I would love to have a lawyer's take on this. (Tim - Ask Elly??), because I'm not sure I agree with some of the interpretations.

As tragic a situation as this is, I think the first issue is really "policy". Under what circumstances would you help a family? Who, how much? Who decides? Setting up a policy to follow that's fair to everyone, all the time is really hard.

As far as the IRS issue, I read it more to mean that the organization's assets could not benefit an individual outside the scope of the purpose of the organization, or one who has substantial influence on the operations.

Of course our resources benefit individuals! PTO's supplement field trips, pay for school supplies, provide scholarships and grants for students who can't afford programs. We benefit the teacher every time we buy something for a classroom. You benefit individuals if you provide free refreshments or pay for babysitting. Big 501(c)(3)'s like United Way are in the business of assisting individuals.

As I say, I'm not a lawyer. But as a lay person reading through the stuff, it seems a PTO could definitely get in trouble if the assets were used to benefit a decision-maker (Board member, principal) in a personal way or if it couldn't justify assistance within the context of its goals and purpose.

However, I don't think it's correct to flat out state that 501(c)(3)'s can't use their resources to benefit an individual. It seems to me it's not quite that simple.

Our PTSO organization is a 501C and we regularly give gifts to our teachers and parents...is there somethign wrong with that? We also give $50.00 each year to our local High School Grad Party (drug & alcohol free) can someone enlighten me?

What teacher gifts??-We don't use any of our membership dues or fundraising dollars to give teachers gifts..All gifts we give to teachers are donated items just like all the items we raffle off at our monthly "Free raffle". The teacher appreciation luncheon we spend $400 on for 225 people. This is approved by membership when the budget goes up for vote. Our budget is @45,000 annually, and it is publized well in advance (flyers sent home and newsletter) that this luncheon is a gift from all of the students for the teachers, staff and administrators. It is staffed by volunteers.

I'm sorry to hear that Sharksmom. It really is too bad that politics get involved. And I must say that you definately raise a good point about the teacher and staff gifts and luncheons. I wonder what Susieq and SFilak will have to say about that...lol...just kidding Susieq and SFilak!
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Well, thought I'd share an update with you all. We ended up doing nothing. One of our board members said we couldn't donate the money for the dance admission....even if we posted signs around the school a week before the dance stating where the admission money was going. Needless to say, I'm a little sour on the whole deal. Since we were unable to do this, let me whine for a second...lol. If that is the case, are we technically not to give volunteer luncheon, principal, nurse, secretary day gifts etc? Just wondering if we could be doing something wrong there as well. Okay, thanks and I'm through pouting...lol

Donations to Individuals--I think I understand. PTO monies should NEVER be used to give donations to individuals regardless of their tragedy, correct? I printed out Publication 557, regarding 501c(3) organizations and in my cursory review I did not find any language concerning this issue. Is there a specific IRS Ruling that I can get that deals with this issue? At our PTO it was suggested that we amend our by-laws to include an item on guidelines for helping our families. However, after reading Publication 557 that would be in violation of the IRS because these types of donations are now allowed. There has been a longstanding precedent set at our school to help families in need but no definitive guidelines to follow to determine what kinds of needs or how much to donate. It sounds like we need to abolish this practice, true? Someone mentioned setting up a "sunshine fund" but it sounds like those funds need to come from outside sources and NOT fundraising money, correct? We had a 1st graders dad die unexpectly last year and I requested a cash donation and was turned down because we HAD TO HAVE A RECEIPT. That was the only criteria. In lieu of cash they decided to buy small gifts for the child because that way they would have a RECEIPT. It now appears that even that act would not be approved by the IRS, correct? It also sounds like there is really no way to get around the IRS without risk to the officers. How can our current president ensure that such donations are NOT made by future officers? Thank you so much.