Is your Parent Teacher Organization (PTO) thinking about giving volunteer or teacher gift cards?
There are quite a few considerations to make before your PTO uses group funds to purchase gift cards.
Technically there isn’t a written rule against providing gift cards to volunteers or teachers, even if your PTO is a 501(c)(3).
This means that it is not illegal or improper to give volunteer or teacher gift cards.
But there are some issues that should give you some pause about using them on the regular.
Please consult your tax attorney for the final word on this matter.
This information shouldn’t be relied on for legal advice.
With those legal disclaimers out of the way, let’s get to the issues with gift cards for teachers and volunteers
Giving Gift Cards Creates a Taxable Event for Recipients
The first issue with giving gift cards to volunteers or teachers is that the IRS considers gift cards to be the same as cash.
And because of this, the gift card creates a taxable event for the recipient in the eyes of the IRS.
In other words, the value of the gift card counts as income that volunteers and teachers should declare when it’s tax time.
Ultimately, that’s an issue for them and not for your PTO.
Gift Cards are Hard to Track
Some PTOs give gift cards to teachers to use as a classroom supply stipend.
However, there’s no accountability for how the gift cards are spent, so the gift card could be spent on anything.
It’s true that teachers typically spend hundreds of their own money each year to stock their classrooms with all it takes to turn the spaces into warm and inviting learning environments.
The reality is that gift cards given for classroom supply stipends will be spent on the right thing one way or another.
A larger, more concerning issue is that gift cards are a potential opportunity for fraud.
A volunteer looking to fleece the PTO could purchase gift cards under the guise of a sanctioned transaction, but use the gift cards for their personal use instead.
Gift Card Alternative
Instead of giving gift cards to individual teachers as stipends, make a reimbursement arrangement with your school.
Give an annual donation equal to the amount you would’ve given to teachers as gift cards.
The school can administer the reimbursement process for the teachers.
This is less work since your PTO doesn’t need to purchase the individual gift cards, nor distribute the funds.
Also gone is the hassle of collecting receipts to prove proper use of the gift cards.
The teachers still get the benefit of funds from the PTO.
The PTO gets to support the teachers in this way.
Volunteers Aren’t Employees
Now this last issue sounds obvious: volunteers aren’t employees.
But by the very definition, according to Merriam-Webster, a volunteer is:
“a person who voluntarily undertakes or expresses a willingness to undertake a service: such as one who renders a service or takes part in a transaction while having no legal concern or interest.”
By this definition, a volunteer is someone who gets nothing in return for their service and dedication.
So does giving a gift card to a volunteer transform them into an employee?
Technically, the IRS could make that determination.
But as a practical matter, I’d bet that they’re not going to because that would be impractical to enforce and not result in a meaningful revenue generator for the agency.
Not giving back to volunteers to thank them for their service is ill advised.
PTOs should be making volunteer recognition a regular part of their plans.
The IRS says that de minimus (in other words, minimal, like coffee and donuts at an event) compensation is ok.
Center volunteer recognition efforts along this guidance and you’ll be legally compliant.
But keep in mind that cash can never be considered de minimus.
Implications for an IRS Audit
If you continue to give gift cards, an IRS audit of PTO finances might get flagged as a potential issue.
The funds of PTO and PTAs with a 501(c)(3) classification should only go towards the stated mission of the organization.
And that means supporting the children and school.
However, if you use a small portion of your annual budget for gift card tokens of appreciation you will be fine and not run afoul of federal and state regulations or best practices.
Just know that there is a risk, albeit a small one, to giving gift cards to teachers and volunteers.
Watch this!
I get into the details of giving school teachers, staff or volunteers gift cards purchased with PTO funds:
Over to You
The bottom line is that it is perfectly legal to give PTO volunteers or teachers gift cards as either a thank you for their service or as a way to defray classroom costs.
But just like with all other things in the world that are legal, this practice may not be a good idea.
How to handle volunteer and teacher gift cards going forward?
Work to minimize how many gift cards you give each year.
Keep the value of the gift cards low, $25 or less.
If you’re uncomfortable giving gift cards given the risks, look for other ways to recognize volunteers!
As a practical matter, as long as you’re not giving lavish gift cards on a regular basis, you’re unlikely to get into legal trouble.
When you use the vast majority of your PTO budget for items other than gift cards, you should be just fine.
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