Is buying T-shirts from a board member a conflict of interest?

Homeschool Mom T-Shirt

Hi, we are wanting t-shirts for our homeschool group. One of our board members can make the t-shirts.

Is it a conflict of interest if she makes them? There would be a little profit made from what is charged to the members.

Would she be able to keep that profit or would it need to go back into the co-op so that there would be no benefit to her?

Thank you. Mary

 

Mary,

You asked if buying T-shirts from a board member is a conflict of interest. Yes it is a conflict of interests between her T-shirt business and her duty of loyalty to the homeschool group.But that does not mean she is forbidden to offer her t-shirt service to your group!

There is a practical, easy way to handle conflicts of interest.

When you discuss the T-shirts, the board member who could benefit from the sale should explain that she has a conflict of interest, leave the room, and not have a vote in the decision.

Your board should do its due diligence and get bids form at least two other T-shirt sellers and compare it to the board member’s offer. Then make a decision.

So, just because a board member has a conflict of interest, does not mean that you cannot buy T shirts from her, if she has the lowest bid.

And she gets to keep the profits because it’s her business doing the work.

 

If you have more questions about conflicts of interest you might find these books helpful:

It’s a template for you to create your own board manuals as a place to store important papers and policies.
Carol Topp, CPA

Is our homeschool group required to have a president?

I recently purchased your ebook The IRS and Your Homeschool Organization. It is so helpful! I do have one question that I hope you can help me with. Are we required to have a president for our organization in Ohio? I see lots of websites saying that we do but not a word about it on any of the actual Ohio documents.

Thank you for your time.

Ashley

 

Dear Ashley,

You asked, “Are we required to have a president for our organization in Ohio. I see lots of websites saying that we do but not a word about it on any of the actual Ohio documents.”

Well, not everything that is a good idea is a codified into a law or specifically spelled out in a document! Like brushing your teeth  for example! 🙂

This document from the Ohio attorney general’s office is helpful.
Guide for Charity Board Members

It explains that there are duties and responsibilities for board members such as the duty of care, duty of management and duty of compliance with stated laws.

If you can execute those duties without a president, then you do not have to have a president. But it is nearly impossible to properly run a nonprofit without someone in the role of chair/president calling meetings, setting an agenda, running the meetings, providing oversight, etc.

So why not have a president (or chair)?

Of course, all the board members are expected to help run the organization. The president should not do it alone. The best board presidents I have served under were good at delegating, listening, and leading, but not doing everything themselves. The worst presidents or board chairs are those who decide everything themselves and try to control too much. They burn out and sometimes damage the group and its activities for a very long time.

There may be some back story and history (or even a dispute) to your question, so if you’d like I would be happy to arrange a phone consultation with you.

If your homeschool program would like to arrange a phone consultation with Carol Topp, CPA contact her here. She is happy to arrange a conference call and each persona can call in form heir own home or location. The conversation can be recorded for those unable to attend.

 

Carol Topp, CPA
HomeschoolCPA.com

Should my homeschool group tithe?

If we want to tithe on our income (from registration fees and donations) are there any restrictions, red tape, or regulations we should know about? Do you have advice or thoughts on tithing by a 501(c)(3) tax exempt organization?

Homeschool leader in Idaho

 

The only restrictions is that the purpose of recipient of your tithe must be in line with your exempt purposes (charitable, educational and religious for this particular group).

So you shouldn’t give any part of your tithe to a for-profit business or to a nonprofit whose mission is outside of your purpose as you indicated to the IRS when you applied for 501(c)(3) tax exempt status (say an animal shelter).

Most 501(c)(3)s do not tithe because they consider themselves as recipients or stewards of donations for their specific mission. But some organizations do tithe. My church, for example, budgets 13% of our income to missions. We consider that part of a tithe.

From a Biblical perspective, it’s unclear if nonprofits should tithe.

Here’s a blog post from a pro-life group LifeMatters Worldwide with food for thought:

Should your ministry give a portion of your budget to the Lord’s work? That sounds good, but isn’t 100 percent of your budget already dedicated to advancing the Kingdom to your particular target audience? If you believe that a nonprofit organization should give because God will bless you in a special way, why stop at 10 percent?

