Craig writes:
Good question. It certainly seems innocent enough -- people work hard for the PTO, so why not let them have this little perk that doesn't cost the group anything? On the other hand, if you do get audited, it's going to require some explaining as to why all of your expenses are reimbursements rather than paid directly by the group. And it will complicate your bookkeeping because you're adding a layer between you and your purchases. What happens when someone puts a bunch of items on their credit card and forgets to save the receipts? What if you have to return an item or get it serviced? These things can be overcome, but they're complications. On top of that, I'm not a tax expert, but I'm pretty certain that your members who do this will need to declare this benefit (which they did not pay for because they are being reimbursed) on their personal income taxes. When it comes to bookkeeping, I'm a strong believer in keeping things as simple and straightforward as possible, so I would recommend against this. And yes, you definitely should establish bylaws. Here's a helpful article called
How To Write PTO Bylaws.
Chicky writes:
Thank you Craig, for your response. This is a tough situation for us. We feel our board member has compromised their integrity, and yet this is the person who is soliciting donations for our organization. How can we be trustworthy that everything is completely honest now? And I have been exploring the by-laws tips on your site ... and yes, they WILL be written. Any tips to help us thru this ?
Craig writes:
It might be easiest to address your situation by putting a number of new financial controls in place, including, for example, requiring pre-approval for reimbursement of any purchase over say $25. Make sure everybody is well aware of the new policies, then enforce them. That way you'll be getting your finances in order rather than targeting a specific individual. The article
5 Smart Financial Controls provides some other important policies you might implement.
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