Treasurer Specific Issues

EXEMPT-ORGANIZATION ISSUES

501(c)(3) Group Exemption

Utah PTA has secured a 501(c)(3) exemption ruling from the Internal Revenue Service (IRS), recognizing it as a public charity under Section 509(a)(2). Each PTA unit in Utah that is in good standing is covered under Utah PTA’s group exemption. (Utah PTA’s group exemption number is 7212.) The IRS requires Utah PTA, as a central organization, to submit annually a list of its subordinate units (local, council, and region PTAs) in good standing. If a unit chooses to no longer be affiliated with Utah PTA, it no longer has the benefits of tax-exempt status under Utah PTA.

Sales Tax Exemption

• Utah law requires every PTA to pay sales tax on purchases under $1,000. That sales tax is refunded upon request.

• For purchases over $1000, the tax exempt number 12510060-002-STC may be used.

• A vendor may request an Exemption Certificate from a PTA to verify the tax exempt number. This certificate can be obtained from the Utah PTA office through Kids@utahpta.org.

• Utah PTA has established, within the guidelines of the State of Utah, a procedure whereby PTA units may request a refund of the sales tax paid.

• All PTA sales tax refund requests must be made through the Utah PTA.

Fundraising and Sales Tax

Local and council PTAs are not required to collect or pay sales tax on fundraising events where the items sold are not available to the general public. We must collect sales tax on books sold at book fairs, since we are selling a third party's product for them. When a PTA does a fundraising event, if the money is collected by the vendor and not by the PTA, sales tax must be collected by the vendor.

Employer Identification Number (EIN)

Every PTA unit must have its own EIN from the IRS. This number is required for the PTA’s bank account(s) and is also used in conducting business with the IRS. Neither the school’s EIN nor an individual’s social security number should ever be used for PTA business. The PTA must also never “loan” its EIN to another group or organization.

If a PTA unit needs an EIN, it should contact the region director or the Utah PTA office. To obtain an EIN, an IRS "Form SS-4" must be completed. When the form is completed and signed, it must be returned to the Utah PTA Treasurer for processing. The IRS will assign an EIN to the PTA, and a letter will be sent to Utah PTA informing them of the assignment. Utah PTA will forward this letter to the unit, and this letter must be filed with the PTA’s permanent records.

Determination Letter

The IRS issues a “determination letter” to organizations that have qualified for tax-exempt status. Because Utah PTA, as a central organization, determines which units are included as subordinates under its group exemption ruling, anyone seeking to verify that a PTA in Utah is tax-exempt can contact the Utah PTA office. Utah PTA can provide a letter about the group ruling and a copy of its determination letter from the IRS for potential donors, sponsors, or grantors. According to IRS Publication 4573, “donors may rely upon central organization verification with respect to deductibility of contributions to subordinates covered in a Section 501(c)(3) group exemption ruling.” Email kids@utahpta.org with your school name and we will send you a letter. Since these expire as of June 30 each year, you will have to request a letter yearly.

Benefits of Tax-Exempt Status

As 501(c)(3) public charities, PTAs in Utah enjoy two substantial benefits:

• Contributions may be treated by donors as charitable contributions for income-tax purposes. Such contributions include programs like grocery store card programs and corporate sponsorships, as well as donations from individuals. PTA members who receive little or no reimbursement for their PTA-related expenses may also be allowed to deduct their out-of-pocket expenses as charitable contributions; current IRS rulings should be consulted for allowable deductions.

• Most income of the organization—income from activities that are substantially related to the exempt purpose—is exempt from federal income tax. As PTA fundraising efforts are often substantial, this exemption from paying income tax is very valuable.

Protecting Exempt Status

A Section 501(c)(3) organization will jeopardize its exemption if it ceases to be operated exclusively for exempt purposes. An organization operates exclusively for exempt purposes only if it engages primarily in activities that accomplish the exempt purposes specified in Section 501(c)(3). A 501(c)(3) organization:

• Must absolutely refrain from participating in the political campaigns of candidates for local, state, or federal office.

• Must restrict its lobbying activities to an insubstantial part of its total activities.

• Must ensure that its earnings do not inure to the benefit of any private shareholder or individual.

• Must not operate for the benefit of private interests such as those of its founder, the founder’s family, its shareholders or persons controlled by such interests.

• Must not operate for the primary purpose of conducting a trade or business that is not related to its exempt purpose, such as a school’s operation of a factory.

• May not provide commercial-type insurance as a substantial part of its activities.

• May not have purposes or activities that are illegal or violate fundamental public policy.

