Not a lawyer either, but I've done some homework...
There's no set amount to hold over, but check your bylaws to see it specifies a certain level for your group.
For us, we feel that the current group of kids should benefit as much as possible from the funds they raise, so we spend most of the funds in the year earned.
Our bylaws require that we keep $2000 on hand for starting up the next year. Our group usually keeps $2500-$3000 just to be safe. Also, we usually have our T-shirt order ($1200+) and a couple other things falling due in the summer. So we end in May with our reserve amount, plus enough to cover the summer bills.
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What is your question about profit/non profit? Both are types of businesses, both earn and expend funds, both can carry funds over from year to year, both can (and should!) make profits. The differences are primarily about ownership and profit distribution.
A for-profit entity generally exists to make money for its owner/shareholders. Non profits don't have "owners" and exist for some sort public good. Non Profits cannot distribute money to its "owners", organizers, principals, insiders, etc. -- the people who run it cannot profit from it. (Note, a non profit CAN pay salaries, reimburse for expenses, and provide money/benefits/goods/services to its constitutents in keeping with its purpose and mission.) Additionally, non profits may quality for tax exemptions or tax advantages.
Our group fundraises this year and spends it next year. It works really well for us. We don't really have a problem with families not participating their final year. For one thing, I'm sure many people have no idea that this is our policy (although we mention it at every meeting, it's not a secret) because the majority of people just aren't that involved. Secondly, it's not really the kids selling, it's the parents (our major fundraiser is giftwrap). We don't offer incentives (administration doesn't allow it) so the kids really aren't begging for more sales to reach a certain prize. The money we raise is pretty level year to year, and there are no problems with the money being spent the next year.
IANAL, but the consensus seems to be that there is no legal limitation. There are a few guidelines that should drive your decision how much to keep on hand:
Spend the money these kids' families raise on these kids.
Keep enough for next year's startup costs prior to your first fundraising receipts.
If you are saving up for a major expenditure, you will need to carry more money until then.
If you are carrying more money for a major expenditure, you need to be sure to communicate that to membership. Otherwise, somebody might assume it is available for a pet project. If your treasurer is an adept bookkeeper, you may want to consider showing that money in a seperate account from your general fund.
There are execeptions to the above, of course. Some groups have amounts stated in their bylaws.
Some groups use a formula of fund-raise this year, spend it next year. This allows the organization to know exactly how much is available to spend during the year. Personally, it makes me wonder how motivated the students are in their final year for fundraising. The flip side of that is they may be VERY motivated the year before so that their last year will be special.
Can anyone tell me how much money PTO is legally able to keep on hand. Any sites to give me legalities in regard to this question would be greatly appreciated. Are there fees that go with the amount of money on hand or should I say could there be fees. Profit and Non-Profit. Difference in the two? Thanks.
