We were asked by staff appreciation co-chairs if they could give a $25 gift card to one person who did a lot for staff appreciation in addition to giving small gifts to two other people that helped. Can we do this?
In giving a gift card to a volunteer, that volunteer ceases to be a volunteer and instead becomes an employee. The IRS views gift cards as a form of cash compensation, so we strongly suggest that PTAs do not give gift cards to volunteers.
Paying volunteers money, or anything of value that can reasonably be construed to be in exchange for their work, is confusing and potentially dangerous to your nonprofit corporation and even to the volunteers you're trying to reward. The basic source of the confusion and the danger is that the law draws sharp distinctions between employees and volunteers. The precise distinctions vary among jurisdictions, but the almost universal point of difference is that employees get paid for their work — volunteers do not. If you pay a volunteer for his or her work, you've transformed the former volunteer into an employee — or at least you've created a plausible basis for that person (or perhaps someone else) to claim he or she is an employee of your nonprofit corporation.
You may purchase “tokens of appreciation” for volunteers, provided the items are less than $9.70 in value because anything above that is considered inurement. If this isn’t in your budget, you would first need approval. Start by checking your standing rules to see if you can re-allocate funds for these types of circumstances. Also check if you have a line item in your budget that could be used for volunteer appreciation. Even if your standing rules state that the board can re-allocate funds, if there is no line item in the budget available for this, then you need to get the approval of your general membership.