Budget 101 for School Support Organizations
Preparing and having the board or membership approve an annual budget and program plan is one of the most important legal responsibilities of nonprofit boards of directors. A parent group budget may be fairly simple, setting forth the main sources of income, and the expected amounts for each, and the main categories of expenses and amounts of each. Periodic reports should be prepared throughout the year that show actual income and expenses compared to the budget.
For example, a simple parent group budget might look like the following:
YOUR SCHOOL BOOSTER CLUB BUDGET
|
|
BUDGET |
ACTUAL |
|
INCOME |
|
|
|
Fall fundraiser |
$8,000 |
$8,250 |
|
Catalog sale |
6,000 |
8,825 |
|
Auction |
20,000 |
24,500 |
|
TOTAL INCOME |
$34,000 |
$41,575 |
|
|
|
|
|
EXPENSES |
|
|
|
Fall fundraiser |
$2,500 |
$2,500 |
|
Catalog sale |
3,000 |
3,000 |
|
Auction |
4,500 |
4,500 |
|
Current grants to school |
10,000 |
10,000 |
|
Playground fund |
14,000 |
21,575 |
|
TOTAL EXPENSES |
$34,000 |
$41,575 |
FAQs
Must a nonprofit, tax-exempt group spend all of its funds each year? If not, is there a limit on the amount of funds that may be carried-over?
There is no legal requirement that nonprofit, tax-exempt organizations spend all of their funds and there is no limit on the amount of funds that may be carried over to subsequent years. Many larger nonprofits hold funds equal to one-year or more operating budget in reserves. Parent groups frequently carry-forward at least minimal sums to get the next year started. Sometimes parent groups must save funds for several years to purchase a large capital or other item, such as playground equipment, new band uniforms and the like.
Can a nonprofit group set up separate “accounts” for individual students. For example, individual students are credited with the dollars they earn during a candy or other sale towards a band trip so that if student A nets $100 from the sale her trip costs are reduced by that $100?
The IRS has strict rules regarding nonprofits setting up individual fundraising accounts (IFAs) as these types of activities are called. See PBUSA’s policy on IFA’s and more about the IRS rules under Individual Fundraising Accounts.
Is the amount paid for items purchased from a school auction tax-deductible for the buyer?
No. Anytime a donor receives something of value in return for the money paid it is not considered a tax-deductible contribution. However, to the extent that a purchaser pays more than the fair market value of an item a deduction may be taken for the amount paid that exceed the fair market value. For example, if a parent pays $50 for a $25 gift certificate to a local restaurant, the parent may deduct the amount exceeding the fair market value -- $25 – as a contribution. Some items, however, such as a class quilt, or painted furniture or other one-of-a-kind item can not be easily valued and therefore the price paid is considered by the IRS as the fair market value. Similarly, the cost of a raffle ticket is considered its fair market value because it is the price a willing buyer will pay for the chanced to win the prize being raffled.
Join PBUSA today and receive a complete Booster Club Operations Guide that include step-by-step instructions for setting up financial procedures, and including how to conduct an internal financial review, for your school support organization.
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