I work for a church-affiliated preschool, which has a PTO (parent-teacher organization). The PTO raises funds every year for the school, usi...

Question

I work for a church-affiliated preschool, which has a PTO (parent-teacher organization). The PTO raises funds every year for the school, using the church's tax ID number. Recently, the pastor of the church announced that the church will be in control the PTO account and may access that account for church use. Is this against the law?

Answer

The rules can be a bit dicey with private schools with a church affiliation. I supposed that your school is incorporated in California as a non-profit and the PTO is simply ancillary to the school. If so, then the church/school will be accountable for the proper use of money that is raised by the PTO. Uses outside the scope of articles of incorporation and the legal limitations on the use of funds imposed by both the federal and state government on nonprofits are prohibited. (If the PTO is a separate non-profit entity, then the church cannot use these funds without PTO approval. I mention this because I have administered nonprofits with separate fund raising entities.) It sound to me as if you have a difference of opinion about how these funds are being used. You will need to address this internally within your church, unless there are violations of law. In that case, you may have a duty to raise this with the IRS and state government.

Answer

Even I can't follow Harrell's answer, so I write to clarify. If the PTO is using the church's tax ID and non-profit status to raise funds, they belong to the church. If the PTO wants to control the use of the funds it needs to become its own independent 501c(3) organization with its own tax ID.