Responsibilities of Tax-Exempt Status

While conferring benefits on 501(c)(3) organizations, federal tax law also imposes responsibilities on organizations receiving that status. PTAs in Utah are required to do the following:

• Keep books and records detailing all activities, both financial and non-financial. This includes detailed information on sources of income and expenditures of funds, as well as minutes of the meetings where decisions are made about the activities of the PTA and such things as newsletters.

• File an annual information return with the IRS either "Form 990EZ," if required, or "Form 990N."

• Meet requirements for substantiation and disclosure for charitable contributions.

• File "Form 990T" if there is $1000 or more of gross receipts from an unrelated trade or business.

Important Note: It is the outgoing treasurer’s responsibility to make sure that the applicable annual information return is filed with the IRS.

The IRS suggests that organizations, like PTAs, that have frequent officer changes develop an information packet that contains the filing requirements, instructions for completing the applicable forms and for filing an extension, and any other pertinent information. The packet should be passed on to each new officer to ensure accurate and timely filing of returns and avoid penalty assessments.

"Form 990N" (e-Postcard)

All PTA units in Utah (local, council, and region) that are not required to file IRS "Form 990EZ" are required to file an annual electronic notice, "Form 990N, Electronic Notice (e-Postcard) for Tax-Exempt Organizations Not Required To File Form 990 or 990EZ." This requirement came from the Pension Protection Act of 2006, with the purpose of improving transparency within the non-profit sector.

"Form 990N" should be filed by August 1, following the close of the fiscal year. "Form 990N" must be filed electronically. Only basic information is required on the form. A copy of the confirmation showing "Accepted" status should be submitted through Givebacks or council/region treasurer after the IRS has indicated that the filing was accepted.

• To access the e-Postcard filing site at IRS.gov/Charities-Non-Profits/Annual-Electronic-Filing-Requirement-For-Small-Exempt-Organizations-Form-990-N-E-Postcard, an account will need to be set up using the ID.me platform as required by the IRS. Detailed instructions are on the treasurers page: utahpta.org/treasurer

• The organization EIN can be found in the PTA’s bylaws. Each PTA in Utah has its own EIN, assigned by the IRS.

• PTA Utah Congress in the Organization's Legal Name - Line 1. On the second page, enter your PTA's name as DBA Name. This is because Utah PTA (identified by the IRS as PTA Utah Congress) is the parent organization for all PTAs in Utah and has a group tax exemption.

• The Tax Year Period for all PTAs in Utah is July 1 to June 30.

• The mailing address for all PTAs in Utah is: 5192 S Greenpine Drive, Salt Lake City, UT 84123

• No other address, including a school or home address, should be entered as the PTA’s mailing address.

• In the "Principal Officer" section, the name is the person filling out the form and the address entered should be the school address.

• When the "Form 990N" is first submitted, the status is "Pending." You must log back in approximately ten  minutes later before printing the confirmation. Make sure the status says "Accepted" before printing the confirmation to submit through Givebacks or council/region treasurer.

Additional instructions on filing the "Form 990N" are available on the treasurer page of the Utah PTA website: utahpta.org/treasurer

Substantiation and Disclosure Requirements

IRS Publication 1771, Charitable Contributions – Substantiation and Disclosure Requirements, explains the federal tax law for charities (like PTAs) that receive tax-deductible contributions. Some of that information is summarized here; the publication in its entirety can be downloaded from the IRS website (IRS.gov).

There are two general rules to meet the substantiation and disclosure requirements:

1. A donor must obtain a written acknowledgment for any single contribution of $250 or more to claim it on his or her federal income tax return. Further, as of January 1, 2007, no charitable contribution can be claimed unless the donor has either a bank record (such as a canceled check) or a written communication from the charity (such as a receipt or a letter) to support the contribution.

2. A charitable organization must provide a written disclosure to a donor who makes a payment in excess of $75 partly as a contribution and partly for goods and services provided by the organization.

Rule 1

Applies to any contribution received by the PTA. Although it is the donor’s responsibility to obtain a written acknowledgment, the PTA can assist a donor—and hopefully encourage continued donations—by providing a timely, written statement containing the following information:

• Name of PTA

• Amount of cash contribution or description (but not the value) of non-cash contribution

• Statement that no goods or services were provided in return for the contribution, or a description and good faith estimate of the value of good or services that were provided

While donors may not expect PTAs to provide a written acknowledgment for small, cash donations given for an event like a jog-a-thon, the PTA should be prepared to issue such a receipt if it is requested. Insubstantial goods or services provided in exchange for a contribution do not have to be described in the acknowledgment. Examples might include a school calendar magnet or student directory with the PTA’s logo. It is not necessary to include the donor’s social security number or tax identification number on the acknowledgment.

