Question: Can PTO use funds to support referendum?

Our school district has had a referendum come to ballot five times over the past four years. Each time, it has failed. A pro-referendum group is seeking donations from members of the community to cover brochures, flyers, and ads in the local paper to help pass it on the next go-around. Is it OK for our PTO—we’re a registered 501(c)(3) nonprofit organization—to use some funds to help our town pass this referendum?

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Advice from PTO Today

Elly writes:

Elly gets this question as often as she gets "Can we spend our money on a luncheon or gifts for volunteers?" The answer to that one is a big yes! The answer to your question is yes, too, but with a few qualifications.

While the IRS prohibits nonprofits from supporting individual candidates, the regulations regarding lobbying or influencing legislation (especially in areas that fit your mission) aren’t as black-and-white. Lobbying is allowed, but it can’t amount to a substantial percentage of your PTO’s efforts or dollars. Example: If your annual budget is $4,000 and you’re forking over $3,000 to lease office space for the referendum campaign committee’s headquarters, Elly says that might spell trouble if you’re audited.

The IRS also has certain guidelines for leaders when it comes to issuing public statements. For organizations to remain tax-exempt under section 501(c)(3), leaders cannot make partisan comments in official organization publications (in your newsletter or website, for example) or at official functions. Additionally, leaders who speak or write in an individual capacity are encouraged to clearly indicate that their comments are personal and do not represent the views of the organization.

Keep in mind that local political issues, including ballot initiatives and referendums, can make for an emotional and volatile climate among parents in your organization and can exhaust its energy, too. If the referendum has failed four times, Elly’s guess is that there is some strong opposition and that parents at your school are likely split on the issue, too. Delving into the debate could split your group, thus hindering its involvement efforts at the school.

To avoid jeopardizing your tax-exempt status or, worse, losing some volunteers, the organization is better off taking the neutral or "educational" approach prescribed by the IRS, namely conducting meetings, preparing and distributing materials, and considering public policy issues in an educational manner. Presenting unbiased information to parents in your newsletter or website or holding forums at the school where parents can listen to both sides and then make an informed decision is likely the best course of action for any PTO.

For more information on political and lobbying activities and how they pertain to 501(c)(3) nonprofit groups, visit the IRS page on political campaign involvement.

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