Bah humbug on end-of-the-year gift giving…
Each year at Christmas and again at the end of the school year my tuba-playing son brought home a note asking for a donation to provide the band directors a gift. Money was collected and a gift card or a check was given to the director and assistant director. Most often we contributed, except for those years when the note got lost in my son’s backpack and didn’t surface until sometime around July.
There’s no problem with collecting donations and providing teachers, band directors, coaches and others’ gifts. However, school booster clubs and other fundraising groups are violating IRS rules when they use money in the organization’s bank account to buy gifts for individuals.
So, what about providing gift cards to teachers to buy classroom supplies? I don’t recommend it. It’s far better to operate your organization like grant-making foundation. You raise the money and determine how it should be spent. You then provide a grant to the school designating the purpose of the grant, and the school, using its standard procedures, reimburses the teachers or distributes the funds. If you provide gift cards directly, the cards should be for Staples, or Office Depot or another store where school supplies are normally purchased, and you must collect receipts from all the teachers for the entire amount of the gift card to ensure that the funds are used for classroom supplies.
You probably think I’m the Grinch and am down on teacher appreciation luncheons also? No worries, I’m not. Teacher luncheons are o.k. provided it’s about recognition and appreciation and doesn’t include a hefty swag bag. The bottom line is that 501(c)(3) tax-exempt organizations must use all their money to support their mission. You can’t benefit specific individuals, including those that raise the money, or the teachers, advisors, and coaches.
It may sound grinch-like to some, but it is quite true,
Your organization’s funds may not be spent on few,
You must raise all your money for one and for all,
For those that play trumpet or run with the ball.
You may not buy gifts or give away money,
To the coach or the teacher or your favorite honey.
Instead says the tax man who gave you exemption,
Your funds must be spent only on your big mission.
The only organization of its kind in the US, Parent Booster USA is about helping school support organizations (parent teacher organizations, high school booster clubs and other school fundraising groups) handle the state and federal government paperwork required of fundraising groups.
Founded in 2004 by an attorney skilled in nonprofit and tax law, Parent Booster USA has more than 5,500 member organizations in 50 states and DC with a 95% annual renewal rate. We provide peace of mind for parent volunteers, school administrators and school district leadership.
Sandra Pfau Englund
Founder of Parent Booster USA
Sandra Pfau Englund was a working mom in 2004 when she volunteered for her son’s elementary school PTO. The nonprofit and tax law attorney quickly became mired in trying to organize the group’s finances, tax-exempt status and fundraising compliance. If it was this complicated and time consuming for someone with her professional knowledge, she wondered how other parents and booster groups managed. From that experience, Parent Booster USA was born.
Sandra is a sought-after subject matter expert and has been quoted by NBC’s TODAY show and in Forbes and The Wall Street Journal, among others. She is published and speaks throughout the country on issues related to nonprofit legal liability, financial controls and audits in a post-Sarbanes-Oxley world, board development and fundraising.
Learn more at sandrapfauenglund.com.