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drjekyll · Mar 2, 2009, 01:07 PM

We are a private non- profit school. Each year we advertise certain fees in addition to tuition. (ie: Technology Fee, Capitol Expansion Fee, etc.) Must these funds be used for what they are advertised for or can they be used however the school sees fit to use them?

ebaines · Mar 2, 2009, 01:26 PM

You should use the fees tyou collect as advertised. It's important for non-profits to always have the highest of ethics, and the last thing you want is for your constituents to become suspicous of how you handle your finances. I would recommend that the school set up approprate funds in their accounting system to track this - you would have a "Technology Fund" account for example so you can trace how money collected in technology fees is used for technoilogy purposes.

Now, having said that... all money is fungible, which is another way of saying that it's imposible to trace the flow of funds to specific uses. So as long as the amount of money the organization spends on technology is not less than the amount it collects in "technology fees," all is well. Local governments play this trick all the time - for example they say that money collected from the lottery will go only to education, but neglect to say that this just means less money will be going to education from other general sources.

drjekyll · Mar 2, 2009, 01:36 PM

Thank you, and I agree with you. We currently operate that way and have individual accounts for these separate funds. However, with the current economic conditions the temptation is there and I have heard rumblings from other administrators. I was wondering if it is illegal by the letter of the law so I can shut it down once and for all.

ebaines · Mar 2, 2009, 01:58 PM

You say you are an administrator - it would be pretty difficult for you to "shut this down" if the head of school and/or the Board is not in agreement with you. Your school should have rules in place regarding the process for transferring funds between accounts - as long as they follow these practices (which presumably have been blessed by the Board) the organaization should have a lot of freedom to use money wherever it may be best used. So for example -- it may require a vote of the Board's finance committee to authorize a transfer of money from the Technology Fund to, say, the Athletics fund, but as long as they follow the documented process that's OK. Whether it's wise to do this is a different topic.