fundraising is determined by the policies of the National PTA organization and the government regulations for 501(c)(3) tax-exempt organizations. 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.
Policies and Regulations Affecting Fundraising
All PTA bylaws—national, state, council, and local—include the requirement to be non-commercial. PTA’s noncommercial policy prohibits the PTA from endorsing a commercial entity and from engaging in activities unrelated to the promotion of the purposes of PTA. It also means that the name “PTA,” which is a registered service mark, cannot be used in advertising or promoting of the goods and services of a commercial entity. The non-commercial policy does not preclude corporate sponsorship; see "Fundraising" section for further information.
PTA policy is also very clear that children should never be exploited or used as fundraisers. Competitive, highpressure selling of a product is not considered an appropriate activity for a child to be engaged in on behalf of PTA. Assemblies where children or youth are “hyped up” to go out and sell items so they can “earn” prizes are discouraged. Children are never to go door-to-door selling items for PTA.
As 501(c)(3) organizations, PTAs are prohibited under federal law from engaging in substantial business activities that are unrelated to their tax-exempt purposes, which are legally defined as educational and charitable. A PTA’s taxexempt status is one of its most important assets. If that status is revoked, charges of negligence or mismanagement may be brought against the officers and directors. When considering any fundraising activity, therefore, the PTA should ask, “Will this activity adversely affect our tax-exempt status?” Further, the revenue from some fundraising activities, if not structured appropriately, may be considered to be “unrelated business income” by the Internal Revenue Service (IRS). “Unrelated business income” is taxable.
School districts may have established policies and procedures for organizations to follow when doing fundraising on school property and/or using staff and students, including limits on the amount of fundraising allowed and required approval processes. PTAs should be familiar with district policy and work cooperatively with school personnel. Your region director is the best resource for knowing the school district’s fundraising policies.
Selection of an Appropriate Fundraiser
If the fundraising event is to reflect the high principles of the association, it will have educational, social, or recreational value in itself. One well-planned fundraising event will usually raise the funds needed 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 mission and the purposes of PTA?
- Does it conform to the noncommercial, nonsectarian, and non-partisan policies set forth in the PTA bylaws?
- Does it preclude the exploitation of children?
- Will it create goodwill for the PTA?
- Is it a type of activity that can serve as a positive example for children and youth?
- Will it provide the revenue needed to meet the PTA’s goals?
- Has a budget of required expenditures (e.g., cost of materials and publicity for the event) been provided?
- Are special permits, such as food handling permits, required?
- Are the PTA and its members protected through sufficient insurance coverage or otherwise?
- Are contracts required? 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 principal 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?
- Have procedures been established to safeguard the handling of products and money?
- What requirements, if any, are involved in using a facility?
- Are there applicable local, state, or federal laws, and if so, is care taken to see that no law is violated?
Contracts with Commercial Vendors
Commercial vendors involved in PTA fundraising activities that involve the selling of a product or service may require the PTA to sign a written contract. Contract guidelines are as follows: All contracts must be in writing. The length of the contract must be limited to the term of the participating officers. Like any legal document, fundraising contracts are binding on the PTA and result in legal liability if they are not fulfilled. All terms of the contract should be carefully read and understood. If there are any questions, consult an attorney for clarification. Do not rely on the advice of the vendor. The terms of the contract must be approved by the board before the contract is signed. The president should clearly indicate that he or she is signing for the organization, not as an individual:
__________________________ by ______________________________
(Name of PTA/PTSA) by (Signature of PTA President)
Donation Fundraisers
Some PTAs have had good success with donation-type fundraising efforts, either as a “no fundraiser” direct solicitation for tax-deductible donations or in conjunction with a student jog-a-thon, read-a-thon, or similar activity. Others have run profitable auctions of donated merchandise, which may or may not result in the collection of donations.
Putting 100 percent of the funds collected into PTA programs is the primary advantage of these types of fundraisers. Psychologically, that can be a big selling point for parents. On the other hand, some PTAs end up making less money than they would if they had worked in conjunction with a commercial vendor to sell a product or service. The amount of time and energy required of PTA volunteers might be the same as or even more than (particularly in the case of auctions) it is for sales-type events.
If a PTA decides to conduct a donation fundraiser, the treasurer and event chair must be familiar with the IRS rules regarding substantiation and disclosure summarized in the "Exempt-Organization Issues" section of this handbook. When there are no goods or services provided to donors and individual donations are less than $250, such as in a jog-a-thon event, the PTA may want to provide notification to potential donors that receipts will be provided only upon request or that the donor’s canceled check will serve as his or her receipt. For an auction event, advance preparation of receipts that include the value of the goods or services to be auctioned will help facilitate compliance with the disclosure requirements.