Wednesday, November 20, 2013

Question of the Week

Are PTAs allowed to provide a stipend to a staff member to attend evening board meetings as liaison?

Thank you for your question. We love to have teachers and staff members as members of our PTAs. They provide a wonderful depth of knowledge and experience that is beneficial to all PTAs and they should absolutely be encouraged to join and attend PTA events. However, regarding a stipend, PTAs should not pay for any member to attend a meeting. If a teacher’s union would like to pay a stipend for a staff member to attend a PTA meeting, this is entirely within their right to do this and something for the teacher and teachers’ union to negotiate. However regarding PTAs paying stipends, this is a different situation. As a nonprofit, tax-exempt association, PTAs have to be very careful to avoid an inurement to an individual.

Below is some information directly from IRS regarding 501(c)(3) organizations so that they do not lose their tax-exempt status:

A section 501(c)(3) organization will jeopardize its exemption if it ceases to be operated exclusively for exempt purposes. An organization will be operated exclusively for exempt purposes only if it engages primarily in activities that accomplish the exempt purposes specified in section 501(c)(3). An organization will not be so regarded if more than an insubstantial part of its activities does not further an exempt purpose. A 501(c)(3) organization:
                    must absolutely refrain from participating in the political campaigns of candidates for local, state, or federal office
                    must restrict its lobbying activities to an insubstantial part of its total activities
                    must ensure that its earnings do not inure to the benefit of any private shareholder or individual
                    must not operate for the benefit of private interests such as those of its founder, the founder's family, its shareholders or persons controlled by such interests
                    must not operate for the primary purpose of conducting a trade or business that is not related to its exempt purpose, such as a school's operation of a factory
                    may not provide commercial-type insurance as a substantial part of its activities
                    may not have purposes or activities that are illegal or violate fundamental public policy
                    must satisfy annual filing requirements

In addition, the WSPTA Bylaws in Article 2, Section 1 (d) has the statement: “No part of the net earnings of the organization shall inure to the benefit of, or be distributable to its members, directors, trustees or other private persons except that the organization shall be empowered to pay reasonable compensation for services rendered and to make payments and distributions in furtherance of the purposes set forth in Article…”   All PTAs (this includes 501(c)(4) organizations) may not benefit a member or officer for private purposes.