The IRS says that a 501(c)(3)'s money cannot benefit an individual member. To give cash to a teacher with no proof that the money was spent in accordance with the 501c3's mission would violate the IRS's rule,even though we all know that teachers spend hundreds of dollars of their own money on their classrooms.

If your PTO agrees to run the raffle since it's easier for the PTO to handle checks, then that's fine. Your group would then make a donation to the school, and the school is responsible for following IRS guidelines. If the PTO wants to use raffle money to reimburse the teachers for classroom expenses directly, then the PTO should be collecting receipts before handing over the checks to the individual teachers.

And not to clutter the discussion, but you might need a license in your community to run a raffle.

What is being asked of your group would be considered money laundering. Your group cannnot just 'run the funds through' your bank account. Critter is correct if your group voted to run the carnival and then gave the money to the school , but if it isn't going to the school but to the teachers instead (that's how I read it anyway), receipts must be provided. You can tell the teachers to blame it on the IRS.

Now, that doesn't mean your group can't help out by running the event or by making the entire amount a donation to the school . The group can vote to split the money evenly between the teachers and the teachers can have the money as long as they provide receipts. That will accomplish the same thing legally (and ethically I might think...)

Good Luck!

If I understood this right it sounds like the teachers called in the PTO to cover their rears. The way I read it The teachers held the carnival then split the money among themselves as they saw necessary. If the money didn't go to the school general fund first they held a for profit carnival and each teacher is responsible for taxes on the income.Always best to play it safe and have receipts on file.

A public school is automatically considered a tax-exempt non-profit organization in the eyes of the IRS. Your PTO can make a donation to the school with no concerns. What the school does with the money is up to the school administration.

Our school's PTO is registered with its own tax ID#, bank account, officer's etc. For the past several years, the teachers at the school have held a sprong carnival. All proceeds from this carnival are split evenly among the teachers for classroom supplies. The PTO has never had any involvement. This year, the principal and teachers have asked the PTO to get involved. The main reason it seems is for the PTO to accept checks for raffle items. THe problem now is that the principal and teachers want the PTO to immediately turn over the money earned after the festival to the teachers to be used in the past. I think this is a problem. I have suggested that the teachers submit receipts for items bought or that the PTO give gift certificates to the teachers to an office supply/teacher supply store. Does anyone have any experience in this area? If the PTO simply turns around a cuts a check to the school for the money raised, I am afraid it could hurt our tax exempt status.