I am very confused on this subject. Our PTA memberships are up on Sept. 30th. I have read that you can start your PTO before dissolving your PTA. How can you do this? How can we get rid of our assets in our PTA bank account so the state doesn't take them and still have money to put into another bank account. We need that money to start the new PTO. We have to file for a non-profit organization status, right? We will need money for insurance. How can we pay for these things from our PTA account without the State questioning where we are spending our money?

In our case, we couldn't use any money from the PTA to start a new "non-profit organization" as stated in our PTA by-laws. You might check yours to see what they say. Even if they don't say specifically that you can't, you might not want to do it to avoid any potential problems.
So you would have to spend all of your money before Sept. 30th and then don't start a new PTA membership drive/year. (And yes - our state went after our money.) As for how you then start a new group with no money, we started a fund raiser right away. We did a survey and our parents were really tired of selling items so we ran a "Capital Campaign" where they just wrote a check to the new parent group. The donation (because you are a 501c3 - get that non-profit status done right away) was 100% tax deductible that they could write off. We promised that we would only solicit donations one time a year. We suggested a donation amount per student and we raised $50,000 our first year. But you could do any fund raiser. Start up costs to the IRS are not great and you can buy insurance from PTO Today and soon as you start collecting money from your fund raiser. I hope that answers all your questions and helps!

Thank You Sooooo Much!!!!! Finally An Answer To This Madness!

How much is it to get a 501c3 non-profit status? Also, do we need to have that status before we open a checking account for our new PTO?

In our case, we couldn't use any money from the PTA to start a new "non-profit organization" as stated in our PTA by-laws. You might check yours to see what they say. Even if they don't say specifically that you can't, you might not want to do it to avoid any potential problems.
So you would have to spend all of your money before Sept. 30th and then don't start a new PTA membership drive/year. (And yes - our state went after our money.) As for how you then start a new group with no money, we started a fund raiser right away. We did a survey and our parents were really tired of selling items so we ran a "Capital Campaign" where they just wrote a check to the new parent group. The donation (because you are a 501c3 - get that non-profit status done right away) was 100% tax deductible that they could write off. We promised that we would only solicit donations one time a year. We suggested a donation amount per student and we raised $50,000 our first year. But you could do any fund raiser. Start up costs to the IRS are not great and you can buy insurance from PTO Today and soon as you start collecting money from your fund raiser. I hope that answers all your questions and helps!

Hi Colorado -

Your PTA bylaws said that specifically about not spending PTA funds to start another nonprofit? Wow -- that's very rare. Haven't seen that language in any other state.

That said, good advice on rest. Another key fact on the 501(c)(3) process is that the acceptance of your status by the IRS is typically retroactive to the start of your organization (provided you apply within a reasonable time -- like 12 months -- from the start). So you don't have to wait for the acceptance before soliciting donations that are/will be tax deductible.

Tim

We want to start a PTO, but do we need to take a vote or anything like that to begin this process before disbanding our PTA? We are already to start a fundraiser in the Fall and just realized we should probably not do that until the PTA meeting vote to disband. But if I can get the PTO up and running we could start the fundraiser under the PTO. But what do I need to do to start a PTO? A vote of the parents? Approval of the Superintendant? Or just a few parents deciding to start one?

Thanks!