I'm not sure where it comes from, but there is some persistent myth out there that the IRS will come after you if you accumulate "too much" money over time. It is a myth--there are no IRS fines or penalties just for that.

Where you might run into a problem, though, is if you received donations specifically earmarked to the playground, and then tried to use that money for something else. If you do have some restricted funds like that, you need to keep them set aside for the playground--keep them for future maintenance or expansion if you can't use them right away. If you still have way too much, then, theoretically what you are supposed to do is go back to the donors and ask them if they either want their money back, or if you can reallocate it for something else. (BTW, all this isn't an IRS rule, it's generally accepted accounting principles, I'm pretty sure. The IRS redesigned the 990 forms 7 or 8 years ago to make them consistent with the new accounting rules. Your best bet is to consult an accountant familiar with FAS 116 to make sure.)

If you had a PTO/PTA event where your board determined that the proceeds were to be used for the playground, your board could probably pass some sort of resolution to reallocate the funds.

If you check the 990 your organization filed (assuming you're big enough), you should have some temporarily restricted net assets on there which would most likely represent your remaining playground funds. If you don't, either the funds really weren't restricted to the playground, or your 990 is incorrect. If you had an accountant prepare the return, that would be your best source to sort this out.

[ 06-03-2003: Message edited by: mum24kids ]</p>

No, there are no rules/laws that restrict how much you keep in your accounts. Non-profits are a type of business. Depending on how huge they are, some have millions in their accounts. (Probably not PTO's ) Small or large, a non-profit needs to operate within its mission and ensure that individuals (i.e. organizers, not clients) don't personally benefit in an inappropriate way.

You do need to check your bylaws to see if there are any rules within your group about account balances. Beyond that you need to find out if there are any school or district policies that might affect you.

Finally, and most importantly, you want to use common sense for your group. Most groups want to spend the bulk of their earnings within the school year to benefit those kids that raised the funds. Some raise funds this year to fund the following year. It's fine to save funds for a big project like a playground that takes multiple years to raise. But it's generally a bad idea to keep a lot money just for the sake of keeping it.

Note, most groups do maintain a reasonable balance to kickoff the following year and support starting activities. (My group keeps a balance of $2000-$3000.)

Good luck with your situation!

Have you checked out the IRS site? Also the bank where your account is could probably answer questions.

Hi! I'm new to this, so bear with me. I was wondering if anyone knows the laws or rules regarding PTO checkbook accounts. Is there a dollar limit on how much a PTO can have in their account at any time? Do we have to spend a certain amount in a certain amount of time? The problem is we raised money for a playground for a couple of years and when the time came, due to money given by the city and matching gifts from the school district, it cost us a fraction of what we had raised. Of course, we already had a fundraiser going for the next school year, and now we have more money than we ever thought. I'll spare you the details, but we have some pettiness and personal issues preventing the PTO from voting to spend as much money as we need to keep this under control. But I keep hearing rumors of "fines" and "penalties" for having so much money and being a nonprofit organization. We do have tax exempt status, but I am not sure that affects the issue. Any thoughts or ideas on where to get this info? "Surfing the 'net" is not my idea of an evening of fun. Any input would be greatly appreciated. Thanks!!