ANSWER: Paying volunteers money, gift cards, or anything of value that can reasonably be construed to be in exchange for their work is potentially dangerous to your nonprofit, and even to the volunteers you're trying to reward. The basic source of the confusion and the danger is that the law draws sharp distinctions between employees and volunteers. Employees get paid for their work — volunteers do not. Pay a volunteer for his or her work and you've transformed the former volunteer into an employee — or at least you've created a plausible basis for that person (or perhaps someone else) to claim he or she is an employee of your nonprofit.
According to the Department of Labor, a volunteer is: an “individual who performs hours of service… for civic, charitable, or humanitarian reasons, without promise, expectation or receipt of compensation for services rendered.”
If you give a volunteer a gift card or cash, they cease being a volunteer and become an employee. Instead, if you want to give volunteers a gift to express your gratitude – consider something non-monetary, such as a small item or token, and not a gift card.
Similarly, if you’d like to give incentives for students, your PTA should consider something non-monetary. Also, check with your school district on any specific policies on student incentives in your area.