Your board should discuss these questions:

  • If you choose to tithe, where would you direct the funds?
  • Would you give to a church? That could be problematic.
  • Would you only give to other similar agencies? Donors who give to your nonprofit expect that 100 percent of their gift will be used to support your mission.
  • What if you choose an organization that your donors don’t believe in?
  • Would they quit supporting you if they knew that a portion of their gift ultimately supported another organization that they don’t like? Their reason for not liking the other organization doesn’t have to be doctrinal or philosophical. Maybe they don’t like the director, or maybe they simply aren’t interested in that particular cause.

The blog post writer concludes with this:

When a nonprofit decides to give to other nonprofits, in a sense they become mutual fund managers. You are deciding for your donors how to spend a portion of their gift that is not directly connected to your ministry. As a donor, I’m writing a check because I want to support the impact your organization is making. If I wanted to support the organization that you choose for me, I would give to them directly.

The biblical instructions about tithing and giving primarily apply to individuals. Business owners may choose to tithe their income, but a nonprofit ministry should not view giving from the same perspective.

There is one critical difference — nonprofit organizations don’t earn income, you are merely stewards of the gifts someone has entrusted to your care to accomplish your mission. When you look at nonprofit tithing from a donor’s perspective, it doesn’t make sense to give something away that isn’t really yours.

I think that will give your board something to discuss!

Carol Topp, CPA

 

Carol’s book Money Management in a Homeschool Organization  will help your homeschool organization create a budget and live by it!

 

How long do I need to keep these homeschool group records?

From the I Am a Homeschool Group Leader Facebook group (if you’re not a member yet request to join us. We’d love to have you!)

 

How does your group handle old financial records? What do you keep, what gets tossed and when?

When I began as treasurer, I received tons of files, receipts, bank statements, old insurance policies, order forms and the like. Our group is 30 years old. It’s a lot of stuff! Don’t want to toss anything that’s needed, but thinking that much of this is not necessary anymore.

Julie

 

I found some helpful lists of what to keep and for how long:

Document Retention for US Nonprofits: A Simple Guide

Document Retention Policies for Nonprofits

Both of these lists are for large nonprofits with employees, buildings, etc. so the lists are crazy long and overly detailed for most homeschool groups.

So I culled it down to this:

Keep these records permanently

  • Articles of Incorporation
  • Determination Letter from the IRS
  • IRS Tax Exempt Application Form 1023/1023-EZ
  • Employer Identification Number (EIN) from the IRS
  • Bylaws
  • IRS Information Returns, Form 990/990-EZ or 990-N
  • State Information returns or annual reports

Keep for 7 years

  • Financial statements (year-end)
  • Canceled checks
  • Bank Statements
  • Leases (5 years after lease ends)
  • Background checks
  • 1099-MISC  given to Independent Contractors
  • Employment Tax records (Form 941, W-2s etc)
  • Payroll records (although one list said to keep these permanently!)

Keep for 3-5 Years

  • Minutes of board meetings (although one list said to keep these permanently!)
  • Invoices
  • Reimbursements
  • Receipts of expenses
  • Insurance  policies

 

Where do you store these documents and papers? Most of the documents will probably be stored at the Treasurer’s and Secretary’s homes.

But the documents to be kept permanently should be stored in a board members’ binders and passed down to future board members. Each board member should have a copy of the important “Keep permanently” documents.

I have created a Homeschool Organization Board Manual. It is a template to create a board member binder. It has:

  • A list of important documents to keep in your binder
  • Section dividers so you can organize the important papers
  • Tools to help you run your meetings smoothly including
  • A sample agenda that you can use over and over again
  • A calendar of board meetings

What Does a Treasurer Do?

 

Do you think all a treasurer does is write checks? Their job involves a lot more that that! Carol Topp of HomeschoolCPA explains the tasks a treasurer does and why her position needs lots of oversight in this short podcast (14 minutes).

In the podcast Carol mentioned a list of Best Financial Practices for homeschool organizations. Find it at  http://HomeschoolCPA.com/Fraud

 

Carol Topp, CPA has written a book just for homeschool treasurers:

Money Management in a Homeschool Organization

  • Does your homeschool group manage their money well?
  • Do you have a budget and know where the money is spent?
  • Do you know how to prevent fraud?

This 115 page book will help you to open a checking account, establish a budget, prevent mistakes and fraud, use software to keep the books, prepare a financial statement and hire workers. Sample forms and examples of financial statements in clear English are provided.

 

Carol Topp, CPA

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What Does a Secretary Do?

 

What does the secretary of a nonprofit organization do?

