Question: Existing School Debt

Our Charter School board recently asked our PTO group to help pay off a large amount of existing debt from our first year of school - from vendors who built the school. We, as a group, want these vendors paid, but our mission statement and bylaws are geared towards enrichment opportunities. We have offered to run specific fundraisers for this - but they want our existing money right away. I feel like we as PTO are being put in a bad position. I know that the existing bank loan with the school requires a certain percentage of of the SCHOOL's fundraising to be paid directly to them. But we as PTO have a separate tax ID number and are set up as a separate entity, so this rule does not apply. I do not want us to get into a situation of doing something that might get us in trouble. Any suggestions on who I should contact or what we should do?

Asked by Anonymous

Answers:

Advice from PTO Today

Craig writes:
Tough question. If your charter school is a tax-exempt nonprofit, you likely don't face any consequences from the IRS for donating money to the school to help pay the bills. The next question is what's more important to parents in your group: helping the school get on more solid footing or providing more enrichment and other opportunities for children. You're right to make sure your group doesn't get pressured into making a choice. It's important to gather all of the facts -- like what are the consequences to the school if the bills aren't paid, and what programs would you have to sacrifice to make that payment? Once you've done that, you can make an informed decision. Good luck!

Community Advice

jenc93 writes:
Craig - thank you for that input. We have a meeting about this tomorrow - and the consequences are fairly severe if the school doesn't show a good faith payment to the vendors. We (as part of the school) are the only ones that can make any headway on this situation, due to financial factors elsewhere. I appreciate your input.

Community Advice

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