Question: Does scholarship program violate bylaws?

A request has been made to our PTO to help fund a scholarship for a senior at our local high school. Students would need to write an essay about how their experience at our elementary school affected their life. A panel of teachers and parents would select the winner. Our mission statement says that we “exist to improve the learning environment for students by raising funds to purchase instructional materials and provide experiences which expand the potential for learning; assisting teachers so that they may maximize the time they spend with students; and promoting parent involvement through events that build community among families.” By funding this scholarship, would we be in violation of our bylaws or engaging in conduct that would undermine the purpose of our organization? Would we be allowing the organization to engage in conduct that could then result in the loss of our tax-exempt status?

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Advice from PTO Today

Elly writes:

Many parent groups provide scholarships to former students of their school, and your mission statement seems broad enough to include it as something that would “expand the potential for learning.” However, only your members can decide whether a particular request matches the group’s goals. What’s more, even if a program fits your goals in every way, parents might still decide it’s not a priority and vote to spend the group’s time and efforts on something else. Elly suggests talking with parents to find out whether they support the idea of a scholarship in the first place.

The IRS does have some specific criteria for how nonprofits can award scholarships or grants. If your group decides to go forward, check with the IRS or an attorney to make sure your essay contest and the related rules and guidelines meet legal requirements.

If you would like to promote a relationship with the high school, consider distributing flyers about appropriate high school activities and recruiting parents at your school to help at high school events. Why not arrange a sit-down with parent leaders from both schools to see how you can help each other? You’ll be amazed by the range of experience and ideas brought to the table.