Yes, it's perfectly OK, especially where you say the PTO is a tax-exempt organization.
It is a bully tactic.
I can give you a similar example that made no sense. We (PTO Today) help administer the back-end of a grant program for Lowe's. (
www.toolboxforeducation.com). We take in the grant apps., manage the grading and reporting, certify that recipients follow all grant requiremnts,a nd mail out the checls/winner packages.
PTOs and PTAs are equally eligible and literally hundreds of PTAs have won grants, grants averaging over $4,000 each.
So the PTA leadership in one (unnamed) state told its units that they couldn't accept the grants, because PTO Today was involved. Craziest thing I've ever heard. Of course, all the grant winners (correctly) told this state leadership to -- how shall I say? -- pound sand. And they're now making use of their $4000 grants very well, I'm sure.
Similar for you.
Tim