Examples of wording for written acknowledgments is as follows:

“Thank you for your cash contribution of $300 to Exemplary PTA, received by us on December 12, 20__. No goods or services were provided in exchange for your contribution.”

“Thank you for your donation of twelve dozen muffins to Exemplary PTA for our Moms & Muffins literacy program on April 2, 20__. No goods or services were provided in exchange for your contribution.”

Rule 2

Applies to PTA activities like silent auctions. In such cases, a donor may only take a contribution deduction to the extent that the contribution exceeds the fair market value of the good or services the donor receives. The required written disclosure statement must do the following:

• Inform the donor that the amount of contribution that is deductible for federal income tax purpose is limited to the excess of the contribution over the value of the goods or service provided

• Provide the donor with a good faith estimate of the fair market value of the goods or services

• The disclosure must be in writing, and a penalty is imposed on charities that do not meet the written disclosure requirement.

Unrelated Business Income

Unrelated Business Income (UBI) is income that is not related to the organization’s exempt purpose. If a PTA receives more than $1000 in UBI, it must file "Form 990T." 

Income is classified as UBI when three factors exist:

• A trade or business (“active”)

• Regularly carried on (in contrast to only “discontinuously or periodically”)

• Unrelated to the organization’s tax-exempt purpose

The income from most PTA fundraising activities is exempt from federal income taxes because of the following exceptions to the general rules:

• Volunteer activities (volunteers must do “substantially all” of the work—at least 85%)

• Low-cost merchandise (items are given in conjunction with solicitation of charitable contributions)

• Donated merchandise (“substantially all” of the items sold must be donated)

Form 1099-MISC or 1099-NEC

PTAs may be required to file "Form 1099-MISC" or "Form 1099-NEC" with the IRS if they pay $600 or more during the calendar year to any unincorporated business or person for services (including parts and materials), or for prizes or awards. Possible situations where this rule applies include an artist-in-residence or a performing group. The form and instructions can be obtained from the IRS website (IRS.gov).

For More Information

National PTA’s Finance Guide, which is available at PTAKit.org, contains more information about many tax-exempt organization issues. A pamphlet on tax issues written by National PTA’s attorney may be available for purchase at the Utah PTA office.

Additionally, the Internal Revenue Service (IRS) has a web-based version of its Tax Exempt Organizations Workshop. These free virtual workshops cover tax compliance issues confronted by small and mid-sized tax-exempt organizations. They consist of several interactive modules on tax compliance topics for exempt organizations including:

• Maintaining 501(c)(3) Tax Exempt Status - How can you keep your 501(c)(3) exempt?

• Unrelated Business Income - Does your organization generate taxable income?

• Employment Issues - How should you treat your workers for tax purposes?

• "Form 990" Overview - Would you like to file an error-free return?

• Required Disclosures - To whom do you have to show your records?

Users can access this training program at StayExempt.IRS.gov. The modules can be completed in any order and repeated any number of times. Also, web-based courses that delve into a variety of topics of interest to exempt organizations can provide training.

FUNDRAISING

The primary emphasis in PTA should be the promotion of the PTA Mission and Purposes of the PTA. The real working capital of a PTA lies in its members, not in its treasury.

PTAs do not exist to raise money, but raise money to exist. Fundraising is NOT a primary function of PTA.

When PTAs invest their human resources in programs that improve homes, schools, and communities, they earn benefits for children and youth with very small outlays of money. PTA-sponsored programs can provide enrichment activities for families. PTAs can work with other community organizations on community-wide issues that correlate with PTA priorities.

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 parent-teacher 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 non-commercial 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, high-pressure 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 tax-exempt 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. (See Unrelated Business Income in "Exempt-Organization Issues" section for more information.)

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)                        (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.

Corporate Sponsorship

Corporate sponsorship is a funding mechanism in which a commercial entity supports a charitable or educational organization (such as a PTA) with cash, products, or services in exchange for acknowledgment or recognition of the sponsor’s support. Sponsorships can relate to a specific event or to the PTA as a whole.

Corporate sponsorship is an appropriate means of funding projects and programs that promote the objectives of the PTA. Corporate sponsorship stands in contrast to endorsement, in which the PTA extols the virtues of a company’s products or services. Endorsement activities are not appropriate for PTAs based on PTA’s noncommercial policy.

