The Free Press, Mankato, MN

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February 21, 2011

Tax concerns prompting PTO-PTA switch

By Tanner Kent The Free Press

NORTH MANKATO — Cara Shaw figured it never hurts to be safe.

Even though the Garfield Elementary Parent-Teacher Organization may be an unlikely target for tax violations, Shaw is leading an effort to protect it from running afoul of the Internal Revenue Service’s non-profit regulations.

Pending approval during its March 1 meeting, the Garfield PTO will officially become a Parent-Teacher Association — that is, a fully vested chapter of the national organization that differs from its independently operated cousins, the PTOs.

“Mainly, (we’re doing this) for the reason of gaining the status for non-profit organizations,” said Shaw, PTO president.

The issue came to the fore recently when a member of Garfield’s PTO suggested that donations to the organization may not be tax-deductible, potentially causing problems for the school and its donors if it were audited.

After some research and consultation with Jerry Kolander, business manager for Mankato schools, Shaw agreed.

Local PTOs are independently operated and must apply for their own tax-exempt status. Technically, donors can not claim their donations to that organization without that status.

As Kolander notes, there are ways around the technicalities. Since every public school naturally has its own tax-exempt status, PTOs can accept donations on the school’s behalf, holding the funds for a specific purpose.

But, in that case, the PTO would have to hold funds in a bank account owned by the school — though, “such a tight relationship sacrifices the independence that many PTOs desire,” according to a tip sheet from PTO Today, a national support agency.

Local PTAs, however, receive tax-exempt status by paying membership dues to the national organization.

Though Shaw estimates that Garfield’s yearly dues will be about $120, she said that’s “considerably less” than the $800 filing fee for tax-exempt status (plus yearly renewal fees).

Bonnie Cannon, president of Minnesota PTA, said many school organizations make the switch for just that reason. In addition, she said organizations also switch so they can leverage financial advice, grants and advocacy programs offered through the PTA.

If approved, Shaw said the school would officially become a PTA in the 2011-12 school year.

 

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