Booster Clubs, PTAs and School Support Organizations Guidelines

Transcription

1 Booster Clubs, PTAs and School Support Organizations Guidelines

2 CORE BELIEFS We believe that 1. Kids come first. 2. Continuous learning is essential to prepare for college and career opportunities. 3. Each student s success is the shared responsibility of students, families, schools and communities. 4. Learning is influenced by environment. OUR VISION Northwest ISD empowers learners and leaders to positively impact the world. OUR MISSION Northwest ISD, in collaboration with students, families, communities, and global partners, will engage in a culture of learning that prepares all students to confidently navigate their future. 1

3 FORWARD This manual is designed to assist Booster Clubs, PTAs, School Support Organizations ( club(s) and/or organization(s) ) officers and members by providing organizational and financial guidance. Guidelines exist to protect an organization s assets volunteers, members and the organization and district name. Only approved organizations, operating under these guidelines and Northwest Independent School District ( district and/or NISD ) policies and procedures, shall be allowed to use the school name in support of its programs. Facility use will be determined in accordance with district policies and procedures. Specific questions regarding the organization s activity should be addressed to the campus principal. Important: The information in the Guidelines is provided for informational purposes only, and it is not intended to give legal or tax advice. Organizations and its members should seek their own legal counsel and financial advice from qualified personnel and may not rely on these Guidelines as a substitute for competent counsel. TITLE IX Title IX is a federal law enacted in 1972 which protects individuals in education programs or activities from discrimination based on sex. It states that, No person in the United States shall on the basis of sex, be excluded from participation in, be denied the benefits of, or be subject to discrimination under any educational program or activity receiving federal financial assistance. Title IX, which is promulgated by the U.S. Department of Education, applies to all aspects of education and related programs, not just athletics. It requires that equal opportunities be provided for members of both sexes. It does not require that each team receive exactly the same services and supplies, but rather that the male and female programs, collectively, receive comparable levels of service, facilities, supplies, etc. Since support organizations and activities are included in the analysis of the district s compliance with Title IX, support organizations should have an awareness of the law and the district s requirement for compliance. Inquires/complaints concerning the application of Title IX and its implementing regulations may be referred to the district s Title IX Coordinator, Executive Director of Human Resources, at PO Box 77070, Ft. Worth, TX 76177, , or the Office of Civil Rights. The Northwest Independent School District is an equal opportunity employer and provides educational programs and services which do not discriminate on the basis of age, national origin, race, sex, color, religion, disability or against any other legally protected group. 2

4 TABLE OF CONTENTS Introduction... 4 Formation and Applications... 6 Organization Federal and State Reporting Sales Tax Accounting for Transactions Fundraising Donations Scholarship Programs District Services Tools for Success Appendix References

5 INTRODUCTION The primary objective of a Booster Club, PTA and School Support Organization is to enrich the education and activities of students through cooperation of parents and staff in providing support to promote school programs or complement student groups or activities that enrich their education, participation in extracurricular activities and expand their horizons. The organizations work closely with the district; however, they are each considered separate entities from the district. Since the activities of the organizations impact the district and the public perception of the district, the district and the principals have authority to regulate these organizations. The main responsibilities of an organization, a sponsor, and a principal are discussed below: Organizations Organizations are responsible for supporting students and staff, supporting a student group, activity, or program. Support may be as simple as providing refreshments for a particular event or support may be as complex as raising money for an out-of-state competition. The organizations work with the principal/sponsor to provide assistance for the planned activities; however, the organization does not have the authority to decide the activities or trips in which the students will participate. The parents and the organization may provide suggestions about particular activities; however, the principal/sponsor is responsible for the final decision. Sponsor/Liaison - A designated sponsor of a student group serves as the liaison between the organization and the school/district, under the supervision of the principal. The sponsor is responsible for determining the various activities and trips in which the student group will participate with the approval of the principal. In addition, the sponsor should work very closely with the organization to provide guidance. The sponsor should not be considered an officer or member of the booster club. However, the sponsor shall approve all student/school-related activities of the organization. Principal - The principal is responsible for approving the formation of an organization as well as the activities of the students/student group and some activities of the organization. Each organization should strive to remain in good standing with all state and federal agencies. Therefore, each organization is responsible for obtaining its own competent independent counsel on accounting and tax matters related to its specific circumstances, if needed. This counsel may include a Certified Public Accountant (CPA) or an attorney. The cost of these services would be the organization s responsibility. Organization officers are solely responsible for ensuring that their organization is in compliance with all state and federal regulations. Therefore, the district, including any district employee, is not responsible for an organization not being in good standing with all state and federal agencies. These guidelines will assist organizations in following district, University Interscholastic League (UIL), state, and federal requirements. The district greatly appreciates the time, effort, and financial support that the organizations provide to our students, staff, and schools. 4

