Yes, if the new PTO gets its ducks in a row and gets the 501(c)(3) or even applies for same, then you're likely good.
The reason I still recommend the spend-down is just to avoid the hassle of the PTA rhubarb.
For whatever reason -- even though it's perfectly OK to do what you're contemplating -- that simple transfer/donation often sets PTA folks off. It's like kicking a bee's nest. So -- because the alternative is fairly easy -- we often recommend just avoiding kicking that nest.
So, if we establish a PTO before we disband the PTA, can we "donate" our PTA money to our PTO? This would alleviate the need to spend down our account.
Regarding starting a new PTO: I would highly recommend buying the Start-up guide from PTO Today. It's only around $40 and there is a wealth of information in there about registering with the IRS and with your own state. Also, PTO Today's insurance rates are very comparable to PTA’s. It’s a lot of work in the beginning, but it is so worth it to not be under the tight reins of the PTA.
Regarding funding a new PTO: The first thing I would do is to scour your local and state bylaws to ensure you are not violating their bylaws. My state PTA actually field a lawsuit and a grievance against me saying that I violated their bylaws, which I did not, and eventually won my lawsuit and the grievance was dropped, but regardless, they go to great lengths to keep tight reins on their PTA’s. I would not bother to ask a PTA rep, but would just check every word of the bylaws. By the way, I like how your PTAs/PTOs support each other throughout the district. If PTA does not allow it, it might be worth looking into changing to a PTO.
HELP!! In wanting to switch from PTA to PTO, what are the steps that need to be taken? This is after it has been voted on. To get the tax exempt stauts we would need to contact the IRS? I know bylaws have to be established. What else needs to be done to change over to PTO?
My reason for switching is the same as SockHerMom. I have been involved with PTA at our school for over 10 years. I just feel like we need a group that can work at our school that fits the needs of our kids. We tried asking questions at PTA Summer Leadership one year about changing and the representative hosting the class got a very big chip on her shoulder and a bad attitude. She didn't want to talk about it. There were others in the room trying to ask the same questions. But, she did say that a PTA could donate its money to another non-profit organization.
It just seems that PTA as an organization has gotten so big that the schools have to spend more time meeting PTA bylaws, deadlines and raising dues to cover the upperlevels of PTA. We want to be able to keep the money here for our school and spend more time on doing things for the students in our community.
Any help or direction would be greatly APPRECIATED!
A new PTO can be considered tax-exempt in the eyes of the IRS, even if it hasn't formally filed for 501c3 status. I forget the exact grace period, but I think it's 27 months from formation of the organization. And even then, you only have to formally apply if your GROSS annual income exceed $5k. So, the donation from one formal 501c3 (PTA) to a new small organization acting like a 501c3 (new PTO) would pass the IRS's test. If you're unsure and want to get an expert's opinion, call the IRS at 1-877-829-5500.
