Serving on a nonprofit board: What is required?


I think we have 3 people willing to be on the board. Their main question is time commitment. I have no idea what to tell them. Do you have any support materials to help leaders judge this?

Jennifer in North Carolina


Board commitment can vary a lot. Some homeschool organizations need everyone to pitch in on co-op day, but the board may only meet once a month for 1-2 hour long meetings.

The more important issue is that potential board members consider their duties as board members.

Each board member has a fiduciary (i.e. legal) duty to manage the organization and its funds within the purpose/mission of the organization and not for private gain or benefit. The board’s job is to govern the organization, be responsible for the management of funds, and be responsible for its programs.

From Ohio Attorney General Guide for Charity Board Members comes this excellent list of the duties of board members (with my comments and links added).

Duty of Care

  • Read and understand mission, vision, and governing documents. I recommend a board binder for important documents.
  • Attend board and committee meetings.
  • Be informed and prepared to participate in decision-making and oversight.
  • Exercise same care as a prudent person would in the handling of their own affairs.

Duty of Loyalty

  • Be prepared to put organizational objectives above self-interest.
  • Establish and follow written policies concerning conflict of interest situations.
  • Disclose personal financial interests when needed/excuse yourself from voting. See a sample Conflict of Interest policy.
  • Avoid entering into business relationships between board members and the organization.

Duty of Management

  • Develop policies that assure the financial responsibility of the organization. Get my list of best practices when you sign up for HomeschoolCPA’s email list.
  • Keep accurate and complete records of income, expenses, investments, and minutes.
  • Develop budget as a blueprint for program plans and all organizational spending. My book Money Management in a Homeschool Organization can help you create a budget.
  • Develop fundraising goals and assist the organization in acquiring adequate resources.

Duty of Compliance

  • Understand and comply with governing documents, including bylaws and code of conduct. Sample bylaws.
  • Know and comply with state and federal laws governing non-profit organizations, including registration and reporting requirements. If you’re unsure about what your filings requirements are, contact me and we can discuss it. My book, The IRS and Your Homeschool Organization, will also be helpful.

I hope this list of duties doesn’t scare away your potential board members! I have found that serving on a nonprofit board has been one of the most rewarding things I have done.

Carol Topp, CPA


Teaching Teenagers and Recent Grads About Money (podcast)


My latest podcast episode is part 2 of a presentation on how to teach kids about managing money. I explain the important lessons to teach high school students and young adults.

Listen here.

This Handout lists helpful resources for teaching teenagers about managing money.


This is part 2 of a two-part presentation. Listen to Part 1 .

You might be interested in my 4-part podcast series in teaching kids about money:

Episode 7: Teach Preschoolers About Money

Episode 8: Teach Kids About Money

Episode 9: Teach Pre-Teens About Money

Episode 10: Teach Teenagers About Money


Career Cover-100px

My newest book Career Exploration for Homeschool High School Students is available in print and ebook format. Learn more.

Will fundraisers cause a homeschool support group to pay taxes?


I looked at the description of the 501c(7) Social Club status, and also reviewed your comparison chart between c3 and c7 status. I agree that our homeschool group most closely fit the 501(c)(7) Social Club status.

However, I was wondering if our periodic fundraisers would cause us to be taxed – your chart says on income from other sources.  We hold the fundraisers when our funds from membership are too low to pay the rent and other costs.
Thank you,
Lisa R



I’m glad you’ve figured out the differences between 501c3 charity and 501c7 Social club status. It’s important to figure out where your group fits.

You asked if periodic fundraisers would cause you to be taxed. It could be a problem, but not likely.

In general, fundraisers are considered “unrelated income” and nonprofits must pay tax on unrelated income (called Unrelated Business Income Tax, or UBIT).

Fortunately, the IRS offers several was to avoid the UBIT tax. The exceptions include:

1. If the fundraiser was conducted by volunteers (if no one was paid to run the fundraiser, then the proceeds are not taxed) and

2. The fundraiser proceeds under $1,000 is not taxed.

The IRS has more exceptions to UBIT but one or both of these exceptions to paying unrelated business income tax probably apply to your group.

Additionally, the IRS requires 501c7 Social Clubs to have most of their income come from membership fees (65% or more). You probably saw that on the chart comparing 501c3 to a 501c7 Social Club.

So make sure that your fundraisers stay under 35% of your total income. You said they are periodic and sound as if they are secondary to your membership fees (“We hold the fundraisers when our funds from membership are too low to pay the rent and other costs”).

I hope that helps.

Carol Topp, CPA

“Is my idea a homeschool co-op or not?”



Hi Carol,

I would like to start a homeschool support or enrichment group. I have a large home on 1/2 acre that is perfectly suited for a co-op or school type gathering place for homeschoolers and unschoolers. I would like to offer all inclusive art, drama, stretching and balance, cooking, gardening classes and help with school work. Hours would be Monday through Friday from 8 5 p.m. with children able to come and leave at their own schedule.