6 Questions to Answer Before You Commit to Creating an Organization Organizations provide an important support function to student groups; however, they also require a strong commitment from members to work properly. Therefore, deciding whether or not to form an organization is a difficult decision that requires careful consideration of the pros and cons of formation. Interested parents should discuss these issues with each other as well as the sponsor and the school principal or administrator. The appropriate school principal and administrator must approve, in writing, the formation of an organization before any further action is taken to create a unique identity. Please remember that parents are not required to form an organization in order to support a student group. Parents may still support a student group as parents through fundraisers and other activities in which the students are involved if the student group has a student (agency) activity fund set up through the district. All money generated would be considered the student group s money and would benefit only that group of students. Additionally, the district would be responsible for all of the accounting and legal responsibilities of the student activity fund. The following are some questions to consider when deciding whether or not to form an organization: 1. Why do I want an organization? 2. What can an organization accomplish that cannot be achieved through the use of a student activity fund? 3. Do I have time to commit? 4. Are there enough parents with time to commit? 5. Am I willing to perform the necessary research, training, and paperwork to be in compliance with all district Board policies, affiliated governing bodies, UIL, state, and federal regulations? (This includes submitting required information to the Texas Comptroller s Office and the IRS.) 6. Have I read or will I read the rest of this handbook to discover my responsibilities once an organization is formed? 7. Have I spoken with other similar organizations to determine what benefits/problems they have experienced? 8. Have I spoken with the sponsor to obtain support for the formation of an organization? 5

7 FORMATION AND APPLICATIONS Once you have decided to form an organization: Obtain written approval of the school principal and administrator before proceeding with any other steps to create the identity of an organization. (See Registration & Approval Form in Appendix.) Final approval by the Elementary or Secondary Executive Director for Curriculum and Instruction, as appropriate, is required. Begin the process of creating the organization s identity with the State of Texas and the IRS. Maintain all the documents related to these steps in a permanent file in a safe place to be forwarded to the new organization officers each year. MAILING ADDRESS The IRS and the Texas Comptroller s Office recommend that each organization obtain a post office box (PO Box) or private mailing box (PMB) to use as the official mailing address of the support organization. The address and box keys can be given easily to the new officers at the beginning of each new year. The importance of maintaining a consistent mailing address for the organization: It will save time since the organization will not have to update the address each year to the district, the Texas Secretary of State, the Texas Comptroller s Office, the IRS, and bank. Organizations receive several important documents from these agencies throughout the year, and if the address changes frequently, some of these documents could be lost or misplaced. If the related school s address is used as the organization s official address, the organization should be aware that it may not receive mail in a timely manner when the school is closed (i.e., summer vacation and some holidays). The IRS mails forms and other correspondence to organizations periodically. If these forms are not completed and returned to the IRS within a specific time period, an organization could lose their tax-exempt status, thereby also losing their tax-exemption with the State of Texas and possibly face fines and penalties. The district does not recommend using a home address since organization officers change frequently. ADDRESS It is recommended that each organization obtain a standard address and password to use as the official address of the support organization. The address and password can be given easily to the new officers at the beginning of each new year. The importance of maintaining a consistent address for the organization: It will save time since the organization will not have to update the address each year. Organizations receive several important documents throughout the year, and if the address changes annually, some of these documents could be lost or misplaced and not turned over to new officials at the beginning of each year. 6

8 BYLAWS Bylaws are an organization's internal operating rules. These rules ensure stability, continuity, and structure, especially during times of rapid growth. At a minimum the bylaws should contain: Name, Object, Membership, Officers, Meetings, Executive Board, Committees, Parliamentary Authority, Amending Bylaws. I. NAME II. OBJECT III. MEMBERSHIP IV. OFFICERS V. MEETINGS VI. EXECUTIVE BOARD (BOARD OF DIRECTORS) VII. COMMITTEES VIII. PARLIAMENTARY AUTHORITY IX. DISSOLUTION CLAUSE X. INDEMNITY CLAUSE XI. AMENDING BYLAWS FORMATION OF NONPROFIT CORPORATION [Articles of Incorporation/Charter] A nonprofit corporation is created by filing a certificate of formation (Form 202) with the Texas Secretary of State. Incorporation helps shield the individuals governing and operating the non-profit organization from liability incurred by the organization, except in cases of negligence. A non-profit corporation is characterized by the fact that none of its income is distributable to members, directors, or officers of the corporation. Not all non-profit corporations are entitled to exemption from state and federal taxes. A Texas nonprofit organization is not automatically exempt from federal or state taxes. To become exempt, the organization must meet certain requirements and apply with both the IRS and the Texas Comptroller of Public Accounts. The application (Form 202) is located on the Texas Secretary of State s website. Nonprofit Corporations: Many, but not all, non-profit organizations choose to incorporate. A nonprofit corporation is created by filing a certificate of formation with the secretary of state in accordance with the Texas Business Organizations Code ("BOC"). "Nonprofit Corporation" means a corporation no part of the income of which is distributable to members, directors, or officers [BOC, Section (5)]. A nonprofit corporation may be created for any lawful purpose, or purposes permitted by the BOC. Not all nonprofit corporations are entitled to exemption from state or federal taxes. Unincorporated Nonprofit Associations: Section of the BOC defines an unincorporated nonprofit association as an unincorporated organization consisting of three or more members joined by mutual consent for a common, nonprofit purpose. All unincorporated nonprofit associations, whether or not the entities are tax exempt, are subject to the provisions of the Uniform Unincorporated Nonprofit Association Act, Chapter 252 of the BOC. The Act addresses a limited number of major issues relating to nonprofit associations; namely, the authority of the nonprofit association to acquire, hold and transfer property in its own name; the authority to sue and be sued as a separate legal entity; and the contract and tort liability of an association's officers and its members. If you need further information regarding these provisions or how they might affect your association, you should contact your own legal counsel. 7

