Legal Implications of Fundraising
This section addresses:
Overall Legal Considerations
Before undertaking any fundraising, a PTA should check with federal, state, local, and school authorities to determine whether the planned activity is prohibited or requires special permits.
Consult all of the following:
Federal laws prohibit PTAs and other tax-exempt organizations from engaging in substantial business activities that are unrelated to their educational and charitable purposes. It is important to avoid these activities to protect your PTA's tax-exempt status.
State laws on fundraising vary widely. Before beginning a fundraising activity, check with your state PTA to learn about any statutes that may apply.
Many cities and counties also have laws requiring registration and disclosure of fundraising activities.
School districts often have procedures to follow for fundraising on school property involving staff and students.
Games of Chance
Fundraisers involving games of chance or gambling (e.g., raffles, bingo, casino night) require special consideration. In some states, a special license must be obtained to conduct such an activity. Games of Chance may be subject to taxation and, in extreme circumstances, could cause your PTA to lose its tax-exempt status. Check with state and local authorities before proceeding.
Assisting an Individual or Family in Crisis
"Sunshine Funds" sometimes refers to a PTA's effort to provide assistance to an individual or family in the case of a catastrophic event, such as a house fire or other disaster. While these efforts are well-intentioned, using your PTA budget for such a cause could result in losing your PTA's tax‐exempt status with the IRS because of the "inurement of benefit rule". This rule prohibits 501(c)(3) organizations from giving funds to the benefit of a specific person or family.
Download PTA's Sunshine Fund Guide.
Tax Receipts for Donations
The IRS has established requirements for tax-exempt organizations receiving donations. If PTA members and contributors have questions about whether a donation they make to your PTA is tax-deductible, refer them to the IRS or a qualified tax advisor. For a cash donation of more than $250: PTA must provide an acknowledgement that includes:
The PTA's name
The amount of money donated
The date of the contribution
A statement that no goods or services were received in return for the contribution