It's very simple - as a non-profit you can expend funds to support your purpose as specified by the IRS and using generally acceptable accounting principles. Part of that requirement is that you don't benefit individuals.
If you are simply handing out money with no proof that it's a REIMBURSEMENT, you are giving those teachers personal gifts. It jeopardizes the organization's role as a non-profit and the teachers should probably count the money as income for their own tax returns.
There are several postings on this with different strategies, but receipts should always be required.
I've always said the easiest (i.e., minimum conflict) method to change the way it's always been is to simply "blame" an authoritative third party - namely either the IRS or the auditor.
You can fully commiserate with their feelings - but, after all, you are only doing this to protect the organization and to protect them. Once you mournfully explain/complain that X (IRS/Auditor) said you had to do it this way because of the two reasons above, most will accept it and move on.
I was in this position once and had explained and justified endlessly and felt I was having to repeat and coax and explain over and over. Finally I just called the school auditor (who also checked our books each year) and asked how it had to be handled. He confirmed the requirement for receipt, even faxed me a one-pager on best practices.
After that I could simply say "the auditor said we had to" and everyone quickly got used to the idea.
Perhaps an abuse of power on my part? I'm not one to say the end justifies the means. But honestly - I have to admit to the occasional short cut to sanity!
Absolutely get receipts. If you are audited won't you need to prove where the money went and how it was spent? If the teachers are told of this I am sure they would understand!
Our PTO is fortunately in the finanical position to give each of our teachers $300 at the beginning of the year for them to spend on their classroom (books, supplies, bins, curriculum enhancement, posters, etc.) In the past, receipts have been asked for but not all the teachers turn them in. Our Board has been discussing whether or not we require receipts or not. On one hand, this is a fairly large expenditure (several thousand dollars total) that we as a Board are accountable for to our donors and it doesn't seem unreasonable to require receipts. On the other hand, we trust our teachers and don't really question that they are indeed spending the money on appropriate things for their classrooms.
Some board members feel quite strongly that requiring receipts will result in the teachers feeling micromanaged and give the message that we don't trust them, plus it's a fair amount of paperwork for someone to manage. Others feel that it's not a matter of trust or abuse (at least currently this is not an issue with our particular group of teachers who we as parents and PTO have a great relationship with) but just a good process to have in place.
Would love to hear what others think or if anyone is in a similar situation. Thanks.
