I agree that an organization needs to be careful about how many real fundraisers they do. And I wasn't suggesting anyone do all the things above, just giving examples. However, "fundraisers" as we think of them and "fundraisers" (actually "sales")for tax purposes are not exactly the same.
For us, our PTO considers that we have two major fundraisers - a Fall catalog sale, and a Spring Fling. However, we do other things like Family Nights or a Community Garage Sale or T-shirts where the primary reason is other than revenue. Some of things things are break-even, others have incidental cash flow. But sales tax (if applicable) is calculated on Gross Proceeds. So, for example, our Breakfast with Santa breaks even or loses a small amount. We don't think of it as a fundraiser - it's a family event. But the pictures that are sold (at cost) are still subject to sales tax.
We don't do holiday shop anymore. When we did - it was always at cost, not to raise funds. But to the State Comptroller, it's a taxable fundraiser.
It's important to understand the difference (at least in Texas) of what's taxable and what's not. If you do two big fundraisers a year, say a catalog sale and Chili Supper, you probably wouldn't want to count the Chili Supper as one of your tax free days, because it isn't taxable to start with. You'd want to pick another item with revenue coming in that is taxable, even if it's minor.
Incidentally, you also bring up a good point. In Texas it's two tax free DAYS not EVENTS. For a catalog sale, the Comptroller allows you to count the sale deadline when the money is submitted as the "day" even though the sale may have lasted for a couple weeks. However, something like T-shirts that you sell all year wouldn't really work unless you have one particular day (or a big day) to count. The limit is two 24-hour periods within a calendar year.
I think the issues raised are valid, and I, too, have heard the 3:1 rule. Thanks for adding to the discussion.
quote:Lisa@Tx Are you referring to the 2 Tax-Free days?
When doing actual fundraising, I think you should be careful on doing too many. You dont want to be considered greedy or all you do is fundraise! I agree the "free money" type programs are not actual "fundraisers", per se. There is an unofficial rule of 3:1. For every one fundraiser, do 3 other type of events. Are you generating too much money? Or are your fundraiser(s) not generating enough and perhaps you should consider a different fundraiser.<hr></blockquote>
When I took over as prez last year, the old regime had been running some sort of fundraiser about every 5-6 weeks (not counting ink cartridges, boxtops, etc.). I believed we could run 2 'big' fundraisers (one in the Fall and one in the Spring) and if it were done right, that would be the only ones we would need to do. We shopped around, negotiated our best deal, and guess what? It went down exactly the way I said it would. It took some research and some just plain hard work, but we made more money than any year prior, with less fundraising. Too bad it is a concept that our newly elected Board doesn't understand. Live and Learn I guess.
When doing actual fundraising, I think you should be careful on doing too many. You dont want to be considered greedy or all you do is fundraise! I agree the "free money" type programs are not actual "fundraisers", per se. There is an unofficial rule of 3:1. For every one fundraiser, do 3 other type of events. Are you generating too much money? Or are your fundraiser(s) not generating enough and perhaps you should consider a different fundraiser.
Note, on the Texas limitation of 2 tax exempt fundraisers - that's anything that is raising money for you as sales. So you have to consider T-Shirt sales, garage sales, carnival, whatever. You pick your biggest two (that would normally be taxable) and claim those as the exempt ones. So, for example, in Texas the following would/would not have sales tax applied:
Candy -no
Concessions -no
Student Directories - no
Gift/Catalog Sales - yes
School Supply Paks - yes
T-Shirts - yes
Chili/Spaghetti Dinner - no
Garage Sale - yes
Items sold at Holiday shop - yes
Carnival games -no
Admission ticket - no (if all money to PTO)
Silent Auction - probably
Educational/Craft Actvitities -no
Books/Bookfair - yes
This is just a sampling. As you can see, it's unlikely a PTO in Texas would get by without paying any sales tax. There are just too many things that are taxable. It's very important to keep track of the different pieces. For us, at Breakfast with Santa, the concession refreshments are not taxable, but the pictures with Santa are. So you need to know which activity earned what within an event.
Thanks JHB I bet you are right!! We actually only have one fundraiser that the children take home. I will check into these areas. Thanks so much for your input!