A special provision in the Internal Revenue Code provides that 501(c)(3) organizations are exempt from paying federal income taxes on income from corporate sponsorships as long as IRS guidelines are followed. According to IRS Publication 598, qualified sponsorship payments are payments “made by a person engaged in a trade or business for which the person will receive no substantial return benefit other than the use or acknowledgment of the name, logo, or product lines in connection with the organization’s activities.”

As a general rule, the PTA may thank the sponsor for its support. The thank-you may be in writing or on posters, banners, or other appropriate media. It must be limited to an expression of thanks and can list identifying information of the sponsor, including name, address, phone number, website address, and logo. The sponsor’s product(s) can also be distributed as part of the acknowledgment.

“Use or acknowledgment” does not include advertising, which includes the following:

• Qualitative or comparative language (such as “this is the best”)

• Price information or other indications of savings or value

• Endorsement

• Other inducement to purchase, sell, or use a sponsor’s products or services

Sponsorship payments that constitute advertising will be subject to federal income tax. On the other hand, qualified sponsorship payments are considered to be charitable donations, and there is no limit to the amount that can be received by the PTA.

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.

Commercial Co-Venturing

Commercial co-venturing is a form of fundraising in which money is paid to a business for a product or service and a portion of that money is forwarded, as a gift, to the PTA. Given PTA’s noncommercial policy, the only appropriate role in any such venture is a passive one. Active promotion of the business’ products or services by the PTA and its members would violate this policy. Additionally, such fundraising activities should be structured to protect PTA’s tax-exempt status and avoid unrelated business income. The funds received by PTAs from such agreements should be accounted for as contributions on their financial records.

Games of Chance

Under Utah law, it is illegal to operate a scheme under which a person gives something of value in order to obtain a chance to get something of value. A raffle which requires purchase of a ticket is, therefore, illegal. A prize drawing may be conducted, however, if one of the following conditions is met:

• Payments are considered to be donations and anyone can have a ticket whether a donation is made or not.

• The payment is for an article with a value reasonably related to the amount of the required payment, and the ticket is given to the purchaser without additional charge.

Accounting for Funds

Because the treasurer’s duties are time-consuming and require attention to detail, he or she will likely not have a great deal of time to actively participate in the mechanics of PTA fundraisers. The involvement of the treasurer in fundraising activities should focus on ensuring compliance with IRS regulations and PTA and district policies and on maintaining copies of contracts and other documentation. Additionally, as with other financial transactions of the PTA, the treasurer is required to keep complete financial records of income and expenditures associated with the fundraiser:

• At the fundraising event or when the funds are received, the treasurer, the chair of the event, and a third person should count the monies received. All three should sign a "Money Counting Sheet" (see sample in Appendix 2) verifying the amount; this form should be attached to a "Funds Received" form (see sample in Appendix 2).

• All monies received should be deposited the same day. Arrangements should be made for the bank’s night depository if the deposit must be made after banking hours. Funds should never be deposited in a personal bank account or in the account of another organization (e.g., the school). Funds must never be taken home or left at the school overnight. Preparing deposits periodically throughout a lengthy event, such as a book fair, will minimize the time required at the conclusion of the event.

• When change is needed for a cash box, a "Check Request" form (see sample in Appendix 2) should be submitted by the event chair. The treasurer issues a check to the individual for the amount requested. The check should not be made payable to cash. The amount of the money in the cash box should be recorded on a signed "Beginning Cash Box Balance" form (see sample in Appendix 2), which should be kept in the cash box until the fundraising event is completed. The beginning cash balance is included in the final counting of the money from the event and deposited back into the PTA checking account. The beginning cash balance should not be included in the computation of profits from the event.

• Itemized invoices, sales receipts, etc. for expenses related to the fundraising event are given to the treasurer for payment by check. No disbursements should be made from cash collected at the event.

• Following the fundraising event, the treasurer, in conjunction with the chair, should prepare a written financial report of income and expenses associated with the event and present it to the board.

More information about receipt and disbursement of funds in the "Receiving and Disbursing Funds" section of this handbook.

Donor-Advised Funds

A Donor-Advised Fund, or DAF, is a charitable giving vehicle administered by a public charity created to manage charitable donations on behalf of organizations, families, or individuals. Donor-advised funds are the fastest growing charitable giving vehicle in the United States by providing a flexible way for donors to pass money through to charities. Many individuals/businesses are choosing this method of charitable giving to support our local PTAs. Some of the more familiar giving funds are: Benevity Causes, Fidelity Charitable Giving, and YourCause.

