I just spoke to an employee of the IRS Tax Exempt Organizations Unit. I was told that as long as we have a Conflict of Interest Policy, it will be okay for the directors/principals/owners of my son's privately held school to sit on the board of the PTO AND also have voting rights.

I downloaded the PTOtoday Conflict of Interest Policy which is also the same suggested language from the IRS. After reading the policy, I think that we will be covered if something comes up.

Thank you for helping. We have our Bylaws committee meeting next week (will NOT include the directors of the school) so we can officially decide what we want to do.

I think the situation you describe -- owner of a for-profit school sitting on the board of the nonprofit PTO that it benefits from -- would violate the IRS conflict of interest rules.

Here's a link to the IRS statement required for your 501c3 application:
www.irs.gov/instructions/i1023/ar03.html

IRS rules are very strict about how for-profit and tax-exempt organizations coexist. I'd suggest that you speak to a tax attorney experienced with nonprofits to help clarify your specific situation.

Good luck, and please let us know how things work out.

Our school is very small. Less than 30 students.
Our school is privately held. There are 2 owners.
The 2 owners are also the Directors/Principals of the school.

We just formed our PTO in April and are working on creating Bylaws. We want the director's involvement (and have a very good relationship with them) - but I am confused as to whether or not they should:

• Sit on the Board
• Have voting rights

Our directors (principals) have a financial conflict of interest with the PTO. As they are the owners and operations of the school, should they be allowed to sit on our board or have any voting rights?

It should also be noted that the directors of our school do not ever plan to convert the school to a non-profit. They want total control over how they run the school and do not want to risk "outsiders" telling them how to run their business.

So, the parents have created a non-profit PTO to support the school. (as typical with PTOs) We can't tell the school how to operate, so should the school have any say in how the PTO operates (outside of getting their support to do anything)

When looking at sample bylaws...most are for public schools. I haven't seen or can tell how a PTO that is associated with a private school handles these types of issues.

Please help!