How in the world do you know this much about someone running for office? Does everyone running for office fill out a personal financial report?
If you have good financial controls in place - and you should - then personal finances are really none of the PTOs business. I have no idea what financial situation my fellow board members are in. No idea how much they donate to our PTO or how much debt they have. I do know that they are good hardworking volunteers with an interest in improving our school and those are two totally separate issues. (Being in debt and being a thief are two very different things. Assuming that she will steal funds is a big assumption.)
I'm not aware of any IRS rules that would preclude the president from serving your 501c3, but you definately want to institute tighter financial controls. These are for your group's protection as well as your president's. Obviously, you (and probably others) are concerned about the circumstances and a bit suspicious of this person's character. The president should welcome implementing tighter controls to hopefully reduce your concerns. Financial controls are appropriate for every PTO, not just one where there's concern. Eliminate risk and you might just avoid tempting someone to do something bad.
Specifically, you should have a 2 signer rule for your checks. No check can be issued unless signed by 2 offiers (usually Pres, VP, Trez are the authorized signers. The bank statement should be mailed to one of hte officers other than the Trez. In this case, maybe it should be the VP. The VP reviews the bank statement, initials it and then gives it to the Trez for reconciliation. The Trez should never issue a check without proper supporting documentation. No paperwork, no check, no matter how small the amount. Cash/checks coming in must be counted by two different people in public. The amount must be recorded on a deposit form and signed off by both folks. The trez must deposit quickly and attach the bank receipt to the deposit form as backup. The treasurer must present a transaction report, performance to budget, and bank reconciliaiton to the board every month.
There are a bunch of tools and articles about this on the PTO Today File Exchange under "Finance and Budget". In your case, you might want to start with the Risk Assessment Checklist. Reviewing it will highlight places where your group should tighten controls, so the pressure to change comes from "the experts" rather than you personally.
Your concern is understandable, but if you put good controls in place, you can sleep soundly, and your president can prove her/himself a good leader without the cloud of suspicion.
Having audit measures in place is a good idea -- maybe the other candidate for president has some financial troubles that you don't know about yet (just got laid off) and would face even more temptation.
Our president has signing authority, but the treasurer holds the checkbook.
If this person did get elected, I would think you might want to have a private discussion with this person to say, we understand you had some financial problems in the past, we don't think they'll affect your performance, but we want to be sure the PTO's reputation can't be called into question, so we'd like to implement these controls.
Problem is this person now has over $10,000 for owed payment against them via a court settlement in addition to the previous Bankruptcy. Unfortunately there are no checks in place to stop money from disappearing if they were careful enough. hence my worry. I had hoped that 501c3 status along with the bankruptcy and even the new judgment against them might have meant they were ineligible to run.
I would say that this is a personal financial situation that is 13 years old and irrelevant to this person serving on the board. I know of a very nice couple who many years ago had to file bankruptcy due to a law suit from a car accident involving their teenage son. Didn't make them bad people-just victims of circumstance.
Do you believe that they could be capable of stealing funds from your group? I would hope that you have financial controls in place to prevent that.
Can a member of a 501c3 PTO organization such as president or treasure still serve if they have a bankruptcy judgment against them?
If they can are there additional rules regarding this, such as they are not allowed to sign checks etc. We have a person running for president who filed for bankruptcy bank in 1996 and we don't want to jeopardize our non profit status because of his past. The President can write checks in our organization.