Procedure

Every local PTA unit in good standing qualifies to receive donations through any DAF under the umbrella of Utah PTA, also known as Utah Congress of Parents & Teachers or PTA Utah Congress. Utah PTA has created and maintains accounts with every donor-advised fund. All donations processed through a DAF will be mailed to PTA Utah Congress using the Utah PTA office address of 5192 S. Greenpine Drive, Salt Lake City, UT 84123. Once donations are received in the office, Utah PTA will swiftly redistribute the donation to the intended PTA with a Utah PTA issued check. Please do not alter the address or name of any of the charitable donation accounts to ensure proper handling of current and future donations. All questions should be addressed to Utah PTA via email to kids@utahpta.org.

Description of Donor-Advised Funds

1. 1. Benevity Causes: Causes.Benevity.org

Benevity is a global leader in online workplace giving, matching, and volunteering. Some of the world’s most iconic brands rely on Benevity’s award-winning solutions to power their Goodness Programs and corporate philanthropy, helping them attract, retain, and engage today’s workers by connecting people personally to causes that matter to them. Donations come from single donors and employees of corporations set up with Benevity. In fact, most corporations will “match” their employee’s donations when using this vehicle of giving.

Utah Congress of Parents & Teachers has an account. Donors are instructed to list in the “Notes" section the name of the local PTA to which they are donating. Also, they are required to document the EIN of the charity to which they are donating.

The donation check will come to the Utah PTA office and upon receipt, the office will deposit and reissue a check to the local unit.

1. 2. Fidelity Charitable Gift Funds:  FidelityCharitable.org

Established in 1991, Fidelity Charitable is an independent public charity that sponsors the nation’s largest donor-advised fund program. Their mission has remained the same—to further the American tradition of philanthropy by providing programs that make charitable giving simple, effective, and accessible. As of 2019, they have 229,000 donors with 138,019 giving accounts available to support a non-profit/individual as they see fit. This is currently the largest giving fund through which the local PTAs are receiving outside donations.

The donation check comes to the Utah PTA office and upon receipt, the office deposits and reissues a check to the local unit.

1. YourCause : YourCause.com

Top socially responsible companies partner with YourCause to manage their employee giving, volunteering, and grants programs. Their platform flexibility meets the needs of companies of all sizes – from Fortune 500 to small businesses – driving engagement and facilitating impact within the non-profit sector. Some of the businesses who donate through YourCause are: AT&T, Best Buy, Chevron, CenturyLink, Dell, Samsung, Symantec, and many more.

Utah Congress of Parents & Teachers has an account. Donors are instructed to list in the “Notes" section the name of the local PTA they are donating to. Also, they are required to document the EIN of the charity to which they are donating.

The donation check will come to the Utah PTA office and upon receipt, the office will deposit and reissue a check to the local unit.

3. Other Corporate/DAF/Employee Funds:

• Adobe Employee/Company Giving

• Kohl’s Cares Program: Volunteer events are set up and funds are disbursed through Benevity Causes. Please contact Utah PTA state office to arrange events and volunteer opportunities.

• United Way Employee Giving

• Vanguard Charitable

• Walmart Foundation: Please contact Utah PTA and notify us when you secure a donation with your local Walmart. This will help us disburse the donations quicker when the checks arrive.

INSURANCE

Coverage For All PTAs

The Utah Risk Manager of Administrative Services modified Rule R37.4 of the Utah Administrative Code adjusting the Utah Governmental Immunity Act Limitations (Tort Limits).

This adjustment strongly recommends all PTA groups have and maintain General Liability coverage with limits up to the governmental entity tort limits (i.e. - same coverage as for school districts). PTAs are not covered by their district or school insurance, they must obtain and maintain their own policy. Districts do not cover your money in case of loss, theft, embezzlement, etc. This is a broader law for anyone who uses a school/civic center facility to purchase liability insurance for events that are outside of school responsibilities. The law is designed to be adjusted each year and therefore the limits may change each year.

As of July 1, 2020, the law stipulates a liability limit of $3,138,300.

While we cannot mandate that you purchase your coverage through AIM Insurance, we can advise you that we have secured, through a partnership between Utah PTA and AIM Insurance, a discounted yearly rate. If you already have coverage in place with another carrier, we suggest you review the coverage to see if it meets the required regulations and, if necessary, increase your limits or move your coverage to AIM Insurance.

Utah PTA has selected September 1 of each year as the date of compliance for having proof of insurance coverage renewed. This date was chosen to correspond with the beginning of the traditional school year, so any unit that signs up for coverage, regardless of the date you sign up, will automatically have an expiration date of September 1. Confirmation is to be submitted through Givebacks or council/region treasurer by October 1st each year.

