Question: Can board members have personal stake in product fundraisers?
Is it OK for board members to use their personal business to help us fundraise and make a profit at school? We’ve always used fundraisers involving parents who happen to be consultants and sell things like Tupperware, makeup, candles, etc. These parents donate a good amount to our cause so we’ve never questioned it, but recently I was told that if officers use their personal businesses to make a profit at school, it’s a conflict of interest. Is this true?
Advice from PTO TodayElly writes:
The most important point to remember about any fundraising possibility is that you should make decisions based on what’s best for the school and students and for your group as a whole—not on what’s best for individual members or officers, no matter how enthusiastic (or even pushy) they are. That means thinking carefully about which fundraisers will be most effective, doing them well, and skipping the rest because parents will only respond to so many calls for support.
A lot of parent groups have rules restricting or forbidding contracts with officers or even members in general. By creating a uniform policy, you avoid hard feelings—and inadvertently getting into trouble with the IRS. In fact, the IRS recommends that groups adopt a conflict-of-interest policy to protect against charges of impropriety.
That doesn’t necessarily mean you have to say no to your treasurer when she offers her catering services at a discount for the annual dinner soiree, or to the dad who charges half his regular fee when he DJs at the PTO’s family dances. It just means you should proceed with caution.
If your group decides it wants to continue doing business with parents, Elly has some suggestions to ensure that those deals are legit.
Make sure all parents, not just officers, know they can share their businesses and services with the school and your group.
Consider multiple proposals, and don’t just choose the most persistent parent because she is calling four times a day. (The same goes for any other vendor, too.)
Get a clear picture of the financial implications of all the proposals you consider, and weigh them against each other. The IRS will want you to be able to demonstrate that the choice you made wasn’t an “inside job.”
Require everyone with ties to any of the contracts or vendors you’re considering to abstain from voting.
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