Yes, these are new board members. Are they qualified? I'm thinking probably not (I have my reasons). I still don't know what changes they have in mind.
It took 3 months to get our official tax exempt letter. We are, for now, a public charity. Does anyone know the minimum required to remain a public charity? Our new board members were discussing it, and what they were saying is very different from the impression that I got when researching it.
Are these your new Board members and what motivated them to bring this up? Also are the Board members really qualified to say whether the by-laws are adequate or not? I would suggest you solicit pro bono legal advice on this part, if they are not qualified or knowledgeable in this area. Also often the State requires filing of by-laws and Articles of Incorporation. I was part of a 501(c)(3) that was required to amend their by-laws by the State because there was some inconsistencies and omissions between the two documents.
As for the budget, that is an internal guideline. The IRS seeks a budget to understand what your activities are. In most cases, depending how you qualified for your non-profit status, you often have a look-back period before receiving your final determination letter. There is reporting at the end of this period and the IRS will review to make sure that your status is legit.
Anyway, you should adopt a budget for your organization each year and avoid changing it, but rather use a moving forecast based on the budget to analyze your results. If you find that there are some changes to be made in operations that materially affect the financial outcome, your Board should review to see if revisions to the budget are necessary.
To pick up on what Boysmom said, being a 501c3 restricts your group's a tiny bit: you can't give substantial amounts of money to an individual, especially a member. I'm not quoting the IRS ruling very well, but basically, a member can't benefit financially from the organization. So if your PTO's bylaws say you'll do that, or if your budget specifically sets aside compensation for officers, for example, that would be a problem. But if the IRS has already reviewed your bylaws, they should be ok. There's a publication that does a good job of describing the restrictions of a 501c3, but I'm not sure the number. You can find it by searching the IRS's website www.irs.gov.
PTO Mother--I'm certainly no expert on this, but our PTO is currently going through the process of obtaining 501(c)(3)status and I've pulled a number of useful & pertinent articles from back issues of PTO Today magazine. You could probably find them from a search of the archive on this website.
From what I understand, there will be new policies we need to put into place on things like keeping better records and copies of all fundraising materials, and there will be some restrictions on how we use our money. We have never that I know of given a donation from PTO funds to an individual on our staff, for example, because we preferred to "pass the hat" when individual cases seem to call for it, but now that would be the only legal approach.
I thought the same thing-if the IRS thought they were acceptable, then I don't know why change is needed. I don't know what they think needs to be changed, I guess I'll find out at our meeting. I just wanted to be informed before the meeting takes place. I'm the one who applied for tax exempt status, and I'm not an expert in that area, but I've learned a lot in the process, so I probably know more about it than most.