Different Types of Policies:

• General Liability­—This insurance provides coverage for a PTA’s legal liability arising from injury or property damage resulting from the PTA’s activities and operations. Such coverage may be purchased either on a continuous, year-round, comprehensive coverage basis, or on a one-time basis for special events (such as carnivals). PTA events are not covered by the school district’s general liability policy. Consult with your insurance agent to decide which works best for your PTA.

• Fidelity Bonding­—This type of policy covers losses through fraudulent or dishonest acts committed by officers or volunteers. If someone entrusted with the PTA’s money embezzles that money, this policy will replace those missing funds.

• Directors and Officers (D and O) Liability­—This insurance provides protection against claims arising out of the wrongful acts of directors and officers, such as discrimination and breach of contract. The Volunteer Protection Act of 1997 provides some reduction of risk to nonprofit organizations, including PTAs, but the laws have significant limitations.

• Property­—This type of policy will replace PTA property damaged or lost due to theft or natural hazard. Most local PTAs do not own personal property, but those that do should consider this coverage. This type of policy would also protect fundraising merchandise while it is in your possession.

• In making decisions about risk management, two variables should be considered: the frequency at which a loss can be expected to occur, and the severity of the loss that can be expected when one does occur. When the risk has a high frequency of occurrence, steps should be taken to reduce the risk. This risk reduction might take the form of cash counting policies that would prevent one person from having sole access to fundraising money. But when the risk has a low frequency of occurrence but a high severity of loss, such as the death of child on a carnival ride, transfer of the risk is likely the best approach. In other words, this is the type of situation in which the PTA might consider covering the risk through the purchase of an insurance policy.

MISMANAGEMENT OF FUNDS

If proper fiscal management procedures are consistently followed in an accounting system with adequate internal controls, a PTA should not have problems with embezzlement or mismanagement of funds. A summary of “Basic Fiscal Management Procedures” is located in the Utah PTA President Handbook and in this handbook. This summary should be reviewed by the elected officers and other PTA members who will be handling PTA funds during the year (e.g., fundraising chair and membership chair). Each of these officers and members should sign the form indicating that he or she understands the procedures. The signed form is to be submitted through Givebacks or council/region treasurer by October 1st.

Guidelines to Follow When Money Has Been Mismanaged or Embezzled:

1. When mismanagement or embezzlement of funds is suspected, the PTA line of communication should be followed in informing and receiving direction and assistance. The local PTA should contact the council. The council in turn will contact the region, and the region will contact with the Utah PTA Treasurer. If for some reason assistance cannot be obtained through the line of communication, contact the Utah PTA Treasurer directly.

2. When any wrongdoing is suspected, the person involved should have a hearing with the local Executive Committee and make an explanation of what has happened. If the hearing is unsatisfactory for either party, the decision may be appealed up the line of communication. Once wrongdoing is suspected, hearings should take place in a timely manner.

3. The PTA officers have a responsibility to the membership for all PTA monies. The PTA also has the responsibility to be a professional organization. The PTA officers are highly encouraged to try to protect the person’s reputation by using discretion in what is said and done, especially in the preliminary stages of an investigation. It is not responsible, however, to disregard the incident.

4. If the results of the hearing warrant further action, the Executive Committee should request that an audit be done, if appropriate, and documentation gathered. They should also carefully consider whether it might be appropriate to file a police report and/or to close the bank account. If an outside investigation is warranted, the police will become involved.

5. Theft of money is breaking the law and should be handled as a serious offense. Embezzlement is the same as ordinary theft. The charges are criminal and, if deemed appropriate, are filed at the police department. The charges can range from misdemeanors to felonies, depending on the amount.

6. According to the local PTA bylaws (Article VI, Section 7b), a person who fails to perform the duties of his office should be removed from office. It is the responsibility of the local Executive Committee to meet and declare the office or position vacant. All resignations must be made in writing to the president. The local Executive Committee is to elect a replacement to fill any vacancy.

7. PTA officers should not make any public or private statements about the situation, take any action without having the approval of the Board of Directors, or say anything to anyone which could be taken as a defamation of character, slander, or other statement of guilt about someone suspected of embezzling funds.

The Use of Gift Cards

The gift card industry is growing with nearly $275 billion dollars in annual sales. Many PTAs in Utah have recognized the benefits that gift cards offer and are purchasing them for use in their programs. Inherent with the use of gift cards, however, is the potential for misuse, and occurrences of such problems are increasing around the state. This section will review some of the problems that can occur with the use of gift cards and outline recommended policies and procedures for their use. For the purposes of this section, the term “gift cards” includes gift certificates.

What Are Some of the Ways PTAs Are Currently Using Gift Cards?