9 APPLICATION FOR EMPLOYER IDENTIFICATION NUMBER (EIN) The IRS requires all organizations that conduct business to have their own Employer Identification Number. The EIN is obtained with the SS-4 Form from the IRS. An EIN may also be obtained via telephone, by calling , or by applying online at the IRS website Search the website by entering employer identification number and continue to complete the application process online. A member s social security number should not be used as the organization s EIN for banking or other business purposes. Organizations are not allowed to use the district s EIN. The EIN will be the number used to establish a bank account for the organization. When a number is assigned to the organization, ensure that the paperwork is maintained in a permanent file from year to year. BANK ACCOUNT To open a bank account, the organization must first obtain an Employer Identification Number (EIN) from the IRS. (See Federal and State Reporting section - Application for EIN.) The school s name should not be solely used on the organization s checks or on its literature. The use of the school name only might imply that the school or the district is responsible for any obligations entered into by the organization. The name must include the organization s name on the bank account. Example: John Doe High School Band Booster Club. All payments must be made by check with two signatures. Individuals authorized to sign on the bank account cannot be related by blood or marriage or reside in the same household. Any employee who actively coaches or sponsors a UIL activity should not have control or signature authority over the organization s funds. District employees may not serve as the treasurer nor be authorized to sign checks for the organization. A district substitute is eligible to serve as treasurer, however, a district long-term substitute may not. All funds received should be receipted and deposited within 24 hours of receipt. Commingling of the organization funds and school activity funds is prohibited. District employees may not accept loans of funds from organizations. The Treasurer should reconcile the bank statement monthly and prepare a monthly financial report to the Board of Directors or Executive Board or Officers. ATM/Debit/Credit Cards The district does not recommend using ATM/debit/credit cards for the following reasons: Loss of the ability to have two signatures. Increased risk for fraud. Intentional/accidental misappropriation of funds. 8

10 QUALIFYING FOR EXEMPTION FROM TEXAS SALES AND USE TAX Organizations may apply for an exemption from sales and franchise tax imposed by the State of Texas. Exemption from Texas state taxes is determined by the Texas Comptroller of Public Accounts. Questions about state tax-exempt status can be directed to: The exemption application (AP-204) is located on the Texas Comptroller s website. Texas Comptroller of Public Accounts Exempt Organizations Section (800) or (512) APPLICATION FOR TEXAS SALES AND USE TAX PERMIT You must obtain a sales tax permit if you are an organization engaged in business in Texas and you are selling tangible personal property or providing taxable services in Texas to customers in Texas. The permit application (AP-201) is located on the Texas Comptroller s website. APPLICATION FOR FEDERAL TAX EXEMPT STATUS 501(C)(3) General instructions on the rules and procedures for federal tax exemption may be found in Internal Revenue Service (IRS) Publication 557 Tax Exempt Status for Your Organization. Organizations must apply for exemption from federal taxes on Form 1023, Application for Recognition of Exemption under Section 501(c)(3). The application must be accompanied by Form 8718, User Fee for Exempt Organization Determination Letter Request, which provides a user fee to be paid to the IRS, depending on the anticipated annual gross receipts. Upon acceptance of the organization s exempt status by the IRS, a determination letter will be received as evidence of approval. The letter should be kept in a safe, permanent place as it will be used time and again to prove the organization s exempt status. Each organization must submit to the district s Financial Services Department a copy of the determination letter issued by the Internal Revenue Service with regard to the organization s exempt status with the GASB 39 information form. NOTE: Instructions for completing these forms and copies of these forms can be found on the IRS website at under Forms and Publications. The IRS main number is (800) , and the Exempt Organizations Section is (877)

