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Capturing your financial information as the year progresses is important for many reasons. Financial information from the previous year, allows you to budget for the coming year. A budget helps keep your expenses in line with your income so that you end up with a balanced budget for the year. A balanced budget means that your income less your costs to run the programs equals the amount you pay back to your school as donations.
Financial information also allows the PTO to keep the school informed of what it is doing. It also keeps the PTO members informed. Financial information allows you to see what months you may have low cash flow to cover expenses.
To keep financial information for the PTO, we recommend you find a parent that is an accountant or bookkeeper. Quickbooks is great software to keep the books. If you do not have an accountant or bookkeeper to keep this information current, consider the following:
STRUCTURE
The PTO may be set up either with its own nonprofit status or as an organization set up under the school's nonprofit status. To be set up with it's own nonprofit status, the organization would incorporate and file for nonprofit status with the appropriate tax agencies. In this case, the organization would have its own Bylaws which describe its purpose and the roles of its officers. In the case where the organization is running under the school's nonprofit status, the organization should consider writing Roles and Responsibilities.
CASH
Be aware of what time of year the organization's expenses are highest to ensure that the cash balances are high enough to cover those expenses until the income comes in. For example, if you are running an auction, you may need to pay for the hall and the auctioneer before collecting the income for ticket sales. You should have cash balances high enough to cover those expenses until that income comes in.
Generally, a PTO can run with the same cash balance from year to year. However, if the PTO is finding that cash flow is difficult at a particular time during the year, it may want to keep some of its profit at year end rather than paying it all to the school as donations. In this case, the financial results would show a profit and that profit would stay in the cash account or be moved to an investment account.
If, on the other hand, the cash balances are sufficient from year to year to cover monthly expenses, then the goal should be to have a balanced budget where the income from programs less the expenses for those programs equals the donations made back to the school.
INVESTMENTS
If the organization has excess cash on hand, the PTO may consider donating those excess funds to the school or may invest those funds to earn additional income. Just be sure not to invest all cash for those months where cash flow will be a problem. Seek advice from a local bank or investment company.
DUES & DONATIONS
Many PTOs collect dues from its members. Dues are paid at the beginning of the school year and range anywhere from $5 to over $100 per year. Paid dues entitle the member to voting rights at the PTO meetings.
In lieu of a set fee, the PTO may opt to collect donations at the beginning of the school year. In this case, families donate cash to the PTO. The amount donated is up to each individual family. Small schools of under 200 students have been known to collect $3,000-$4,000 using this method.
The PTO should vote on how these funds should be spent. Generally, these funds would be used to cover administrative costs such as bank fees, costs of checks, postage, and start-up costs for fundraisers, etc.
PROGRAM INCOME AND COSTS
This includes income and expenses from any PTO events. These events may have a fundraising purpose or a community building purpose. An example of income from a fundraising activity, such as an auction, would be ticket sales and bids on silent and live auction items. The expenses would include the cost of the hall, food and auctioneer. If the income and expense are shown together on the financial reports, then it is easy to see the profit from that particular program.
There also may be some programs that are for the benefit of the community such as a Kids' Fair where there is no fundraising goal. In a case like this, the income collected would be just enough to cover the expenses, resulting in no profit on that activity. The purpose of the event may not be fundraising and the income and expenses should net to zero or close to it.
DONATIONS TO SCHOOL
The profit from the various fundraising programs should be paid back to the school. Usually, the PTO has a vote as to where those funds are spent within the school. So these donations can be recorded as an expense for that particular purpose. For example, if the PTO votes to give the school a certain amount to buy books for the library, the expense would be called Library Book Donation.
BUDGETS
At the beginning of the school year, the treasurer/bookkeeper should prepare a budget based on the programs the officers plan to continue. At the first meeting for the year, the PTO should discuss any new programs they wish to have and discuss any old programs they wish to drop. Then the bookkeeper should update the budget for approval by the PTO. The approved budget provides guidelines for spending during the year. However, the budget is not set in stone and may be updated if new program activities come along.
Detailed income & expense reports should be kept for each individual fundraiser. For example:
Pancake breakfast ticket sales___________$2,325
Food________________________________ (100)
Paper Goods__________________________ (100)
Coffee, Juice___________________________ (25)
Etc...
Net Profit on Pancake Breakfast__________$2,100
Then the overall budget would show as follows:
| SAMPLE |
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| Budget vs. Actual |
|---|
| Budget | Actual | Variance |
|---|
| INCOME: |
| Carryover from Previous Year | 3,055.00 | 3,055.00 | |
| Wrapping Paper Sales | 5000.00 | 4862.00 | (138.00) |
| Pie Sales | 500.00 | 1140.00 | 640.00 |
| Bake Sales | 500.00 | 877.00 | 377.00 |
| Pancake Breakfast | 2100.00 | 2100.00 | 0.00 |
| Raffle | 740.00 | 740.00 | 0.00 |
| PTO Memberships | 400.00 | 520.00 | 120.00 |
| Box Tops | 200.00 | 200.00 | 0.00 |
| Cartridge Recycling | 200.00 | 200.00 | 0.00 |
| Enrichment Grants | 1200.00 | 1000.00 | (200.00) |
| Total Income: | $13,895.00 | | |
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| EXPENSES: |
| Enrichment Programs | 3500.00 | 2500.00 | (650.00) |
| Classroom Expenses | 2400.00 | 2400.00 | 0.00 |
| Field Trip Buses | 1800.00 | 1204.00 | (596.00) |
| Gym Equipment Donation | 500.00 | 500.00 | 0.00 |
| Field Day | 900.00 | 900.00 | 0.00 |
| Ice Cream Social | 250.00 | 250.00 | 0.00 |
| Amazon Party | 300.00 | 275.00 | (25.00) |
| Parade Float | 100.00 | 145.00 | 45.00 |
| PTO Operatons/Supplies | 600.00 | 580.00 | (20.00) |
| Performance | 300.00 | 300.00 | 0.00 |
| Staff Appreciation Lunch | 350.00 | 350.00 | 0.00 |
| Day at the Movies | 650.00 | 650.00 | 0.00 |
| High School Scholarship | 1000.00 | 1000.00 | 0.00 |
| Playground Maintenance | 1245.00 | 2091.00 | 846.00 |
| Total Expenses: | $13,895.00 | | |
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PTO Ideas has provided you with ideas. This information is the opinion of PTO ideas and may not be all inclusive. We recommend consulting with the head of your school and any other essential professional.
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