ANSWER: First, a business is unrelated to the organization’s purpose if the primary objective is to make money, even if the income generated from an activity is used in furtherance of your charitable purposes. For example, if you sell advertisements in your PTA newsletter, this income is likely subject to UBIT (unrelated business income tax) even if you spend the income to further a charitable purpose. Will you be charging for this space? Remember advertising from a trusted brand like PTA to their key market – parents – has considerable value. How much would they pay for such advertising through other means? Is there an even pay-off with the $10 back to the PTA per inquiry? In addition, what safeguards are in place to ensure PTAs get the money when they make an inquiry? Will the company have a good way of recording the inquiries? How could it be proved?
Second, a PTA may not endorse a commercial entity. In Article 2, Section 1(h) of the Uniform Bylaws states that “the organization or members in their official capacities shall not endorse a commercial entity or engage in activities not related to promoting of the purposes of the organization.” If you choose to sell advertisements in your PTA newsletter, be sure to state the paid advertisement does not represent an endorsement of the commercial entity.
Having said that, there are several factors you may want to consider.
-- Is the product or service being offered one that is aligned with PTA’s purposes? For example, promoting a healthy food product or activity for kids clearly would be, while an oil change, probably not so much, and a discount on dangerous or harmful products is probably something that your PTA would not want to be associated with. These are business judgments that your PTA’s board of directors would have to make weighing the benefit to the PTA and the membership as well as the needs and circumstances served by your PTA.
-- Also, there may be other businesses – including some owned by your members – that might welcome a similar opportunity. While you don’t have to try to contact every business in town, you may want to put the word out generally before accepting the first opportunity that presents itself. Finally you may want to include a statement to the effect that the offer is being made available to your members as a convenience to them, but that if they choose to take advantage of it the business relationship is strictly between them and the business.