Each year, many questions arise about the use of gift cards and gift certificates in the PTA. We hope your PTA will use this information to help you decide whether or not gift cards/certificates should be used.
Some examples of the ways PTA currently use gift cards/certificates:
- As prizes or incentives for students.
- As membership incentives.
- As “stipends” for teachers and/or for the purchase of classroom supplies.
- In conjunction with teacher and staff appreciation activities.
- As donated merchandise for “silent auction” fundraising events.
- As thank you gifts for volunteers.
Some potential problems with using gift cards/certificates in these ways are:
- Loss of accountability. Gift cards/certificates, like cash, can be used by anyone. Without adequate documentation of the purchase and distribution of gift cards, no one is accountable for those items and there is no “audit trail.” Unfortunately, PTAs, like all non-profit organizations, are susceptible to fraud. The policies and procedures in place for control of cash transactions – such as two signatures on checks, prompt reconciliation of bank accounts, and detailed documentation – are sometimes nonexistent or easily circumvented with gift cards, resulting in an even greater possibility for the perpetuation of fraud.
- Turning volunteers into employees. When cash, gift cards, or gift items of more than nominal value are given to PTA volunteers, the PTA runs the risk of turning the volunteer into an employee in the eyes of the IRS. While the work of PTA volunteers is invaluable, if a PTA attempts to “compensate” a volunteer for his/her services, then he/she is no longer a volunteer. As an employee, he/she becomes liable for paying taxes on the income, and the PTA, as an employer, becomes subject to payroll filings and taxes.
How can these problems be avoided?
- Treat gift cards/certificates as cash. Institute the use of a log for disbursement of gift cards (or cash) used for prizes or incentives for students so that there is documentation of who received each award. (That log, signed by each prize recipient, should be attached to the check request form used for the purchase of the gift cards.)
- Limit use of gift cards/certificates for PTA purchases to items in the approved budget, and maintain, to the extent possible, the same controls that should be in place for cash purchases (including having two people coordinate gift card use and retaining receipts for purchases made).
- Require submission of receipts for purchases made on gift cards used by teachers for classroom supplies.
- Eliminate use of gift cards/certificates (or cash) for teacher “stipends,” as this may create an employer-employee relationship.
- Maintain an “accountable plan” for reimbursement of legitimate PTA expenses. (Such a plan – which is accomplished by following PTA’s recommended basic fiscal management procedures – includes the timely submission of documentation of the expenses incurred through invoices, receipts, etc.)
- Eliminate use of gift cards/certificates (or cash) as “thank you” gifts for volunteers, as this may create an employer-employee relationship.
PTA members should also familiarize themselves with their local school and school district policies on gifts and gift cards.