Legally, you have a ton of flexibility in carrying over money. You have to be a good steward of your money -- there's no IRS rule that you have to spend every dollar that you take in within a certain time limit.
A good example would be if you were saving for anew playground or to buy a new air conditioning system for your school. That kind of effort might take 3 years, and that's OK.
I'd also offer one other good reason why carrying over a decent amount of $$ is a good idea: it allows you to spend the first month or two of school focused on service and connecting and involvement, rather than fundraising. And that's a much better order of operations.
For so many groups, their first effort each year and therefore their first impression with parents each year is fundraising and the membership drive. In other words -- please give us money! I think that does real harm to your more importnat efforts of creating community and building involvement.
On the fairness issue, if each year starts with, say, $3000 in bank and then ends with $3000 in the bank -- then there is no unfairness. It's just a shift in spending and raising patterns. Net $$ effect is the same $$, but -- in my opinion -- a much better, more welcomingh back-to-school cycle.
I certainly see the points made about spending money throughout theyear. There's also value, though, in saving money for big-ticketprojects. I know our PTO doesn't bring in enough in a single year tofund any big-ticket projects, but those projects can have lastingimpact, and the parents I know don't mind us saving some money fromyear to year -- as long as they know what we're saving it for.
Even if it's something that might not benefit their kids, they knowthat their kids benefit from *previous* big-ticket purchases funded byparents who came before them. My own daughter -- and every child inthird grade or lower at our school -- plays on playground equipmentpurchased a few years ago, before she was old enough to go to school,funded by savings the PTO had accumulated over five years. So it wouldbe very selfish of me and other parents of K-3 kids to insist thateverything the PTO collects this year has to be spent this year onstuff to benefit our kids.
The biggest problem for McKelly, in my opinion, is that they don't foresee any big purchases in the next few years. With that much money on hand, I think you need to be able to explain what you're going to do with it. If you can't figure that out, then you've got a problem.
Joanna and Brenna said it: let that money benefit the kids whose parents donated.
I can't imagine it'll be a tax problem -- not like you're earning huge amounts of investment income on the bank interest (it does count against public support).
Our PTO always looks at the budget in May, estimates the extra, and asks the principal and staff to make recommendations, which we vote on at the last meeting in June.
I have to agree with Brenda, as a parent, PTA member and board member I think it is important to use the money throughout the year. There are parents that donate their time and money into the school who may not have a child return the next year. It seems unfair that their kid will not benefit from their donations and most of all their time.
I can't imagine that the school can't use the money somewhere. Library materials? Playground update? Technology? I've never met a teacher that couldn't make a dream list of items for the classroom or school.
Rather than a legal obligation to spend the money, I think you have an ethical obligation. The parents that donate to your school expect the funds to help THEIR student - not the students 3 or 4 years from now. Keeping it in an account is unfair to the parents that donated the money.
Thanks for the replies. The tax liability is what I am worried about. I will have to ask around and see if anybody knows a CPA.
We actually did gift the school a large sum of money last year to purchase smart boards and ELMO's. I realize this problem hardly seems like a problem. I just have this nagging feeling that we are doing something wrong carrying too high of a balance.....