I would like to offer part time or full time based on the families needs. I would like to charge a monthly fee of around $200/month per child and less for part time. Could you please tell me if this is legal and if there is a cap on the number of children I could have in my home? If my idea sound like it is covered in your book I would be happy to buy it, I am not sure if this is a co-op?

Would I need to file anything or get a license or could I just advertise and start. Any help you could give would be great because I can’t seem to find any info on my particular idea, and I would love to use your services if they could apply to my situation

Thank You!
Heather M in California



You have a pretty neat idea!

What you need to decide is if you’re going to run this as a business with you as owner (since you are using your property) or if you want it to set up a nonprofit organization (a homeschool co-op).  No one “owns” the co-op; you may help lead it with others and you can offer (or rent) your space to the organization.

Your specific questions on the maximum number of children and licensing are California specific and I cannot answer them. And they probably apply more to for-profit school/daycare than a nonprofit association (i.e a gathering of moms and kids).

In my opinion, if the parents stay on the premises and help out, you have a co-op and fewer regulations because you are a gathering of moms and kids and not a “school.” And my book, Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out would be extremely helpful.

My advice is to start small and learn as you go. For example, start with one or two classes, one day a week, but not Monday-Friday, 8 am-5 pm. Make the full time operation your goal after a year or two. After a year of running your program, you’ll know if you should get licensed, operate as nonprofit or for-profit business.

Carol Topp, CPA

Can board members be responsible for a nonprofit’s employer taxes?


If the IRS rules that a 501c3 nonprofit organization has misclassified its workers as independent contractors instead of employees, and the back taxes, fines, and/or penalties exceed the resources of the organization, what happens? Is it possible that the membership of the organization and/or members of the board could be financially responsible?



Yes, the board members can be held personally responsible for employment taxes owed by a nonprofit organization. That’s why many nonprofits with employees have Director and Officers insurance.

Here’s a website that discusses paying employer taxes. (Employer taxes are slightly different from what you asked, but its still a tax/fine imposed by the IRS or state govt).

The author, a nonprofit attorney,  states

“If a nonprofit fails to pay taxes, the IRS may go after individual board members and executives to repay the money.…The IRS doesn’t want to discourage service on the boards of charitable organizations. But the IRS wants its money and will get it any way it can and from whomever it can prove was a responsible person.

Board members and senior executives of any charitable organization should be vigilant in ensuring that an organization is current in all its payment obligations to taxing authorities.”

Carol Topp, CPA

Insurance and fundraising for a homeschool team


Our homeschool group has an engineering class that has become a finalist team in an invention competition at MIT.  The teacher needed us as a non-profit organization to “back” or “sponsor” the team. All that means is we needed to support the team (not financially, but letter of recommendation).

Now that we have become finalists it is very possible we will be selected to travel to MIT for the competition.  Our concern is liability.  Is there a way for us to continue to support the team without a worry about insurance for the travel?  Can we have parents sign a waiver of liability?
The teacher has agreed to fund raise but NOT have any of the money go through our accounting, since we need to limit our income due to the 5013c requirements.  Our income needs to stay below a certain amount. We are a large coop and so our dues add up quickly.
Mary S
Congratulations on your Engineering teams success!

I’m not an insurance or risk expert, so I am not really sure how “sponsoring” an academic team makes your organization responsible if there is an accident while traveling. Yes, have parents sign a waiver, but that is not guarantee that you’re free of responsibility. It just reminds parents that they should be carrying medical insurance on their children.

  • Act in a responsible, safe manner and you’ll lessen the risk.
  • Ask for drivers licenses from the drivers.
  • Ask if they have speeding tickets, their own insurance, etc.
  • Have chaperones at all times, never let the kids go off by themselves, etc.

I bet you can search the internet and find a waiver and maybe even rules to follow. Ask the competition for samples of waivers or contact the other groups coming and ask for their policies.

Does your co-op have liability insurance? You should call your insurance agent and talk to him/her. They may say your group is covered under your current policy or write you a special event rider.

Limits on nonprofit income

The dollar limits the IRS imposes are for organizations that have not yet applied for 501c3 status (if gross income is under $5,000 a year, a group can be considered tax exempt without filing the application form with the IRS).

If you already have 501c3 status (and have an IRS letter to prove it), you are not limited in the dollar amount you can raise. For example, the Red Cross raises millions each year to help  in disasters.

The IRS does have dollar thresholds when filing the annual Form 990. For example if your gross income is under $50,000 you file the simple on-line 990-N form once a year. If your gross income is $50,000-$200,000, you file the Form 990-EZ. The gross income determines what form you file, but does not limit the amount you can raise.

