Advice from PTO Today

Craig writes:
Good question. If this situation is working for you, you wouldn't. A lot of parent groups, especially at parochial schools, operate in the way you describe.

There are two primary reasons for a group to become its own independent, tax-exempt entity. One common one is that the group wants more control of and/or easier access to the money it raises. Sometimes school rules can interfere significantly with the ability of the group to operate efficiently. And sometimes money that goes directly into the school account is spent on things that the PTO doesn't consider a priority (like items for a different school, for example).

The second reason is that many groups operate in a middle ground where they were established as a separate entity but never applied for 501c3 tax-exempt status. The reason to apply for tax-exemption is, first, to make your group legal. Second, it makes donations to the group tax-deductible. (That's particularly important if you run an auction.)

Here's an article that outlines the reasons to switch. But if your situation works well, you should probably stick with it.

501c3 for PTOs

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Community Advice

seekanswers writes:
Thank you for your response. Your answer highlighted some of our concerns - more control / and easier access to the funds and concern about where the money might be spent. I will order the PTO Toolkit soon to help us navigate the process of becoming a 501c3 group.

Do we need to apply for some type of insurance as well?

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Advice from PTO Today

Craig writes:
Yes, you should have insurance. You might have some coverage through the school policy -- check to see what protection it offers for you. Usually, that's fairly limited. Here's a link with information on insurance for PTOs. We have a group buying pool that offers a fairly significant discount.

Best wishes to you and your group with the change!

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