Question: Use of School Tax ID

Our PTO is currently starting anew as we are combining two seperate elementry PTOs into one PTO for the benefit of the Districts two elementry schools. I have been elected as Treasurer for the upcoming year for the new PTO. In asking questions I have come to realize that our organization is not a 501c3 and they have for years not operated under the school. In trying to move forward, individuals from all three Boards are involved which is proving to be very complex. I am a CPA and after doing much research, I have brought to the attention of all Board Members that we should incorporate, obtain an EIN, and 501c3 status and move forward. However, the school has presented the option of the PTO operating under the schools tax ID through use of a seperate General Ledger number. Any funds we make would be deposited into a school owned account and any expense we need to incur would have to go through the school's purchasing process. From a professional stand point, I totally disagree with this as even an option. However, the majority of the current Board members from the two seperate PTOs are against moving forward with the non-profit route and think that we should just take the easy way out and operate under the school. It has become a halting point preventing us from moving forward to plan for next year. I am new to dealing with PTO related issues and not an expert in such field. But everything in my accounting background tells me that this is an inappropriate route to take. I will point blank ask, is it illegal for a PTO or parent led organization to operate under the use of a public schools tax ID? From every thing that I understand, if ANY organization has over $5,000 in gross receipts (not income) per year, it should be reporting to the IRS. This tells me that the organization should be seperate. If it was a student organization such as FHA or cheerleading, I could see them operating under the school. But a parent based organization? Or am I simply off base and totally wrong in my perception of the way things need to be done to be ethical and legal? I read a lot of what appears to be opinions, but is this truly an option? Any thoughts would be greatly appreciated if you have ever expierenced the same issue.

Asked by Anonymous



Advice from PTO Today

Craig writes:
It's not illegal to operate as, essentially, a committee of the school. It's a big tradeoff, though. You give up all autonomy. You don't have bylaws; you have rules -- that the school can decide to change at any time. If the school decides to spend your playground equipment fund on office products and cleaning supplies, there's nothing you can do about it. If the principal decides he wants to appoint the president rather than hold elections, you won't have much recourse. Those are extremes and many groups do operate as committees of the school, but if you go that route you should know what you're giving up. In general I'd say that situation can work fine when things go well and the principal has a good relationship with the parent group. But when tensions rise, it can be frustrating for parent group leaders to find they have little actual authority.

Community Advice

simoned writes:
I would not recommend the PTO's being under the school. You should be a separate volunteer organization with your own EIN number. And Exactly what the previous answer is above. You do not want anyone else but the PTO handling your finances or telling you how to spend them.

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