Selecting Appropriate Fundraising Activities

When considering and carrying out large fundraisers, keep the following concerns in mind:

  • Is the fundraising project related to PTA’s educational, charitable and philanthropic purposes as a tax-exempt organization?
  • Will the proceeds of the fundraiser be designated for specific approved projects that meet the purposes of PTA? Do not hold a fundraiser if the PTA has not determined how the funds will be spent.
  • Does the project violate PTA’s noncommercial policy?
  • Does the association have enough volunteers?

Safeguards for Conducting Fundraising Projects

The fundraising chairman needs to:

Present plans to the executive board for approval and to obtain authorization to expend funds.

Read all contracts carefully.

Ask the membership to approve the contract before committing to the vendor. Ensure that the contract is signed by two elected officers of the PTA, one of whom must be the president, after the membership has voted to conduct the project.

Follow the financial procedures required by the California State PTA. (See Handling PTA Funds.)

Request reimbursement in a timely manner for expenditures made on behalf of the association or, if an advance was requested, present the completed Payment Authorization/Request for Reimbursement no later than 14 days after the event.

Never pay any vendor with cash collected the day of the event. Pay bills by check after a vote of the association.

Prepare a report detailing the income and expenses of the event.

Alcohol and PTA Events

Selling Alcohol – according to the California Business and Professions Code, Section 25608, “Every person who possesses, consumes, sells, gives, or delivers to any other person, any alcoholic beverage in or on any public schoolhouse or any of the grounds thereof, is guilty of a misdemeanor.” PTAs may not sell alcoholic beverages under any circumstance.

In accordance with the California State PTA insurance program, PTAs may not engage in the sale of alcoholic beverages. Many PTAs hold annual silent auctions and dinners as fundraisers, at which bottles and/or cases of wine are donated for use as auction items. These donated bottles and/or cases of wine may be used as auction items provided the contents are not decanted on the school premises. Contact the school district for local policies regarding auctioning of donated alcoholic beverages. PTAs may auction donated alcoholic beverages but may not sell alcoholic beverages under any circumstance.

(Note: Assembly Bill 2073 (“AB 2073”), which became law on January 1, 2015, created an exception to the prohibition against the sale or consumption of alcoholic beverages on the grounds of K-12 district facilities if the beverages are acquired, possessed, used, sold, or consumed under a license or permit obtained for special events held at a time when students are not on the grounds. The new law will allow K-12 districts, community college districts and other local education agencies more flexibility in renting their facilities for fundraisers and other events which include alcoholic beverages so long as a license or permit is obtained and students are not present.)

Serving of Alcohol at PTA Events – The California State PTA strongly urges its unit, council, and district PTAs to refrain from serving alcoholic beverages at PTA functions. If alcoholic beverages are served at a PTA function, the PTA may not serve them. Any alcoholic beverages must be provided and served by a licensed establishment or catering company that has the appropriate permits and insurance. When a PTA is planning an event that will include alcoholic beverages, the PTA may not collect for the cost of the alcoholic beverages through ticket sales. This cost must be paid separately to the licensed establishment or catering company with the valid permits and insurance.

Under no circumstances may PTA funds be used to purchase alcoholic beverages or bottles of alcohol. Remember, the purpose of the PTA is to work on behalf of all children and speak for “every child with one voice.”

If the unit has any further questions regarding this subject, please do not hesitate to contact the California State PTA insurance broker, or your district PTA.

Choosing a Fundraising Company

Evaluate and research several fundraising companies. Determine the best value for the PTA in working with a specific fundraising company. Invite several companies to give presentations in order to compare several aspects of each program. Do not select a company based on one criterion, such as percentage of profit.

Determine the quality of the product. Higher quality items will generate more sales and enhance the reputation of PTA. Determine what services are offered to make the fundraising effort as trouble-free as possible.

  • Is shipping an additional cost?
  • Is there a reduced cost based on volume purchased?
  • Who is responsible for developing fundraiser fliers?
  • Who is responsible for packaging individual orders?
  • Are products guaranteed?
  • How are order errors handled?

Determine the experience, professionalism, and reputation of the company within the community. Ask how long the company has been in business, whether the company is a member of the Association of Fundraisers and Direct Sellers (www.afrds.org), and for two to three references. If a company will not provide references, it is an indication not to use its services. When provided, contact references and ask about their experiences with the company and whether they recommend it.

Determine what safety measures or policies the company offers. Review samples of the company’s letters, videos, fliers, and other promotional materials that indicate safety is assured.

Determine the company’s ability to meet the PTA’s goals. The retail price of the product should represent a fair market value for its goods and be reasonably priced. The PTA should be able to make a fair profit. Ask whether the company can demonstrate a history of success, placing the burden of proof on the company to convince the PTA that their goal will be met. Do not pay in full for products until the complete order is delivered. If a deposit is requested, it should be a token amount of the total order.