• As prizes or incentives for students in Reflections, Battle of the Bands, and other programs

• As membership incentives

• In conjunction with teacher appreciation activities

• As donated merchandise for “silent auction” fundraising events

• As thank you gifts for volunteers

What Are the Potential Problems with Using Gift Cards in These Ways?

Loss of accountability—Gift cards, like cash, can be used by anyone. Without adequate documentation of the purchase and distribution of gift cards, no one is accountable for those items and there is no “audit trail.” For example, students who do not attend their Reflections award night might never receive the gift cards purchased as prizes because they can readily be slipped into a purse and forgotten. Similarly, a PTA officer who accepted a donated gift card from a local business might use it for a purpose other than that approved by the board or even for a personal purchase. Unfortunately, PTAs, like all non-profit organizations, are susceptible to fraud. The policies and procedures in place for control of cash transactions—such as two signatures on checks, prompt reconciliation of bank accounts, and detailed documentation—are sometimes nonexistent or easily circumvented with gift cards, resulting in an even greater possibility for the perpetuation of fraud.

Turning volunteers into employees—When cash, gift cards, or gift items of more than nominal value are given to PTA volunteers, the PTA runs the risk of turning the volunteer into an employee in the eyes of the IRS. While the work of PTA volunteers is invaluable, if a PTA attempts to “compensate” a volunteer for his/her services, then he/she is no longer a volunteer. As an employee, he/she becomes liable for paying taxes on her income, and the PTA, as an employer, becomes subject to payroll filings and taxes.

How Can These Problems Be Avoided?

• Treat gift cards as cash.

• Institute the use of a log for disbursement of gift cards (or cash) used for prizes or incentives for students so that there is documentation of who received each award. (That log, signed by each prize recipient, would be attached to the "Check Request" form used for the purchase of the gift cards.)

• Limit use of gift cards for PTA purchases to items in the approved budget, and maintain, to the extent possible, the same controls that should be in place for cash purchases (including having two people coordinate gift card use and retaining receipts for purchases made). (See Appendix 2 for sample.)

• Eliminate use of gift cards (or cash) for teacher “stipends” since this creates an employer-employee relationship.

• Maintain an “accountable plan” for reimbursement of legitimate PTA expenses. (Such a plan—which is accomplished by following PTA’s recommended basic fiscal management procedures—includes the timely submission of documentation of the expenses incurred through invoices, receipts, etc.)

• Eliminate use of gift cards (or cash) as “thank you” gifts for volunteers, since this creates an employer-employee relationship.

References

“Stay Exempt: Tax Basics for Exempt Organizations. Course 3: Employment Issues.” Internal Revenue Service. StayExempt.IRS.gov

“Exempt Organizations: Compensation of Officers.” Internal Revenue Service. IRS.gov/Charities-and-Nonprofits

Disclaimer

The information, suggestions, and recommendations in this document are provided for educational and informational purposes only. They are not intended to, and do not constitute, legal or tax advice. PTAs and their members should consult their own attorneys or accounting professionals for relevant laws and regulations.

A "Prizes/Gift Card Sign-Out Sheet" can be found in Appendix 2 of this handbook. It can also be found at utahpta.org/treasurer

FREQUENTLY ASKED QUESTIONS

Where can I find a list of what our PTA can or cannot spend money on?

There is no published list from either National PTA or the IRS of acceptable expenditures. PTA’s Mission and tax-exempt status should guide your decisions. All expenditures in the PTA budget must support the Mission of PTA. If there is a questionable expenditure, a good rule of thumb is to authorize the expenditure only if you could defend the expense to the IRS in case of an audit.

Utah PTA takes no official position on the appropriateness of specific expenditures of its affiliated local PTAs, except as follows:

• All activities should be in accordance with the Mission and Purposes of PTA, as outlined in the bylaws and as required by our status with the IRS as a 501(c)(3) public charity.

• A needs assessment should direct the work of the local PTA and its annual goals and objectives.

• All expenditures must be made within the budget categories and amounts approved by the general membership.

Local PTAs should comply with the guidelines of the school district in which they operate.

When do we need to amend our budget?

Any substantial change to the budget must be approved by a 2/3 vote of a quorum of the membership. The amendment must occur prior to any additional funds being disbursed. The vote may be taken at any regular general membership meeting or at a special meeting called for that purpose. The number of members required for a quorum is defined in the bylaws. For PTA purposes, a change of 10% or more is considered to be substantial.

How do we get a 501(c)(3) or determination letter to give to a potential donor?

