A Question of Quorum

QUESTION: 

We have eleven members on our Board of Directors.  I know  that the Uniform Bylaws says a quorum for a meeting is a majority—how is that interpreted when there’s an odd number on the Board? 

ANSWER: 

You are correct that the quorum, or minimum number that must be  present to take action, for the Board of Directors is a majority.  This means that more than half of the members of the Board must be present—for an eleven member Board that means at least six members must be present in order to take action at a Board meeting.  Note that the same number would be required if there were ten members on the Board—because more than half of ten is also six.

Raising Money For Specific Activities

QUESTION: 

I understand that PTA is supposed to be for all children, so is it inappropriate for our PTA to raise funds to support and/or sponsor an activity that benefits less than the full school (e.g. an activity limited to a particular grade, or to those students who want to participate in the specific activity, such as a chess club)?  What concerns are there if the activity is going to involve school staff and/or be a school activity? If the PTA does fundraising to help defray the costs, can we allocate the proceeds only to support those students who participated in the fundraising?  

ANSWER: 

The answer to your first question is yes, subject to certain conditions.  First, you are correct that PTA’s purpose is to help all students, but that doesn’t mean that PTAs are limited to those activities in which all children can or will participate.  It only means that the scope of all PTA activities taken together should support the entire school community.  Second, you should make sure that the particular activity is within your mission, as laid out in the PTA’s Articles of Incorporation and in the 1023 form filed with the IRS in seeking tax exemption for the PTA.  If not you will need to amend those documents.  Third, the activity has to be provided for in the budget, at least in a general sense, such as student enrichment activities.  Again, if not, the budget would need to be amended at a general membership meeting to include the activity.  

To answer your second question, if the support is for a school activity, such as a field trip, the best practice is to make a grant of the moneys to the school district, restricted so the funds can only be used for that particular activity at that school.  If it is to be a PTA activity, then the PTA should be involved in all aspects of the activity, including advertising, making logistics arrangements, handling the funds, and signing any applicable contracts.  Remember that if transportation is involved, the PTA liability insurance policy from AIM does NOT cover transportation. 

 

The answer to your third question is an absolute unqualified NO.  Resources of a tax exempt nonprofit are to be used for the well-being of the public as a whole, and not to benefit any particular individual or individuals.  You can provide scholarships based on need but not on the basis of whether the child’s parents are PTA members or participated in the funding. 

Providing In-Unit Discounts For Members?

QUESTION:  

Is there any prohibition against a PTA giving a discount to members for events such as a carnival or dinner or on the purchase price of items such as the student directory? 

ANSWER: 

No, unless the price charged to the member is less than the cost incurred by the PTA in providing the event or item.  For example, if you are selling tee shirts that cost the PTA $5.00 each, you can sell them to your members at a lower price than the price for non-members.  However if you charge your members less than the $5.00 cost, the IRS would say that this is an inappropriate benefit for your members, and at least theoretically your tax exempt status might be at risk.

Paying School Staff For a PTA Event

QUESTION: 

Our PTSA would like to “sponsor” an after school activity for the children in our school, using a school staff who would be paid for her time.  Can we do that and what responsibilities do we incur?

 

ANSWER: 

If this is truly a PTA activity, then at least one and preferably more PTA volunteers should be present to supervise, collect any fees being charged by participants, etc.  You would also need to review your PTA’s 1023 or 1024 form to make sure that the activity is within the scope of the activities described there; if not, you will need to file an amended 1023 or 1024.  The PTA could contract with the person conducting the activity using a personal service contract, but would want to be sure that the person truly is an independent contractor.  If the IRS later determines that the staff member is actually an employee of the PTA, the PTA would be liable for withheld taxes, Social Security and other employer taxes, and likely would have to pay penalties as well.  A better approach would be to grant the funds to the school district which could then have a supplemental contract with the staff person, who would clearly be the school district’s employee and not the PTA’s.  Finally you would be wise to check with your insurance carrier to make sure the event is covered. 

 

In short, this question illustrates why it’s important for your whole board to attend an upcoming PTA & the Law Workshop. 

Can we have student memberships?

QUESTION: 

Our PTSA would like to have student memberships—is this okay?  Can the students sign themselves up or should we have a parent sign them up?  Can we have a special membership rate for students that is less than the rate for adult members? 

 

ANSWER:  

Yes, student members are both permissible and a great way to make students part of the support in the school.  The students should be signed up by a parent or guardian to avoid any problem, and a lower rate is permissible as long as the rate charged is sufficient to cover the national, state and (where applicable) council membership service fees. 

Reimbursing for travel/food expenses to PTA events?

QUESTION: 

When our PTA sends representatives to state events such as Convention or Legislative Assembly, is it okay to reimburse them for their travel and/or food expenses?  Also, what about reimbursement for local activities, such as the fuel costs incurred in running PTA errands? 

 

ANSWER: 

Whether to reimburse for expenses such as meals or mileage while traveling to a state meeting or driving around the community on PTA business is a local decision that should be addressed in the local unit’s standing rules.  The only potential limitation would be if the reimbursement were unreasonably generous (dinner at El Gaucho, for example) then the IRS might consider it an “inurement” or benefit to an individual rather than a legitimate expense.  We recommend that any reimbursement be supported by a receipt, or in the case of mileage a log or some independent evidence (such as a Google Maps or MapQuest printout) of how many miles were reasonably necessary.  If the PTA decides to reimburse these kinds of expenses, but some individuals don’t want to be reimbursed, we recommend that you ask them to fill out a reimbursement request and then donate the reimbursement funds back to the PTA.  That way the actual cost of doing business will be documented and future year’s budgets can reflect those actual costs.  Keep in mind that not everyone is in a position to forego reimbursement.

Can our unit award college scholarships?

QUESTION: 
Our PTA would like to offer one or more scholarships to graduating high school seniors—is this something that PTAs are allowed to do, and if so are there any pitfalls we should watch out for? 


ANSWER: 
There is nothing in PTA bylaws or policies that would preclude a PTA local unit or council from offering scholarships; indeed doing so is closely aligned with the part of PTA’s mission that speaks of PTA being “a relevant resource for families”.  As you probably know, WSPTA’s Scholarship Program awards up to $60,000 per year in scholarships, funded by the awards that local units purchase to honor their volunteers and educators. However, there are some things to think about to make sure you don’t jeopardize your PTA’s tax exempt status with the Internal Revenue Service (IRS). 

First, you’ll want to review your 1023/24 form—the form you filed with the IRS to obtain tax exempt status—to make sure that having a scholarship program is covered by the purposes you stated in that document.  If it is not, you can file an updated 1023/24 pretty easily. 

Second, an appropriate expenditure for the scholarship program should be listed in the budget approved by your PTA’s membership. 

Third, you should have both some standard criteria and processes established up front to guide how which person(s) will be awarded the scholarship(s); for example if the scholarship is to be based on financial need, how will that be determined?  If it’s to be based on academic performance, what is the minimum grade point average?  It’s much better to plan these things in advance rather than making them up on the fly. 


Finally, while you can place some conditions, such as limiting the scholarship to graduating seniors who attended a particular elementary school, or are entering a particular field of study, you cannot limit applicants only to members of your PTA or to the children whose parents worked on a particular fund-raising activity—otherwise the IRS would likely say that the scholarship is a financial benefit for members and not the public, and evoke your tax exempt status.  

As always, please feel free to contact the WSPTA office if you have further
questions or would like clarification.