Verify the company carries liability insurance. The Insurance and Loss Prevention Guide provides a list of Concessionaire/Vendors/Service Providers who have filed the appropriate evidence of insurance with the California State PTA Insurance Broker. Because a vendor is listed with insurance DOES NOT mean that all activities he/she might offer are approved. The red, yellow and green pages’ guidelines must be observed. Refer to Insurance and Loss Prevention Guide for additional information.

Operation of Bingo Games and Poker Nights for Charitable Purposes

Bingo is a game of chance that must comply with regulations of all local authorities, including school district and city and local governments. Consult with county council and/or city attorney to determine local code and ordinances. When authorized, PTA, as an organization that falls within §23701d of the Revenue and Taxation Code (charitable organization and tax-exempt), may receive a license to operate a bingo game provided that all provisions of California State Penal Code §326.5 are met. These laws are updated frequently.

Certain tax-exempt organizations are authorized by state law and local ordinance to raise money from bingo, provided that: (1) the proceeds are used only for charitable purposes; (2) the games are conducted by volunteer members of the organizations; (3) no salaries are paid with bingo proceeds; (4) there is no commingling of bingo money with any other funds; and (5) the organization conducting bingo holds a valid license issued by the city or county in which bingo is played.

On January 1, 2007, a California law (AB 839) was enacted allowing eligible nonprofit organizations to hold “charity poker night” fundraisers. Nonprofit organizations and suppliers of equipment and/or services for such fundraising events must submit an annual registration form to the Bureau of Gambling Control for approval.

The organizations must meet all requirements of the California Attorney General; refer to http://ag.ca.gov/gambling/charitable.php.

Bingo and charity poker night proceeds are considered to be part of the gross receipts of the unit (Income). They must be accounted for in the semiannual audit, the budget and all financial reports to the executive board and association. If someone other than the treasurer is responsible for reporting, a financial report must be made at each executive board and association meeting. The bingo proceeds also must be considered when determining the necessity for Federal and Unrelated Business Income Tax reporting.

Legal Raffles for PTAs

Forms and information on how to conduct a legal raffle can be obtained by going to the California Attorney General’s website. (See www.ag.ca.gov/charities/raffles.htm Section 320.5 Gambling: Charitable Raffles.)

A completed registration form and registration fee must be submitted by September 1 of each year (September 1 through August 31) during which a raffle is expected to be conducted. A separate Nonprofit Raffle Report must be completed for each raffle conducted during a reporting year (September 1 through August 31). Reports are due on or before September 1 (California Penal Code section 320.5). Once registered, the Attorney General’s office requires re-registration annually.

Raffles may include but are not limited to raffles, donation drawings, ducky derby and cow chip bingo. Fifty-fifty (50-50) raffles are illegal.

Paper SCRIP Programs

(see E-scrip)

Scrip is a coupon that may be redeemed in lieu of using cash at the store that issued the scrip. Scrip is purchased, usually from grocery stores, in large amounts for a discount off the face value. The PTA then sells the scrip at the full value, raising funds for the unit. When purchased directly, scrip is redeemable by anyone and, therefore, is as subject to loss or theft as cash.

Scrip can be purchased by the unit either directly from the store or a scrip wholesaler. The basic bonding insurance provided as part of the California State PTA insurance program may not be sufficient for PTAs that sell large amounts of scrip. Higher limits are available for those who have a need. Please refer to the Insurance and Loss Prevention Guide.

Inform purchasers that scrip is not tax deductible, since the full value is received when paying for items at the issuing store, just as if they paid with cash. Use a stamp to mark front of checks received in payment for scrip, “Scrip Purchase – Not Tax Deductible.”

Ensure the Scrip Committee follows correct financial procedures.

Work directly with the store(s) and purchase scrip with a PTA check signed by two authorized elected officers.

Keep an accurate record of scrip inventory and all sales.

Provide a written report to the treasurer with deposit receipts attached, to be placed on file for audit.

Make arrangements for safekeeping of scrip between sales.

Do not keep scrip at a committee member’s private residence or in a car trunk.

Renting a safe deposit box at a bank is recommended for large amounts of scrip.

If unsold scrip or money cannot be deposited in the bank immediately, establish advance arrangements with the principal to use the school safe. It is recommended the PTA purchase a small safe or lockbox to place inside the school safe.

Prior to placing unsold scrip or money in the school safe, two PTA members, one of whom must be a financial officer or chairman, must count it. Document the amount and have the documentation signed by the PTA members. The principal may require that a school representative verify the documentation.

Conduct sales of scrip in a safe, protected location.

Provide interested customers with a name and phone number of a person whom they can contact for information about the sale.

Never use children as couriers.

Maintain control of the program to ensure that all scrip sales are accurately reported.

 

Print Friendly