Emergency reserve funds are considered an integral part of each PTA’s planning and budgeting process. An emergency reserve fund is intended to serve as a means to retain financial stability in the event of unforeseen developments. Maintaining a small savings account and/or carryover balance will allow for efficient management of funds as well as provide funds to carry on programs until the next opportunity for revenue.
The amount of the carryover or reserve fund will vary according to each PTA’s size and needs. National PTA has suggested that the reserve not exceed one-half of a PTA’s budget for an average year, but each PTA can establish its own policy. No IRS regulation or other federal law specifies a carryover limit.
If the revenue sources for one year bring in more money than was anticipated, it can readily be carried forward, giving the next year’s officers the opportunity to have limited fundraising or even no fundraising at all. No one has the authority to write a check to the school or anyone else for unbudgeted items to “clean out” the PTA account. The purpose of fundraising is to run PTA programs; the PTA is not the fundraising arm of the school.
PTAs without a sufficient carryover or reserve fund should work to build one over time.