I am one of the chairpeople who is moving our 6 school district PTA to PTO. We are trying to abide by our bydlaws and affroding county reps opportunities to speak and what not in accordance. Long stpry short, we have decided to disaffiliate from PTA and move forward. At the first indication that this might happen, we organized our PTOs and incorporated as such with the state. We also moved forward in applying for our (501)(c) 3 status and have sent that off to the state as well. We are planning to fulfill the last bylaws requirements by having the state PTA reps speak at our May meetings and then vote to disaffiliate imemdiately following their speeches. In the meantime, we opened new bank accounts under the new PTO names with the new PTO EINs and voted to tranfer the funds PRIOR to the PTA reps coming to speak. Therefore, if the PTA does decide to go into our books and garnish anything there, they will only have access to about $100 in each account. It is erfectly legal to vote to tranfer monies from one non profit organization to another. PTA has also noted that they have NEVER before (at least in NJ) garnished anyone's monies who have disaffiliated but we are better safe than sorry.
Having gone through this process, we see the relevance in putting the steps to disaffiliate and form new PTOs in writing so we wil be doing so over this summer and submitting it to Tim at PTO Today so they will have future reference for giving new PTOs guidance.
Goood luck in your endeavor. If you have any more questions, I'll do my best to answer them for you!
PABROCC
Thing is, though, I don't see where your transferring funds to another nonprofit would jeopardize the PTA's nonprofit status.
IRS's big concern is that a nonprofit's leftover assets upon dissolution don't wind up in a person's or a corporation's (non-nonprofit) hands. You wouldn't be doing that.
Would be interesting to hear what the IRS's nonprofit specialists say on this one. They have a great free helpline.
Tim
Thanks. I agree. I've never been afraid of us breaking the law. We also are just now in the process of applying for the new group's federal tax exempt status, so it's a bit more complicated. I can see the state PTA having concerns, though, with transfer of assets. Because while I know my group would do thier homework and would not do anything innappropriate, I can't say that about the hundreds of other school-based groups. So, at the policy level, I can see PTA working very hard to prevent groups from doing a lot of transfering of funds.
I've spoken to the IRS nonprofit specialists and they've been great. However, it seems that the advice can be different depending on who you speak to and who is asking the questions. [img]smile.gif[/img]
Like you, I'm not a lawyer. I may have to get a nonprofit attorney on this one, just for curiosity.
Thing is, though, I don't see where your transferring funds to another nonprofit would jeopardize the PTA's nonprofit status.
IRS's big concern is that a nonprofit's leftover assets upon dissolution don't wind up in a person's or a corporation's (non-nonprofit) hands. You wouldn't be doing that.
Would be interesting to hear what the IRS's nonprofit specialists say on this one. They have a great free helpline.
No need to keep going over this, because I think your concerns are on target. It's an interesting topic, but one that's never really been settled, because it's so easy just to go the other way (spend down) rather than testing this policy.
Glad to hear your experience with PTA in the dissolving process has been positive. It should be.
Thanks again for responding. I think (and I'm no attorney) that the crux of the issue regarding our ability to transfer the assets is our subsidiary status. If we held our own tax exemption, we could change our name, transfer funds, change our bylaws, etc. without any trouble. But the tax exemption for our unit has been secured by the California State PTA under 501(c)(3). Therefore the ability to do a transfer between independant nonprofits does not seem to really apply to us. Make sense?
What I want, personally, is a transition that works for our organization and does not put the state PTA's tax exemption status at risk. The PTA model doesn't really work for us, but they've done us no harm. I don't know that there would be any serious ramifications for us if we decided to transfer our funds anyway. I would, however, not feel right leaving in a way that is convenient for us, but puts another organization at risk.
Thanks, again, for responding. I really think the PTA needs to make this issue more clear (if I'm correct). I can find many more interesting reads than the tax code, especially on a Sunday. Ugh.
Absolutely makes sense. That's why I generally advise spending down the funds on the: "why pick a fight when you don't have to?" angle.
And your bylaws are similar to many around the country.
It sounded from your first note that you were/are looking to test that part of the bylaws. I think that section is eminently "testable", that's all. I think the only reason those clauses are in the bylaws are to make it (seem) harder for groups to get out of PTA.
That said -- spending down is often a less stressful method.
Thanks for the prompt response. So far, we enjoy a cordial relationship with our PTA leadership and I haven't been made to feel bullied in the least. I think this is one of the more complex issues related to moving out from under a parent organization and everyone is primarily concerned with the legality and appropriate management of funds.
Here's what our PTA Toolkit says...
Section 11. Upon the withdrawal of a unit PTA’s/PTSA’s charter, the State PTA shall have the right to collect and transfer any funds, including funds deposited by the PTA/PTSA with a financial institution, over which the PTA/PTSA or its officers have or had signature authority or control.
So I think the state organization does have a degree of control over our assets. I don't think anyone wants our non-monetary assets and I'd be very surprised if our representatives came and swiped our popcorn maker. But I think that there may be reasonable concern for a state PTA if local PTAs start transfering funds. California is just plain huge and I can't imagine trying to monitor that kind of transaction in a state this size. So, I can see this being the kind of thing that prompts more involvement and attention from our state leadership. Make sense?
