Oh and by the way, don't think just sources of dollars. All those donations for teacher appreciation, items for your auction, parents donating food, local stores providing supplies - those are contributions.

[ 08-21-2006, 07:07 PM: Message edited by: JHB ]

I think Mattibug has the answer for the question posted, but this issue comes up from time to time, so I'd like to summarize for anyone else reading this.

Referencing IRS Form 1023, X. Public Charity Status. Question 5. The applicant has to pick one of the choices A-I. Many of us who have successfully filed have been told by the IRS to choose:
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• G - ...support from grants from governmental units or from contributions from the general public, or a combination of these sources.</font>
• H - more than 1/3 of your support from contributions, membership fees, and gross receipts from activities related to your exempt functions, or a combination of these sources, and not more than 1/3 of your support from gross investment income and net unrelated business income.</font>
• I (either G or H, but let the IRS decide)</font>

From discussions with others who have filed, I think "H" is most common.

Bottom line -unless you are an unusual PTO with atypical sources of income and disbursements, keep it simple and choose G, H, or I.

I know D (an organization supporting...) sounds like a good match. But if you choose that, there's yet another schedule to file. And the way the IRS defines support doesn't mean the same thing as the way we think of it. From what I understand, the D choice is more like for an educational foundation which literally raises money for the school to use.

[ 08-21-2006, 07:06 PM: Message edited by: JHB ]

matti - I'm curious if the IRS meant any money gifted to the school (for a specific purchase or to remimburse the school for an expense the PTO agrees to fund) is the same as giving it to the school. Is there any chance by "giving money to the school" they could have meant that you were giving your money to the school for the school to deposit and control? Do you see my point?

We write checks to the school all year for various, specific PTO-approved reasons, but not just because we raise money for the school . I wonder why this particular payee is different than, say, a bagel vendor you might pay every month? I don't want to complicate the issue, and I'm perfectly comfortable with not being a supporting organization in the IRS's eyes...just curious what they said for the sake of all the readers here.

Are you sure you never write any checks to the school? or never will?

For example, we let the teachers and Principal deal with getting the busses for field trips. The school pays the bus company and the PTo reimburses the school up to the defined limit.

I was able to get through to an irs rep today. For 1023 app purposes, if a pto funds are given to a "school" then we would be considered an organization supporting another tax exempt organization (choice d of #5 part X). However, I needed clarification since our checks are never written out to the school. Our funds are disbursed either to the teachers who run clubs, need books, conduct after school programs, third parties to bring activities to the school etc. Since our funds are not distributed directly to our elementary school, we would file as receiving funds directly from the public. (choice g of #5 part X) That makes my life simpilier. Thank you for all of your help.

matti - call the IRS before you select your final answer. I looked over the June06 revisions to Form 1023, and it looks like the most substantial change is the user fee. The current PTO Today Start Up Guide is based on the major revision from October 2004, so it's still relevant, especially since the IRS will accept that version until December 1, 2006. I am very curious what the IRS says about being a supported organization. I would call them myself, but maybe there's a nuance about your PTO that is different from ours and qualifies you as a supported organization. You can help us all understand if you can share the IRS's opinion with us. Thanks for helping us all learn! Good luck with your application. I know it's a bear to complete.