I know $100,000 sounds like a ton of money, but remember the IRS looks at GROSS income. So if you run a 50% profit fundraising that clears $15,000 for your PTO, you actually handled $30,000 gross income. Because we handle a few fundraisers for the school (i.e. book fair, yearbook, spiritwear), the PTO's gross income goes up pretty quickly and unsuspectingly, even though the PTO doesn't ultimately control the detailed spending of those profits.

Gee, I wish we had that problem. We are lucky if we earn $15,000 per year.

Income levels are important, particularly at $5000 (do you need to formalize) and at the $100,000 (990) level. One strategy to remember is that the PTO doesn't necessarily need to "own" all the funds.

If you have a good relationship with the school and you are raising funds specifically for XZY, sometimes it's easier to let the school own the fundraiser and have the funds deposited directly with the school. The PTO can still provide the volunteers to run the activity. The school/kids still get "XYZ". It just doesn't go through the PTO account.

Of course, this does depend on having that solid understanding with the school.

One of my PTOs has chosen to stay small/informal and keep under the $5000 threshold. So if they get involved in anything bigger, it will strictly be as the volunteer arm on behalf of the school and run the funds directly into the school account.

Just a bit of advice for those PTO's who are federally-registered 501c3 (or wil be this year)...Be careful when you set up this year's budget. You don't want to exceed $100,000 in GROSS income or you'll need to file IRS Form 990 next year, instead of the shorter, easier Form 990EZ.

$100,000 sounds like a lot of money, but it adds up quickly, since the IRS considers ALL INCOME, not just net profit.

For example, last year our net income budget was $37,000, far below the $100k threshhold. However, we had a very successful fundraiser, and we managed several fundraising projects that really belonged to the school such as yearbook and book fair. By the time we added up all the income that flowed into our account, we were at $105,000. Now I'm facing the long Form 990. We could have easily told the school that they needed to manage the money for book fair or yearbook (that is, have the checks written directly to the school instead of the PTO), and that would have kept us under the $100k threshhold. But we didnt' look far enough ahead and now we have to fill out the more complex form. Next year we'll be more careful. Our PTO volunteers will still handle all the work for book fair and yearbook, but the money will go directly to the school and not thru the PTO's account.

Having to do Form 990 instead of the 990EZ form isn't the end of the world, but they call it "E-Z" for a reason.

Something to think about as you prepare next year's budget, especially if you're taking on some new fundraising projects that might push you over $100k gross.