Check with whoever told you that you had to stay under a certain dollar amount. I think he/she may be confused.

Carol Topp, CPA

Paying your homeschool graduation speaker

We provide our homeschool groups members with a graduation ceremony.  The group assists in planning the event and contributes $500 toward their expenses.  Some of the expenses were “love offerings” given to volunteers who sang, played piano, and created slide shows.  This was a challenge when it came to gathering receipts since it was not contract labor or services provided.
How should we handle future “love offerings” or “gifts” and meet requirements of the government for keeping receipts of expenses?  Because our record keeping has been nonexistent in the past, I want to make sure I am setting things up correctly and doing things within the confines of the law.
Thank you,
Trisha in Texas
I was treasurer for my homeschool group’s graduation ceremony for a few years and we did the same thing: gave “gifts” or speaker honorariums. We also did not have a receipt to prove the expense. The check I wrote to the speaker or singer was our only record of the expense.If you pay someone more than $600 in a year for their services such as the speaker, the singer, etc. then you should give them a 1099MISC at the end of the year (and a copy goes to the IRS).

If you are reimbursing a parent for decorations, etc. then you should have receipts from him/her. It’s not a personal service, but a volunteer reimbursement and no 1099MISC is sent to the volunteer.

Carol Topp, CPA


Calendar of Board Topics for Homeschool Groups


This blog post from Nonprofit Law Blog had a great idea: Create a calendar of topics your board should discuss every year.

I modified their ideas a bit for typical homeschool organizations and came up with this list of topics for your board to discuss each month:

  1. Welcome new board members and give them a history of your organization, its purpose, an understanding of their duties and a board binder. Read over the bylaws and review your mission and purpose statement.
  2. Discuss new programs and activities.
  3. Decide on discounts and appreciation gifts for volunteers.
  4. Go over best practices to avoid fraud. Read them here. Implement changes as needed.
  5. Discuss fundraising techniques.
  6. Authorize committees, recruit members and delegate duties to them.
  7. Review your conflict resolution policy. How do you solve conflicts. Read The Peacemaker.
  8. Review your risk areas, safety policies and insurance coverage.
  9. Evaluate any paid workers, independent contractor agreements, and employment practices.
  10. Recruit, nominate and elect new board members.
  11. Set a budget near the end of the year for the next year.
  12. One month after end of fiscal year file IRS form 990/990-EZ or 990-N and any state forms.

As you can see, I have links to articles and blog posts on most of these topics.

And my books,

  • Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out
  • The IRS and Your Homeschool Organization.
  • Money Management in a Homeschool Organization

have many issues for your board to discuss as well.

Carol Topp, CPA



Can a homeschool group give perks to board members?


Can a member of the board (of our homeschool group) be given free tuition as a perk? Or could this be a conflict of interest?




It is a conflict of interest if the board votes itself tuition discounts. A nonprofit board member has a duty of loyalty to the organization above themselves. So if a board votes themselves a tuition discount, their loyalty comes into conflict with their personal benefit.

If only one member receives a discount, the rest of the board could vote to give that person a discount in appreciation for her volunteer efforts. That member benefiting should not be in the room during the discussion on discounts and they should not be allowed a vote.

If the entire board wants a discount for each member, then perhaps the bylaws should state that. If the bylaws are amended, I’d recommend  a vote be put to the membership at large approving the discounts as a “perk” of serving on the board.

I’d also recommend a conflict of interest policy. See samples here:

Carol Topp, CPA

Can a homeschool group give discounts to a family in need?

Our homeschool group is a 501c3 organization. A parent member of our group recently approached me and asked if we could start a scholarship program. (This would not be a college scholarship program.) The parent’s hope is that a parent (or any individual) could give a donation to the organization to be used for scholarships for families who were facing financial hardship to attend our classes.
The scholarship would only be used to reduce a needy family’s tuition at our co-op. The parent that asked this question was hoping to get a tax deduction for his gift. I know that there could potentially be an issue with private inurement* for the families receiving a “scholarship” in this situation.
I would greatly appreciate your input. I am happy to schedule a phone consult with you.
Sharon in PA
What your member is proposing is a type of benevolent fund.
I don’t like the use of the word “scholarship” because, to the IRS, “scholarship” means payments on behalf of a student to a college.
I wrote a blog post about it:
Granting a tuition discount to a needy family is not inurement* if you put into practice a few safeguards such as:

  • the board, or a committee decides on the criteria to grant a tuition discount for a hardship (consider creating a policy)
  • the family receiving the benevolent discount has no vote or decision in granting the discount
  • the donation is not “ear marked” for a specific family. The board gets to decide who gets a benevolent discount, not the donor.

*Inurement is when the earnings of the organization are used for the advantage of a specific individual instead of the purpose of the organization. Inurement is forbidden for 501(c)(3) organizations.

I hope that helps,

Carol Topp, CPA