You may think of your role with your PTA as “just a volunteer job,” but in reality, you are helping to run a 501(c)(3) non-profit organization. That’s why both the state and federal governments have specific legal requirements for your PTA, most of which focus on financial issues. Here are five steps to PTA financial success in the coming year.

  1. Do an audit. Your PTA bylaws spell out how your audit committee is structured, and remember that no one authorized to sign checks may serve on the audit committee. While they can’t serve on the committee, your PTA treasurer should be available to the committee to answer questions and help find documentation. Make sure the committee has all the financial reports for the past year, including treasurer’s reports, check register, ledger (or spreadsheet or accounting software), deposit and expense vouchers, copies of meeting minutes, and the previous audit report. Remember that an audit is done not just to account for the PTA’s financial activity—it also helps protect the outgoing and incoming officers from accusations of wrongdoing. Once the audit is done, it will need to be accepted at your first general membership meeting of the year (before the new budget is adopted).
  2. File your taxes. The IRS requires non-profits to file a Form 990 every year. For most PTAs, this is just an electronic postcard form that basically says we’re still around and we brought in less than $50,000 this past fiscal year. If your PTA brought in more than $50,000, you will need to file a more detailed version of Form 990. While the form is not due until the 15th day of the fifth month after then end of your fiscal year (for most PTAs with fiscal years ending June 30, that’s November 15), once the audit is done and you know how much money your PTA brought in, you can file the proper Form 990 right away and not have to worry about the IRS coming after your PTA’s non-profit status for failing to file. Be sure to save the receipt that the form was properly filed in the PTA’s financial records.
  3. Plan your budget. When planning your PTA’s budget for the coming year, start with what your PTA wants to accomplish during the year. What events and programs do you want to do? What activities do you want to support? Once you have the cost side of the budget figured out, then work on the fundraising side of the budget to determine what you’ll need to do to meet those costs. Remember that PTA is not a fundraising organization, but an advocacy one, and the IRS does not look favorably on 501(c)(3) organizations that just raise money without a plan in place for why they are raising those funds. Also remember that a budget is just a best estimate of how the PTA plans to raise and spend money. As your PTA’s financial situation changes during the year, the budget can be amended to reflect those changes, dropping a fundraiser that’s no longer needed or reallocating funds from an event that had to be cancelled.
  4. Consider incorporation if your PTA hasn’t done so already. Incorporation for non-profit organizations in Illinois is done through the Secretary of State’s office and is a low-cost way of protecting your officers and board from personal liability (i.e., having their assets like their house or car taken if the PTA is sued). If your PTA is already incorporated, make sure that the incorporation is kept current by filing annually with the Secretary of State. If your PTA’s incorporation has lapsed, your PTA can get it back up to date by filing forms and paying owed incorporation fees and small penalties for the missed years. Talk to your Region Director if you need help with this.
  5. Get trained. Illinois PTA offers numerous training opportunities, both online and in-person for all PTA leaders, with additional courses to support PTA Presidents and Treasurers. Check with your Region Director to find out when training is available for you. Remember, the IRS does not accept “I didn’t know I was supposed to do that” as a defense, so be sure you know what your legal responsibilities are.

Photo © 2011 by Ken Teegardin under Creative Commons license.