Donors to your PTA may request a “determination letter” or 501(c)(3) letter as proof that their donation is tax-deductible. Corporate giving programs like Smith’s Community Rewards will generally require this documentation. It will probably also be required for any grant application your PTA may be completing. Contact the Utah PTA office at kids@utahpta.org to get a letter about Utah PTA’s group exemption ruling from the IRS for your potential donors, sponsors, or grantors.

What information should the treasurer be reporting to the Executive Committee and the board?

The treasurer should provide a written treasurer’s report to the Executive Committee and board on a regular basis, preferably at each of the regular meetings. It is the responsibility of the entire Executive Committee to ensure that proper financial procedures are being followed. The specific format of the treasurer’s report is less important than the fact that reports are made. (See Appendix 2.)

Are local PTAs covered by insurance provided by Utah PTA?

Utah PTA does not provide insurance coverage for any local PTA. It is the responsibility of each PTA to determine their needs for insurance.

When would our PTA be required to issue a 1099-MISC or 1099-NEC?

PTAs are required to issue IRS Forms "1099-MISC" and "1099-NEC" by January 31 to any unincorporated business or individual they paid $600 or more in the calendar year for services rendered or in payment for a prize or award. Forms "1099-MISC" and "1099-NEC" are not required for payments to corporations.

What should our PTA do about an NSF (non-sufficient funds) check?

Contact, either by telephone or in writing, the maker of the check, and explain that the check was returned by the PTA’s bank. Ask the maker to replace the check immediately, preferably in cash, and also let him/her know about fees, if any, the bank has charged you for the transaction. Some units have had success with sending a letter signed by the school principal in addition to the PTA president or treasurer.

At any PTA function where checks are accepted, it is advisable to post a notice clearly outlining your PTA’s policy regarding returned checks (e.g., $10 fee will be assessed on all returned checks). It is also acceptable to discreetly let those collecting payments at PTA events know that checks will not be accepted from certain individuals.

I’ve heard that our PTA cannot carry over more than $2000 from one year to the next. Is that true?

Absolutely not! Good financial management would suggest that your unit maintain an emergency reserve to retain financial stability in the event of an unforeseen development, such as an economic downturn, unexpected expenses, or a fundraiser that is less successful than anticipated. No law or regulation dictates the amount of the carryover from year to year. Depending on the timing of your unit’s cash flow, a carryover of one-half to one full year’s expenses would not be unreasonable.

Can we donate PTA funds to help students?

The home of some of the students in our school was involved in a fire, or one of our students needs an organ transplant, or we’ve noticed that several students need winter coats.

No matter how worthy the cause, IRS regulations prohibit PTAs from making distributions to private individuals or families. The PTA Mission focuses on all children. (Of course, this does not preclude an individual from setting up a fund for such purposes, but the funds should never be run through the PTA account.)

Your PTA can include in its approved budget a donation to another nonprofit organization. The recipient must be a 501(c)(3) charity and must have a mission similar to PTA’s (school or child-related).

A new school is being built and some of our students will be attending it. How much of our funds do we have to give the new school’s PTA?

While not required, it is considered a beneficial act for the existing PTA membership to pass a motion giving the new PTA some start-up funds. One reasonable amount for that donation could be determined by prorating the expected year-end balance based on the number of students moving to the new school. In some areas, all PTA units in the council donate a set amount to the new PTA. Consult with your council and/or region leaders about what they recommend. Please remember that the new group must be a valid PTA affiliated with Utah PTA and National PTA before any funds may be given.

Our PTA is going to end the year with more money than we thought we would. How do we gift the excess money to the school?

Your PTA is not limited to a certain amount of money in its bank account from year-to-year, so it is perfectly acceptable to just carry this “excess” money forward to next year. But if the PTA wants to provide some funds to the school for a specific purpose, it must include this item in the approved budget (amending the budget, if necessary) and should distribute the money in the form of a grant (located in Appendix 2). A written grant agreement should include the specific purpose of the grant and require that the funds be used within a specified time period and that a written accounting be given to the PTA from the school.

What should happen if someone loses a receipt for reimbursement?

For audit purposes, you must have receipts showing that each check was written for a specific item(s) for a specific purpose. If a receipt is lost, the request for reimbursement should come to your PTA board and they can determine how to document an expense so that the person can be reimbursed.

Can we reimburse board members for mileage for attending Leadership Convention?

Travel is a legitimate PTA expense. The rate at which to reimburse mileage is something that should be set and voted upon by your local PTA board. The policy should be included in your standing rules. If you don’t currently have an established rate you can consider the IRS’s reimbursement for charitable miles driven is $0.14. Utah PTA reimburses for mileage at a rate of $0.35.