11 TAX ISSUES FOR NONPROFITS Neither a nonprofit corporation nor an unincorporated nonprofit association is automatically exempt from federal or state taxes. To become exempt, a nonprofit organization must meet certain requirements and apply with both the Internal Revenue Service and the Texas Comptroller of Public Accounts. Federal Taxes - IRS Charities & Nonprofits page o To attain a federal tax exemption as a charitable organization, your certificate of formation must contain a required purpose clause and a dissolution of assets provision. o IRS Stay Exempt: tax information for 501(c)(3) organizations o IRS Publication 557, Tax Exempt Status for your Organization. o Life Cycle of a Public Charity: sample organizational documents and IRS filings o Questions about federal tax-exempt status? Contact the IRS Exempt Organizations Section at (877) o IRS Form 1023 application for recognition of exemption and instructions (PDF). o Information about Form 990-N reporting requirements for small tax-exempt organizations whose gross receipts are normally $50,000 or less. State Taxes - Comptroller of Public Accounts Exemption page o Comptroller Publication , Guidelines to Texas Tax Exemptions. o Exemption Forms. o Questions about state tax-exempt status? Review the comptroller s FAQs or contact the comptroller s Exempt Organizations Section by phone at (800) or (512) or by . FRANCHISE TAX Every profit and nonprofit corporation in Texas must file all franchise tax reports and public information reports with appropriate payment until the Texas Comptroller s office has granted tax exemption. Failure to do so will cause the loss of corporate privileges as well as the forfeiture of charter by the Texas Secretary of State. The organization must submit an application for exemption along with the appropriate documentation to the Exempt Organization Section of the Comptroller's Office. Tax Code Chapter 171, Subchapter B, provides for certain exemptions from the franchise tax. Nonprofit entities who have requested and been granted an exemption from the Comptroller's office do not have to file franchise tax reports, including the Public Information Report or Ownership Information Report. If the entity has not requested or been granted an exemption, the entity must file all reports. TEXAS NONPROFIT RESOURCES Texas Association of Nonprofit Organizations: A gathering place for all nonprofits within the state of Texas. Texas Business Advisor: The Texas Business Advisor provides links to various sites that may be of assistance to non-profit associations. Charitable Trust Section of the Office of the Attorney General Texas C-BAR: Community Building with Attorney Resources provides free legal assistance to Texas non-profit organizations. OneStar Foundation - OneStar promotes service and volunteerism, forges effective public and private partnerships, and works to increase the performance of non-profit organizations. 10

12 ORGANIZATION ROLE OF THE ORGANIZATION Booster Clubs, PTAs and School Support Organizations shall organize and function in a way that is consistent with the district s philosophy, objectives and adopted district Board policies, in accordance with affiliated governing bodies and UIL regulations as applicable. Each organization must maintain bylaws that are jointly reviewed on an annual basis by the campus principal and the organization s officers. The rules of membership shall be clearly stated in the bylaws. Only active members in good standing shall be permitted to hold office or vote upon any matter of business of the organization. The bylaws must address the organization s fiscal year, structure and the method to be used to elect officers. At a minimum, the organization shall elect the following officers on an annual basis. District employees may serve as an officer with the exception of treasurer. District employees are not authorized to sign checks or enter into any contract verbal or written. Individuals authorized to sign on the organization s bank account cannot be related by blood or marriage or reside in the same household. There is an approval process to establish a support organization (see Appendix). PRESIDENT Typically, the president of an organization is the parent/guardian who has been active in the organization. The major duties include, but are not limited to, the following: Preside at all meetings of the organization; Regularly meet with the designated campus representative regarding the organization s activities; Resolve problems in the membership; Regularly meet with the treasurer of the organization to review the organization s financial position; Schedule annual audit of records or request an audit if the need should arise during the year; Perform any other specific duties as outlined in the bylaws of the organization. VICE PRESIDENT The vice-president acts as the president s representative in his/her absence. They must remain familiar with the organization. The major duties include, but are not limited to, the following: Preside at meetings in the absence or inability of the president to serve; Perform administrative functions delegated by the president; Perform other specific duties as outlined in the bylaws of the organization. NOTE: Larger organizations may find it necessary to elect several vice presidents with responsibility over differing areas. Such positions shall be clearly defined in the bylaws of the organization. 11

