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.
- Craig
Links in this post: