Question: Can classrooms earn money from the the PTO

With budget cuts our teachers are looking for ways to earn more money for their classes. Can the PTO split the money earned from a fundraiser such as a carnival and say if you run a booth, you get a percentage of the profit brought in? That way you don't get penalized by a booth that isn't popular. The question then becomes, is this a gift from the PTO if they earned $67? Can the PTO dictate one class earned money but another didn't based on participation? Can the PTO hand out the $67 to be spent on the class or does it have to be in the form of reimbursement only? How does this look to the IRS? Thank you for any comments.

Asked by PantherM0m



Advice from PTO Today

Craig writes:
The IRS is concerned that you spend your money in ways that match your mission -- helping the students and the school. All of the things you mentioned do that, so you won't have any trouble there. The question is really more one of fairness and what's best for the school. It's certainly not best for the school for the 4th graders to earn $500 because they had the dunk tank while the 2nd graders make $35 off the bean bag toss. And I don't really think that's fair, either, since both groups likely worked hard. Allotting a percentage of profit to classrooms is a great idea, and I would recommend splitting it equally. You can give money to teachers upfront (teachers love this), but you do need to collect receipts for your tax records. One reason groups reimburse is because collecting receipts after the fact can be a pain.

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