PTO Today

We are currently a PTA looking to change to a PTO. We now have 501-c3 status and I was wondering if we will need to reapply for that under our new name and by-laws or is it strictly a name change? Does anyone know how to go about this?

Thanks!

The 501(c)(3) status will not transfer. You will be starting a new organization with a completely different entity. So you will need to file and pay the fee to apply.

The same thing happens if you are a PTO that incorporates (after getting the 501). The incorporated PTO is a new legal entity, so the 501(c)(3) doesn't transfer.

Your group would need to apply for the non-profit status and depending on your state, you might need to apply for tax exempt status.
Your status now is "umbrellaed" under your state PTA and when you leave, you're out in the rain until your new group applies and it covered!

Hi Smiley --

JHB has it right.

A couple of follow-ups:

1. You can start your behind-the-scenes PTO start-up process before your public launch in order to have some of these details taken care of. For example, if you expect to make a PTA-to-PTO transition and you expect to take your final disband PTA action in May, you could start the PTO start-up pahase now and have it all ready on the very day of transition.

2. Your non-profit status as a PTO basically starts the day you start your PTO. There's no gap. As long as you apply for yur 501(c)(3) within (I believe it's) 18 months of your start date, then your 501(c)(3) status (once you're approved) will be retroactive to your start date.

3. There is a cost to getting your own 501c3. Typically it's $500. The good news there is that that's a one-time cost (not an annual fee), so -- over time -- there's a huge savings there.

Tim

The fee went up this last year. The top (most common) fee was $500 seemingly forever, so we're all used to that amount. But now it's $750.

Actually, there are two fee levels depending on your GROSS expected income.

"Organizations whose gross receipts have averaged, or will average, not more than $10,000 per year pay $300. Larger organizations pay $750. "

Most PTO folks that participate in the Forum exceed the $10,000 criteria if they are pursuing the 501(c)(3), so you'll primarily hear the top amount referenced here.

Hi all,
Just jumping into this conversation a little late. We are a very small PTO just organizing out of a PTA... your "fundraising numbers" are way beyond us... how about a group only expecting to raise around $5,000 per year?
Karen

$5000 is the threshhold at which the IRS says you need to formalize and pursue the 501(c)(3). But it's important that PTOs understand the IRS criteria are based on [B]Gross[/B] Amounts - everything coming in, not what's left after expenses.

So, for instance, if your PTO only has one single source of income and you sold $8,000 worth of cookie dough with 50% going back to the company.
Gross sales income = $8000; Net sales income = $4000.

It's the $8000 number that counts.

I have heard the amount of $25,000 of Gross Receipts as the IRS threshhold. Is there any value to this number?