13 SECRETARY The secretary is responsible for keeping accurate records of the proceedings of the organization and reporting to the membership. The secretary must ensure the accuracy of the minutes of the meetings and have a thorough knowledge of parliamentary law and the organization s bylaws. The major duties include, but are not limited to, the following: Report on any recommendations made by the executive board of the organization if such a governing board is defined by the bylaws; Maintain the records of the minutes, approved bylaws and any standing committee rules, current membership and committee listing; Record all business transacted at each meeting of the organization as well as meetings of any executive board in a prescribed format; Maintain records of attendance of each member; Conduct and report on all correspondence on behalf of the organization; Other specific duties as outlined in the bylaws of the organization. TREASURER The treasurer is the authorized custodian of the funds of the organization. The treasurer receives and disburses all monies indicated in the budget and prescribed in the local bylaws or as authorized by action of the organization. All persons authorized to handle funds of the association should be covered by a fidelity bond in an amount based upon the organization s annual income and determined by the executive board. The major duties include, but are not limited to, the following: Serve as chairperson of the Budget and Finance Committee if prescribed within the bylaws of the organization; Issue a receipt for all monies received and deposit daily; Present a current financial report to the executive committee and general membership within thirty days of the previous month end; File current financial reports with the campus principal on a monthly basis; Maintain an accurate and detailed account of all monies received and disbursed; Reconcile all bank statements monthly as received and resolve any discrepancies with the bank immediately; File sales tax reports as required by the comptroller s office (monthly, quarterly, or annually); File annual IRS form 990 in a timely manner; Submit records to audit committee appointed by the organization upon request or at the end of the year; Other specific duties as outlined in the bylaws of the organization. Submit GASB 39 information form to the district s Financial Services Department annually by August 1 (see Appendix). NOTES: Due to the increasing requirements placed on charitable organizations by the Internal Revenue Service, it is strongly recommended that the treasurer have an accounting background. District employees may not serve as the treasurer nor be authorized to sign checks, agreements or contracts for the organization. 12

14 PARLIAMENTARIAN The primary duty of the parliamentarian is to advise the presiding officer on parliamentary law and matters of procedure when requested. The president or presiding officer of the organization alone has the power to make decisions or rule on a point of order. Thus, after the parliamentarian has given advice, the presiding officer must make the ruling to the organization but is not obligated to follow the recommendation of the parliamentarian. The parliamentarian should be thoroughly familiar with the bylaws and any standing rules of the organization. A copy of Robert s Rules of Order Newly Revised should be maintained by the organization and referenced as needed. ELECTION OF OFFICERS The election of officers of the organization will occur annually within the timelines and manner prescribed by the organization s bylaws. The organization shall provide the name, address, address and telephone number of the newly elected officers and the authorized signers of bank accounts (annually) to the campus principal or designee prior to June 1. Any changes in positions shall be reported to the campus principal in a timely manner. (See appendix for Booster Clubs, PTAs & School Support Organizations Officer Information Form.) Officers may be elected in a variety of methods (simple majority, secret ballot) in accordance with the organization s bylaws. The election of officers should be from a slate of officers presented by the nominating committee in the spring of each school year. Recommendations may also be taken from the floor at the time of the vote in accordance with Roberts Rules of Order. At no time should officers be appointed without the input and approval of the membership. The district will conduct background checks on all officers elected or appointed to the Executive Board of the organization. The transfer of records and audit of the accounts should be completed no later than July 1, of each year. POTENTIAL CONFLICT OF INTEREST FOR DISTRICT EMPLOYEES AND SCHOOL BOARD MEMBERS While no law specifically prohibits a board member or district employee from serving as an officer in a support organization, this is not a recommended practice. There is often overlapping areas of interest and responsibility between the district and a booster club, PTA, or school support organization. Therefore, serving as an organization officer is likely to lead to conflicting loyalties. For example, a booster club may request that the district use a gift in a certain way. If the issue comes to the Board of Trustees to decide, then a board member who also serves as a booster club officer should abstain from the vote. District employees should also be aware of the potential conflict of interest involved in serving as an officer of a school support organization. Per NISD Board Policy DBD (LOCAL), employees are required to disclose to his or her immediate supervisor a personal financial interest, a business interest, or any other obligation or relationship that in any way creates a potential conflict of interest with the proper discharge of assigned duties and responsibilities or with the best interest of the district. Further, the Booster Club, PTAs and School Support Organizations Guidelines state (given the potential conflict of interest involved when a district employee serves as an organization officer) that NISD employees are prohibited from serving as the treasurer and are not authorized to sign checks, agreements, or contracts on behalf of the organization. 13

