Board, Bylaws and Budget
October 18, 2008 · Print This Article
A homeschool leader is asking some excellent questions about writing bylaws, establishing a board and collecting money.
Dear Carol,I am co-directing an established homeschool group and we are in the process of writing by-laws. My question is, is it okay to not allow members to have a vote pertaining to the decisions of the homeschool board? Can the by-laws be set up to allow suggestions and recommendations from the members at the approval of the board? Our concern is to protect the vision of the homeschool group. Also, is it legal to initially appoint a board without a vote and then fill vacancies at the discretion of the established board? When it comes to handling dues from the members are there guidelines that must be followed such as becoming a formal non-profit? Can we handle dues without needing to apply for non-profit status or 501c3?Your website has been a tremendous help to us as well as your article in the Winter 2006-07 issue of The Old Schoolhouse. Thank-you for your time and ministry to homeschooler’s.Misty M
You have asked several good questions. Your group is fortunate to have you as a co-director.
Yes, it is OK to not have members vote; I have been on several nonprofit boards that do not have members vote.
Yes, you can set up your bylaws to allow final approval of ideas to be a board responsibility. You may establish a practice of considering suggestions and recommendations; you may not need to formalize the practice in the bylaws.
Yes, you can appoint a board without a member vote. This is done quite frequently on nonprofit boards, especially fine arts boards (i.e., art museums, symphonies, ballets, etc). Many boards find their own members from interested members, volunteers or patrons.
You can accept dues without being a 501c3 or having nonprofit corporation status. If you have a large surplus you may wish to consider nonprofit incorporation to legally establish your group as a nonprofit. My co-op filed for nonprofit incorporation last year because we have been carrying a large cash surplus for several years. We didn’t want our state to think we are a for-profit business and charge us business income tax. These articles might be helpful:
Do We Need to Incorporate?
7 Great Reasons to Incorporate
As a guideline, your board should remember their fiduciary duty (duty of care and duty of loyalty) to manage the funds with the purpose/mission of the organization in mind and not for private gain or benefit.
The board’s job is
- “to provide for fiscal accountability,
- approve the budget, and
- formulate policies”
(from “Major Duties of Board of Directors),“
In other words, think first of what is best for the organization.
I hope that helps!
Carol Topp, CPA
Carol,
What a great ministry that you have to the homeschool community. Several home educators and I live in a remote area of Texas where there is only a homeschooling support group for the mom’s, but nothing in the way of activities and classes for the children. We have everything established to get the co-op started for the fall of the year, except for the issue with the bank account. One person recommended that we keep just a cash box, but that seems a little overwhelming. We are just starting off and considering getting a checking account to store the money collected for dues. Right now, we are a small group, and obviously well below the $5k in income. From one of your previous comments, I gather that we should not set up an account in the three of our names, but rather in the name of the group? I wanted to verify that recommendation and then find out once the group has a bank account, is there a website that can step us through the other legal (federal) related issues to make sure we are in accordance with laws for non-profit groups? Thank you for you direction.
Tasha
Tasha,
Good for you for serving the needs of homeschool families in your area!
The idea of a cash box may work well if your group is small.
To open a checking account, you should call the bank first and see what they will need. They may want an EIN (Emplpoyer ID Number), which you can get for free from the IRS. My Leader Tools page has articles to explain that
Getting an EIN from the IRS
Your next step should be to read through my articles on boards, budgets, bylaws, and nonprofit incorporation.
As for legal issues, you should visit Hurwitt and Associates (http://www.hurwitassociates.com), a website created by attorneys. They have a great list , by state, of the requirements for nonprofits. Since you told me you are in Texas, I found the link:
Starting a Nonprofit in Texas
You’re off to a great start!
Don’t forget I wrote an entire book about starting and running a homeschool co-op. Read a sample chapter here:
Homeschool Co-ops Sample Chapter
Carol Topp, CPA