One of the units in the Graduate Certificate in Philanthropy and Nonprofit Studies is Legal Issues for Nonprofit Organisations and covers such areas as Codes of Conduct, Risk Management and Accountability.

Managing the potential liabilities of taxation legislation as it relates to schools is an important aspect for good Governance. The Development Office of a school can play an important role in managing these potential risks.

Three areas where schools can make major errors and consequently cause problems for themselves and their donors are in the area of Building Fund levies, the return of enrolment bonds and receiving scholarships or bursaries.

A Building Fund contribution has to be voluntary and should not be presented as if it were part of the school’s fees and charges. Best practice is that it should be separated and presented to parents as a request for voluntary support to the building fund. No mention of ‘off setting normal school operating budget’ or ‘allowing other funds to be released’ should be made or implied.

Refundable Enrolment Bonds, usually kept to allow for the smooth release of the parents obligations at the time a student leaves the school, cannot be simply transferred to the Building Fund account. The ruling on this matter is quite clear and the Bond must be returned to the Parent. The parent can then be encouraged to make a payment or donation to the school of a similar or greater amount.

A donation to a school building fund on the understanding (need not be in writing) that a scholarship will be offered to a student with some connection with the donor (such as a parent, relation or family trustee) will also not be regarded as a deductible gift.  This applies even if the donation is in excess of the school fee. Such arrangements or understandings are usually dealt with seriously by the Taxation Office with consequences for both the School, the school building fund trustees and the donor.

Similarly, if a parent is required to make a contribution to the Building Fund as a condition (implicit or explicit) of enrolment of a student, then this payment will not be a gift. If the school makes enrolling parents aware that it is EXPECTED that they make a contribution to the Building Fund once the student is attending the school then this also falls outside the definition of a gift.

An ATO document has been included on this web site under Members Resources to allow members of the school family including Board Members, Principal, Business Manager, P&F Committee, Development Office and other senior staff to copy and keep handy for further reference.

John C Hocknull J.P. (Qual), ADAPEF, MACE    www.edoms.com.au
Director
Education Development Office Management Services
"From Enrolment to Memorial"®
07 3392 7997             0410 22 55 99