15 STANDARDS FOR MEETING Notice of all meetings of the organization should be published at the campus 72 hours prior to the meeting date, except as provided by the organization s bylaws. The notice should clearly indicate the date and time of the meeting and the items to be discussed. Such organization meetings may not occur without the campus principal or designee in attendance. Business determined at meetings without adequate campus representation shall be considered null and void. If an organization feels that it is necessary to meet without a campus administrator or sponsor, the Executive Director for Instruction and Campus Support should be contacted for an acceptable replacement. TRAINING REQUIREMENTS Two members from each organization s executive board (preferably president and treasurer) are required to attend the district s annual Booster Clubs, PTAs and School Support Organizations training. Training requirements should be implemented into the operations of the organization. Some organizations may have additional training requirements by their governing bodies. SPECIAL COMMITTEES Special committees are created for a specific purpose and voted upon by the membership. The committee is automatically dissolved as soon as that purpose is accomplished and the committee report is made. The special committee may not be able to complete its assignment during a school year and members may function into the ensuing year until the purpose of the committee has been achieved. Individuals who have a conflict of interest shall not be allowed to serve as members of the committee. For example, senior parents would not be included on a scholarship committee since their child is a potential recipient of the monies. AUDIT COMMITTEE At the end of the fiscal year, an audit of the organization s financial records should be conducted. The audit should be performed by someone who is independent from day-to-day financial activities. Ideally, this audit should be performed by a group of three individuals; however, if the membership size does not allow, the audit may be performed by two individuals. The primary objectives of the audit are to: Verify the accuracy of the treasurer s financial reports; Ensure that the club s cash balances are accurate; Determine that established procedures for handling organization funds have been followed; Ensure that expenditures have been appropriately received and occurred in a manner consistent with the organization s bylaws; Ensure that all revenues have been appropriately received and recorded; Submit a copy of the audited financial report to the campus principal or designee no later than August 1 following the end of the fiscal year. The audit committee shall make a report to the general membership upon completion of the audit. Any discrepancies noted shall be brought to the attention of the president of the organization and a resolution reached prior to presentation. All officers of the organization shall make records available as requested by the committee. SUSPECTED FRAUD/IRREGULARITIES Suspected violation of guidelines, fraud, or misappropriation of funds must be reported to the parent organization, campus principal or designee, and district administration. 14

16 ORGANIZATION DISSOLUTION Noncompliance with any district policy or criteria may result in the disbanding of the organization by the principal or the administrator. To dissolve an organization, a resolution shall be adopted by the organization (or the executive board if the organization is inactive) stating that the question of such a dissolution be submitted to a vote at a special meeting of the members having voting rights. At least 30 days prior to the meeting, written or printed notice shall be given to each member entitled to vote stating that the purpose of such meeting is to consider the advisability of dissolving the organization. The organization must determine the distribution and usage of treasury monies and other assets before dissolution. In order to comply with Internal Revenue Service guidelines, care should be taken to ensure that excess funds are distributed within the framework of the organization s original purpose i.e. band booster funds would remain with the musical program at that particular campus. Any other distribution of funds could void the organization s tax-exempt status and force it into a fully taxable situation. LIABILITY INSURANCE PROTECTION The district strongly encourages organizations to obtain adequate insurance protection for liability and financial fraudulence. Organizations should have various safeguards set up to protect the officers, membership, and funds that are raised. Organizations must provide adequate insurance coverage for activities conducted on school premises. The district cannot provide insurance coverage for organizations. A General Liability Policy protects not only the organization but protects the individual member. An Accident Medical Policy provides additional coverage for out-of-pocket medical expenses to help deter lawsuits and to provide coverage where the General Liability Policy does not. This policy does not replace a liability policy but is a complement. The Bond or Commercial Crime Policy is set up to protect money, scrip, and securities in the event they are embezzled, stolen, or fraudulently altered. The Officer s Liability Policy is set up to protect the way the organization is managed and the decisions that are made by board members. These decisions include what type of fundraiser to have, where to hold the event or any other managerial decisions. A Property Policy provides protection for the personal property of the organization from such perils as theft or fire. One thing that most organizations don t realize is that the Property Policy can also protect fundraising merchandise, auction items, and raffle prizes. Organizations with insurance must supply a copy of the policies to the district s Risk Management office. 15

