Question: Benefit for one family

Our school suffered a tragedy when a parent and her oldest son died in a car accident. She left behind 8 other children - four students at our school. Members of our PTO have arranged for bake sales, a restaurant fundraiser and a coin drive. The money was given to the PTO to give to the family. Are we violating our PTO charter and 501C Status? How can we fix this? Almost $5000 has been raised. Thank you.

Asked by Anonymous

Answers:

Community Advice

fjrogers1 writes:
I don't know about the legalities, but was the money raised under the name of the PTO. Perhaps in the future it could just be some parents who raise the money, not under the guise of the PTO. Our school has done that before....

Advice from PTO Today

Craig writes:
This is something of a gray area. If you organized a fundraiser in which it was clear the money was going directly to the family rather than to the PTO, I don't think you'll get into trouble with the IRS. If I were doing this I might also take the step of making sure the money raised wasn't put into the PTO account. I'd either open a separate account for "Smith Family Fundraiser" or hand over the proceeds to the family without depositing it first. By the way, you might be at more risk if the money went to the family of a PTO board member. The IRS might be tempted to look closely at that.

Community Advice

badpants writes:
Earlier this year, one of teachers died from lung cancer. We held a Trivia Night benefit. Even though it was fully supported by our families, who purchased tables, donated baskets for the auction, as well as promoted the event, it was organized and led by our teachers. Our parent group also donated a lump sum. If you have not already deposited the $5k, I would also suggest opening a separate account. This may be useful as well if money donation come in after the fact or if another fundraiser is coordinated in the future. One of the things that our group does, which may be helpful, is the treasurer keeps a file with every flyer or RSVP form, for every event where money is exchanged. As a chair for many of our social events, I keep all of the returned forms families send in along with their payment.

Community Advice

pngai writes:
Opening a separate account leaves unanswered the important question: whose taxpayer ID or Federal Tax Identification Number will be on the account? That person or entity will have to include the money deposited on their tax returns. Depending on the nature of the entity, taxes may be owed.