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Member of Russell Bedford International, a global network of independent professional service firms.
CPA | Manager
When the last bell rings, school is far from over. Schools have a myriad of extracurricular activities running nearly every day of the week and late into the evening. This includes everything from athletics to fine arts to chess club and all the activities in between. All of these activities involve money, including fundraising, participant fees, and expenditures for equipment and services. Most Illinois school districts track this money in “activity funds” or “club accounts”. These accounts make enriching school experiences possible, but they come with challenges and risks. Here’s what every school district should keep in mind to stay organized, transparent and compliant.
Set up clear rules for handling money
Before any club or team collects or spends a dollar the district should have a clear plan in place for how that money is managed. This includes who is allowed to make purchases. Will coaches and club sponsors be able to buy things directly? Will everything need to go through the district’s business office first?
It also means establishing how cash and check deposits will be handled. Who physically takes money to the bank, what paperwork is required and whether the district has a check scanner to make deposits easier. Finally the district needs to decide what software system will be used to track the money and who has access to it. Bottom line: Coaches and sponsors need clear, easy-to-follow reports so they can make good decisions for their clubs. Make sure that information gets to them regularly.
Bottom line: Coaches and sponsors need clear, easy-to-follow reports so they can make good decisions for their clubs. Make sure that information gets to them regularly.
Keep each club’s money in its own account
Each club or team account is meant for that specific group. For example, the cheerleading account is for cheerleading, the drama fund is for drama, and so on. Money shouldn’t be moved casually between accounts. If one club temporarily needs to borrow from another, the district should be sure to set up a due to/from entry. This keeps the records clean and makes it easy to see exactly what is happening with each club’s funds at any time.
Bottom line: Treating each account as its own separate “budget” prevents confusion and keeps things transparent for everyone involved.
Use the district’s sale tax exemptions correctly
Illinois school districts are units of local government, which means they are generally exempt from paying sales tax on purchases. Most districts often have an official letter that employees can use at checkout to provide proof that the exemption applies. This is a benefit that needs to be used responsibly. Only coaches and sponsors should use the tax exemption and only for legitimate school purchases. Requiring purchase orders for all transactions is a good way to keep this process organized and eliminate misuse.
Bottom line: Train coaches and sponsors on how and when to use the tax exemption and make sure it’s not being used for personal purchases.
Be careful with crowdfunding platforms
Crowdfunding platforms, like GoFundMe may seem like an easy way to raise money for a team or club but they carry real risks for school districts. If a coach sets up a personal crowdfunding campaign on behalf of the school, the district may have little control over where the money goes or how it’s reported.
Best practice is for the school district to require approval for any crowdfunding campaign set up in the school’s name and to ensure all funds raised are deposited into official district accounts. Some districts choose to establish a policy forbidding crowdfunding for school-sponsored purposes. This eliminates the risk entirely.
Bottom line: Have a written policy on crowdfunding before someone launches a campaign. Reacting after the fact is much harder than preventing the problem before it happens.
Activity funds are a small but important part of what makes school life meaningful for students. With the right policies and some training, they don’t have to be a source of stress or confusion. By setting clear expectations from the beginning, Illinois K-12 districts can support their clubs and teams with confidence while avoiding the financial headaches that can distract from what matters most: the students.