17 BACKGROUND/SECURITY CHECKS All organization volunteers are required to obtain a background check, annually, prior to volunteering at any activity at the campus. All persons entering the district facilities are required to check in through the front office for security clearance using the district s software. We have implemented a two-step process when volunteering at the campus which will include completing an NISD Background Check and logging all volunteer hours in the Volunteer Portal. Volunteers will follow the link that will be placed on the district web page. The link will direct you to the NISD Background Check website to complete your secured online background check. You will be required to provide birthdate, address, full name, phone number and primary address for contact purposes. After your background check has been approved, you will be able to log into the Volunteer Portal to sign up for various volunteer activities. The Volunteer Portal captures your volunteer hours that will be credited towards the campus. The secured online background check process reviews incidents that occurred within the last 10 years from date of incident. This information is kept confidential and no details are given to the organization or campus. CONTRACTS/SPONSORSHIPS District employees serving as an officer may not enter into any contract, verbal or written. Sponsorships and/or donations shall not be solicited or accepted if they: are obscene, vulgar, or otherwise inappropriate for the age and maturity of the audience; endorse endangering the health or safety of students; promote illegal use of drugs, alcohol, or other controlled substances; advocate violation of school rules and fall within the standard described at LIMITATIONS ON EXPRESSION at FNAA(LEGAL); advocate imminent lawless or disruptive action and are likely to incite or produce such action; include hate literature that scurrilously attacks ethnic, religious, or racial groups, and similar publications aimed at creating hostility and violence if they fall within the standard described at LIMITATIONS ON EXPRESSION at FNAA(LEGAL); would result in material and substantial interference with any school educational and/or curricular-related activity or blocks or impedes the safe flow of traffic within hallways and entrances and exits of the school. Organizations may not directly hire or contract with individuals or organizations to work with students. An organization may donate funds to the district, to be used for mutually agreed upon activities allowing support of student learning while maintaining proper controls and safeguards. 16

18 FEDERAL AND STATE REPORTING This section provides general information. It is each organization s responsibility to seek competent professional advice for its own tax reporting and filing requirements. The information provided in this document is not intended to be specific or all inclusive. The officers of the organization are responsible for ensuring that the organization follows all State and Federal regulations. The district and its employees are not responsible for an organization failing to comply with the requirements of the State and/or Federal regulations. ANNUAL ACCOUNTING PERIOD Exempt organizations must keep books, reports and file returns based on an annual accounting period called a tax year. A tax year is usually 12 consecutive months. Organizations should specify an annual accounting period within their bylaws. There are two kinds of tax years: Calendar Tax Year - This is a period of 12 consecutive months beginning January 1 and ending December 31; or Fiscal Tax Year - This is a period of 12 consecutive months ending on the last day of any month except December. It is recommended that a fiscal tax year end of June 30 th be used so that the organization has the same annual accounting period as the school district. ANNUAL FILING REQUIREMENTS Every organization exempt from federal income tax under section 501(c) is required to determine the necessity of filing an annual Form 990, Return of Organization Exempt from Income Tax. It is the responsibility of the organization to determine whether filing is required and, if so, to complete the requisite filing. Further, even though organizations are recognized as tax exempt, they may be liable for tax on the portion of income deemed to be unrelated business income (UBI). UBI is income from a trade or business activity, regularly carried on that is not substantially related to the charitable, education or other purposes that are the basis for the organization s exemption. Each organization must determine whether additional forms must be filed in this regard. More information may be obtained from Publication 598, Tax on Unrelated Business Income of Exempt Organizations. PUBLIC DISCLOSURE A nonprofit organization must provide copies, on request, of its original application for tax exemption, including any supporting documents filed by the organization in support of its application, plus any letter document issued by the IRS in connection with the application. In addition, the organization must provide copies of its annual IRS information returns for the past three years, including all schedules and attachments. When a request for information is made in person, the booster organization and school support organization is required to furnish the requested information immediately under IRS guidelines. Further, the organization will be required to comply with the timelines established by the Texas Public Information Act, Texas Government Code Chapter 552. Organizations are exempt from the above requirements, with the exception of requests under the Texas Public Information Act, if they have made the documents widely available, such as posting them on a web site, or if it can be demonstrated that the requests are part of a harassment campaign. Requests made under the Texas Public Information Act may be subject to limited exceptions and should be immediately forwarded to the campus administrator for review. If the organization elects to post the information on a web site, specific IRS criteria must be followed which produces an exact reproduction of the information; HTML format is not acceptable. It is acceptable to post financial 17

19 information in a database of other charitable organizations such as GuideStar which can be located at Organizations and school districts must be vigilant to maintain their separate identities because failure to do so may subject the clubs and organizations to the Texas Public Information Act. RECORD KEEPING The transfer of records and audit of the accounts should be completed no later than July 1 st of each year. Organizations should check with State and Federal guidelines regarding length of time records need to be kept. 18

