We don't have a specific dollar amount, but we try to look ahead and keep enough money to get us through to collection for our first fundraiser.
We would never DREAM of handing the money over to the principal, however - nor, for that matter, would he DREAM of asking. Of course, we happen to have a dream of a principal who realizes and recognizes all that PTO does for the students, his staff and the school. From what I've read lately, we're going to hold on to him because principals like him don't grow on trees, evidently!
Currently our bylaws read that every effort be made to spend all funds in the year they were raised. We do have a provision to carry over 8% of our current operating budget. We were advised that this is the maximum a not for profit group was allowed to carry over unless the funds were approved for a long term project, such as a playground. We have spoken to many PTA's that have carried over up to 50% of their operating budget. Is there an IRS ruling regarding surplus funds for a 5013c? Could we change our bylaws to increase our carry over without violating any IRS rules? :confused:
Dito, It is always recommended that there be a carry over to get the next school year started at our school. we work off of a $15,000-$16,000 budget and we recommend a carry over of $3000-$4000. However this year it was $6500.
Our Bulaws require a minimum $2,000 carryover, but we have carried over anywhere from $5,000-$15,000. If year after year, a PTO consistently carries over lots of extra money (not earmarked for a big capital project), you might as well put the money into a mattress for all the good it's doing the school because you're never dipping into it. We try to spend as much of the extra as we can each school year. Parents appreciate knowing the money they contributed through fundraising this year is spent on their kid, this year.
I had heard that there's a need for "start-up" funds, so I took a look at our September cash flow. Since our PTO collects $10 dues, we immediately have positive cash flow. At most we pay for 1-2 assemblies in September, and then we collect our big fundraising income in early October. Fortunately, cash flow is not a problem for us.
Being able to spend the surplus means that your treasurer/board are aware of how much surplus your PTO has earned. That means you need a budget that can project how much and what type of expenses are ahead. So, if your fundraiser(s) earn more than you budgeted, you know that you will have surplus. Likewise, if your expenses come in under budget, you have a surplus. As treasurer, I start looking very closely at our surplus position in Feb/March so we don't end up with a surprisingly high balance in June when it's too late to spend it this year.
Personally, I'd be asking alot of questions if my PTO carried over $20,000 each year. Hopefully, it has been approved for a special project.
Our PTO in the past had carried over at least $20,000 for three years, but we were also planning on buying computers for our computer lab. When our technology bond was passed and the district purchased new labs for each school we had to redirect those funds into other projects over a three year timespan. Our by-laws state that we can carry over a maximum of $5,000 for start up costs. We have one fundraiser a year in October and our budget is structured so that if the fundraiser does not make the target goal we cut back. At this point we don't have any special projects in the works but if we do decide on one we will certainly carry over more money until we have the funds needed, but carrying over a large amounts of money for no particualar reason is foolish and it may mean that you are having fundraisers for the sake of having them, which our group accused our former board of doing...now we are down to one and the parents seem to really appreciate that and go all out because the trust that next month when they look in the backpacks there isn't something else we are pushing them to sell
There's no rule that says a nonprofit has to spend all of its money every year.
At the very least, many groups hold onto a strong supply of start-up funds for the following year. We think that's a great idea, since it helps group make the first month(s) of the school year much more about involvement and connecting than about fundraising.
There are also good reasons for holding onto more funds, if you wish. Example: say your group is aiming for a new playground for your school. That might be a 3-year project, and there's nothing wrong with growing those funds (even in an interest-yielding account) for the long haul.
