Question: Receipts for Classroom Funding

I'm the Treasurer of a new PTO and we just had our first fundraiser and want to give our first donation to the school. We would like to give each classroom a donation of $75 for "Classroom Enrichment". Which means whatever the teacher thinks is best, such as defraying costs of field trip or classroom supplies. I'm a lazy treasurer and want to make this process as easy as possible, but I'm afraid I can't just distribute the money without getting receipts back for what it was spent on. What is the best practice for this? Do I need to have each teacher spend their money first and then submit a receipt for reimbursement? Or can I give the school a lump check with instructions on what it is for?

Answers:

Advice from PTO Today

Craig writes:
You do need to collect receipts. Because the amount of money you give out will be a "substantial" part of your budget, the IRS wants you to collect receipts to show that the money was used in a way that matches your group's stated purpose. (And by the way, that's broadly defined. As long as the teacher isn't buying a new watch or a wall hanging for the dining room, you're probably OK.) As far as best practice, you'll get more receipts if you collect them before you issue a check. However, teachers will appreciate you more if you give them the money, then let them turn in receipts. It will undoubtedly take some hounding on your part, but I'd give the second way a try this year. If it doesn't work out, then you'll have a good reason for making teachers turn in receipts first. A third solution is that you can donate the money as a lump sum to the school to be distributed to teachers. What often happens in that case, though, is that the school secretary ends up doing the follow-up—which is unlikely to make you popular with her.