20 SALES TAX TAXABLE STATUS OF PURCHASES All organizations must apply for their own sales permit number. They may not use another organization s or the district s sales permit number. Organizations that have applied for and received a letter of exemption from sales tax do not have to pay sales and use tax when they buy, lease or rent taxable items that are necessary to the organization s exempt functions. Each organization can have two tax-free sales days per calendar year according to Texas State Sales Tax Law. No item purchased tax-free by an exempt organization can be used for the personal benefit of a private party or individual. An organization must provide the vendor with a valid signed exemption certificate when claiming state sales tax exempt status. Exemption certificates do not require numbers to be valid nor is the vendor required by law to honor the exemption. Items which become the personal property of the student (cheerleader uniforms, band t-shirts, etc.), even though connected with a school or organization, are not exempt from tax. Meals purchased by the organization for athletic teams, bands, etc. on authorized school trips are exempt from sales tax if the organization contracts for the meals. The organization must pay for the meals with an organization check and provide an exemption certificate. Individual members of the athletic team, band, etc., may not claim exemption from the sales tax on the meals they purchase while on a school authorized trip. COLLECTION AND REMITTANCE OF SALES TAXES The organization shall collect sales tax on all taxable sales as appropriate to the location of sale. This information may be obtained from the City Secretary s office where the sale originates. When imposing sales tax, the organization has the option of: Example Only (use appropriate sales tax amount for area of sale) Adding the tax to the item s selling price - thus, if the selling price of an item were $2.00 and the tax rate were 8.25%, the organization would collect $2.17 ($2.00 x ) from the buyer for each item sold, or Absorbing the tax in the item s selling price - thus if the item sold for $2.00 including tax, the organization would retain $1.85 and remit $0.15 for sales tax. If this method is used, divide the total sales by (assuming a tax rate of 8.25%) to find the taxable sales. To determine the sales tax amount, subtract the taxable sales from the gross sales. 19

21 TAXABLE STATUS OF SALES Organizations need not collect sales tax on the following: Admission tickets; Club memberships; Sale of food and soft drinks sold during a regular school day, subject to an agreement with the proper school authorities;* Food and drinks sold at organization carnivals; Vending machine sales;* Meals and food products, including candy and soft drinks, served in an elementary or secondary school during the regular school day;* Candy and food items sold through fundraising drives by organizations or students of the school who are under eighteen years of age;* Two tax-free sales of otherwise taxable merchandise per calendar year, per school, per organization are allowed. A record of the sale must be maintained in the minutes of the organization. Therefore, state and local sales taxes shall be imposed and collected on all sales for: Items sold by the school store (i.e. pencils, erasers, paper, etc.); Any type of organization materials; Any other item sold as personal property (i.e. school pictures, uniforms, sweaters, etc.); All sales of items such as handicrafts, t-shirts, candles, cups, books, and school supplies sold by an organization during a fundraising drive; All other personal property except for those items specifically excluded above. Sales tax should be filed in accordance with the Comptroller s guidelines. For questions regarding sales tax, call the Texas Comptroller of Public Accounts at or refer to comptroller.texas.gov. * An organization planning to sell food or beverages should consider that food sold on campus during the school day (the period from midnight before to 30 minutes after the end of the official school day) must meet the federal Smart Snacks in Schools nutrition standards for competitive foods. For more information, visit or speak with the campus principal or program coordinator. 20

22 ACCOUNTING FOR TRANSACTIONS METHOD OF ACCOUNTING There are a wide variety of computerized accounting packages available to assist the organization in accurate financial reporting; manual record keeping is not the recommended method of reporting. Rather, each organization should adopt an accounting package or computerized accounting method to be used for several fiscal years. Establishing records in a spreadsheet format is perfectly acceptable, although somewhat cumbersome. It is preferable to adopt an accounting package for long-term use. The packages chosen should be reviewed on a biannual basis for effectiveness and accuracy of financial reporting. Packages should also be evaluated based upon their ease of use and overall cost, both financial and training, to the organization. At a minimum, the membership should be provided with a financial statement and bank reconciliation at each meeting. The financial statement should detail the budget to actual expenditures and receipts. Cash receipts and disbursement reports should be available for review when needed or at the annual audit. CASH RECEIPT PROCEDURES All cash collections received by the organizations for fees, dues, fundraising, etc. must be deposited upon receipt. All money must be deposited prior to holidays and weekends. All funds must be supported by some type of record documenting the source and amount of funds (tabulation of monies collected form; cash receipt form, ticket sales record, etc.). Such documentation shall be readily available for audit purposes. Bank deposits should be prepared as follows to ensure the integrity of the financial reporting: 1) Separate all currency and coins by denomination and carefully count and record it in the appropriate section of the bank deposit form. 2) A tape may be run of any checks included in the deposit rather than indicating the checks individually on the deposit slip form. A copy of the tape should be retained with your copy of the deposit records. 3) Total the deposit slip. 4) Tally the pre-numbered cash receipts and make certain that this total matches the deposit total. 5) Attach the cash receipt verification with a copy of the deposit slip and file in date order. 6) For large deposits, have another individual independently count the currency and coins, and verify that the amounts have been correctly recorded on the deposit slip. 7) Both individuals should initial the deposit slip next to the currency amount on the deposit slip. 8) Seal the deposit in a deposit bag in the presence of the second individual. This is called dual control and places the organization in a better position to challenge any claim the bank may make that the currency received was not correct. District employees should not count, collect or secure an organization s funds. District employees may not have access to an organization s lock box. 21