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reserve money

11 years 1 month ago #149355 by mamaj
reserve money was created by mamaj
Do any of your PTO's have a CD account? Is there a need to have money in reserve. Our PTO, that I have just become President of, has a large CD and a savings account with a considerable amount in the savings. Is there a purpose for a PTO to have so much money sitting there? I thought we were there to help the kids and teachers. Why earn the money if you are not going to spend it? Any responses would be helpful.
11 years 1 month ago #149513 by witkowski
Replied by witkowski on topic RE: reserve money
I never heard of a PTO having a CD account -- usually just a checking account to pay for things during the year. The By-Laws should state how much needs to be in the account for start up each school year (most say $1,000). Was that $$ in the CD targeted for something special at the school? If so, then it should now be spent if there is enough $$. I know we bought a/c's for the school and said on each fundraiser flyer that the $$ raised was being put towards the purchase of a/c's for the school. We had an Open PTO meeting and did a slide presentation and at the end did a Q&A session and then took a vote. Every person in attendance said Yes. We then just raised $$ and spent it on the a/c's; anything left stayed in checking account and we have spent it on variety of things during the past 2-3 years -- assemblies, carnival, classroom gifts etc. etc.
11 years 1 month ago #149516 by LUVMYKIDS
Replied by LUVMYKIDS on topic RE: reserve money
The elementary group I was a part of had a CD at one time that was money designated for a playground. We put it there to let it earn some interest(and therefore reduce our fundraising needs) while we waited for school construction to be completed. The CD was then deposited in our checking and spent. That being said, I don't think any group should hold large sums of money in reserve, whether it's in checking, savings, or CDs without an express purpose for that money. Carrying over a couple thousand dollars to cover start of year expenses is very necessary for most groups, but otherwise money raised should be spent in the year it was raised if at all possible.

Here are thoughts on spending that money:

Some years our group had particularly successful fundraising programs, so we had excess monies. We had the principal, teachers, and office staff give us a wish list of items needed in the school. We started making purchases from the list and got rid of a big chunk of money. A couple of times we gave our teachers an additional classroom stipend so they could get extra supplies and learning materials.

Hey Rocky, watch me pull a rabbit out of my hat.
11 years 1 month ago #149519 by OregonTreasurer
Replied by OregonTreasurer on topic RE: reserve money
We do have a sizable sum in a savings account and have considered putting at least part of it into a CD. Our eventual goal is to have one year's worth of operating costs in savings so that if we ever have an emergency that stops us from fundraising in the fall or something along those lines, we won't be in such dire straights. The money didn't all come from one year's budget and has built up slowly over time.

We were about 1/3 of the way to our budget goal. Then we chose to remove several thousand dollars to assist our school in light of the current economy and the budget cuts announced by the district for next school year.

That is the type of thing that makes a reserve account a sensible thing to have. You never know what types of emergencies may crop up. I've heard horror stories of districts changing policy to not allow catalog fundraising. While yes, you can eventually find alternatives to replace those funds, it probably won't happen in the first year. Which may mean that you can offer very little to your school that year (I know that's what it would mean for us if we didn't have a reserve account).

I read an article recently that stated it was a good idea for non-profits to have a reserve fund equal to two years of their budget in case of emergency or sudden lack of funds and/or quick increase in services needed. While the article was geared toward non-profits that are larger and bring in more dollars that the average parent group, it came across to me as sound advice for us as well.

Our group's view on the whole carrying money over thing is that it's fine as long as the bulk of what we take in each year is spent on our school each year. Our average yearly contribution to our reserve fund is only about 1/30 of our yearly budget in any given year.

In addition to our reserve fund we also carry over around 3k-5k from June to September to fund beginning of the year trainings, the back to school open house in August, school supply scholarships, and other early expenses like our finance manager renewal, printing, stamps, etc. We don't see the take from our fall fundraiser until around the end of October, and by then we've hosted 2-4 events, so that money is imperative for us to function for the 1st couple of months.
10 years 11 months ago #149821 by EvaMDPTO
Replied by EvaMDPTO on topic RE: reserve money
Interesting to see 2/3 say no, don't carry over and the other say it's a good idea to have one year's operating budget in reserve with the caveat that these recs are usually for much bigger non-profit organizations.

Are there any 501c3 regs on how much you can carry over? I thought the idea of non-profit is that you shouldn't have much carry over money, but I don't know much about federal regs on this or if there are any.

Also, in each of these cases, is the General membership made fully aware each year of the CDs and/or reserve balance?

Thanks in advance for any comments.
10 years 11 months ago #149825 by NP's Mom
Replied by NP's Mom on topic RE: reserve money
As far as 501c3 regs go you can carry over as much money as you want as long as it's being used for the purposes that was stated in the 501c3 application.
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