Question: Documenting Transfer of Funds from PTO to School

The PTO became a 501(C)3 organization in December of 2009. Our fiscal year ended June 30th. The typical procedure is for the PTO to cut the school a check at the end of the fiscal year (it would be this month), and those funds are used the following school year. Someone told me that if I cut the school a check for a large sum of money (or rather anyone for that matter), I need to put together some sort of letter documenting all the details of the check, and have both myself (the treasurer) and the person I am writing the check to sign this letter for IRS purposes. Does this ring a bell to anyone? Or has someone been blowing smoke up my ear? I haven't written a large check since we've been deemed 501c3 so I have no idea what any procedure is. Thanks so much for any help.


Asked by ptovolunteer

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Answers:

Advice from PTO Today

Rockne writes:
Why are you cutting this check? That's unusual. Tim


Community Advice

ptovolunteer writes:
Why do you find this unusual? Are you saying that any monies that are spent by the school be paid directly out of the PTO checking account?


Advice from PTO Today

Rockne writes:
Hi volunteer - Just would be helpful to understand a bit more what your are referring to. Most PTOs and PTAs have a budget, their own checking account and their own spending procedures. If they, for example, fund a field trip for the 2nd graders, they cut the bus check out to the bus company. At the end of a given year, remaining funds are kept in the account o hep fund the start-up of the next year's work. So I'm not sure why you're writing this check to the district. That's typically only done if a group is dissolving or if there is a specific purpose for the donation. Tim


Community Advice

ptovolunteer writes:
Hi Tim, My apologies for not being specific. The PTO checking account and the school's checking account (not the district's) are kept separate. In May there is an allocation meeting between the school and the PTO. At that meeting, it is decided upon how the money raised that particular school year will be spent the next school year. There is a small amount of money that remains in the PTO account that is used as start-up funds, etc. In July / August, 75% of the funds are given to the school's account to help them get their assemblies together, fund the teachers, etc. In January we pay them their remaining balance due of the prior year's monies. Yes, it sounds very convoluted, and quite honestly, it is. Our last PTO dissolved because of money laundering, and I'm sure this was the procedure they enacted to ensure the money stays in tact. However, we are now officially a 501c3 so I am sure the procedure can be tweaked, but I am not familiar with how it SHOULD work. Any advise would be much appreciated. And back to the original question, if I were to cut a large check, does anyone know if that needs to be documented? Thanks Laura


Community Advice

badpants writes:
It does seem like a convoluted process, but every organization has their way of doing things. I would just call an accountant. Maybe your personal accountant, if you have one or even if you have a parent at your school that is a CPA. That way, you are getting info from a professional, that you trust. You may also want to consider asking if there is a more seemless way to handle the money. Our parent group also has an allocation meeting, however we tranfer funds to a special account that is still maintained by our group. We call it the project account and the project manager is the oiygoing treasurer. Once we allocate the funds, the project manager is give a line item expense list, with how that money is to be spent and she writes those checks to those expenses. We retain $2000 for the following year. With this system, we can be assured that the money we raised, gets spent on exactly what we decided.


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