A secretary does a lot more than just record minutes of meetings. Carol Topp of HomeschoolCPA explains the important tasks a secretary does as the keeper of important papers in a homeschool organization in this short podcast episode (13 minutes)

In the podcast Carol mentioned …

Homeschool Organization Board Manual

This manual will help your organization’s secretary assemble all your important papers.

But this is more than just a few cover sheets for your binder. It is also a 55-page board training manual with helpful articles on:

  • Suggested Board Meeting Topic List
  • Board Duties
  • Job Descriptions for Board of Directors
  • What Belongs in the Bylaws?
  • Compensation and Benefits for Board Members
  • and more…

 

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How can a nonprofit board receive benefits (properly)?

A homeschool organization sent me their bylaws to look over. They had two conflicting statements about offering compensation or benefits to their board members, especially the officers (the officers of a nonprofit organization are President/Chair, VP, Secretary and Treasurer).

Article 4 Section 1 Board members shall receive no compensation (other than reasonable expenses) for their service on the Board.”

Article 5 Section 4 Officers of the Board are eligible for benefits such as discounts, retreats and/or priority registration as well as other meeting expenses deemed reasonable by majority vote.

So which is it? Are officers allowed compensation/benefits or not? Tuition discounts are taxable compensation according to the IRS (unless they are “insignificant“).

Also the benefits are approved by a “majority vote.” Majority of whom? The board? This organization has no voting members except the board. And a nonprofit board cannot vote themselves benefits because that is a conflict of interest and private benefit which is forbidden by the IRS (if excessive).

I understand the desire to thank hard-working board officers, but be careful that it doesn’t become taxable income or a conflict or interest or worse private inurement which is forbidden by the IRS for 501(c)(3) organizations.

Here’s what I recommend:
1. Change the wording of Article 5 Section 4 to read Officers of the Board are eligible for  benefits (such as insignificant discounts, training (retreats and conferences) and/or priority registration) deemed reasonable, but not significant enough to be taxable income, by majority vote of the non-officers of the board or recommended by an independent committee.

and then

2. Hold a board meeting where the officers leave the room and the remaining board members vote on what benefits the officers will receive that year. That means you need to have a large enough board to do this. And it needs to be done every year.

Or

appoint an independent committee (no one on the committee is related to any of the officers) to make a recommendation. The board votes to accept the committee’s recommendation (but without the officers allowed to vote since they will personally benefit).

These changes in their bylaws and having other board members vote for the officer benefits will keep the organization from having a #1) conflict of interest and #2) the appearance of private benefit. It also means the officers are being thanked for their service without receiving any taxable income.

 

If your organization needs help in understanding how to thank your board members (properly), read

or my new Homeschool Organization Board Manual. It’s a template for you to create your own board manuals as a place to store important papers and policies.

Carol Topp, CPA

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Homeschool Board Duties

 

Did you know the 4 main duties of homeschool board members? They are the duty of care, loyalty, management and compliance.

In this short podcast episode (12 minutes) Carol Topp, the Homeschool CPA, explains what those duties look like in practice. She offers tips and advice to help your board do a better job with their responsibilities in running your homeschool organization.

In the podcast Carol mentioned that you can heave a

Phone Consultation with Carol Topp, CPA

Phone Consultation: A pre-arranged phone call to discuss your questions. My most popular service for homeschool leaders. It’s like having your own homeschool expert CPA on the phone!

Cost: $75/hour to nonprofit organizations.

Q &A by Email:  I am willing to answer questions by email, but it is very time consuming to read and reply to emails. I charge a reduced rate of $50/hour to read and reply to emails.

Contact HomeschoolCPA, Carol Topp, CPA, to arrange a telephone consultation.

 

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Homeschool Organization Board Manual is ready (and beautiful!)

I’ve been thinking about creating a homeschool board member manual for several years. Well, 2017 is the year it happened!

I am pleased to offer this helpful (and beautiful) Homeschool Organization Board Manual.


This manual is a customizable template for you to create your own board member manuals.

It has pages that act as dividers for separate sections of the manual like this page that lists important legal documents you should have in your binder:

And then I’ve created helpful tools like a calendar of meetings, list of board members and a sample meeting agenda:

 

And then I got carried away and created a huge amount of other information. The Homeschool Organization Board Manual is 55 pages.

It’s like a board training guide.

The additional information has articles on

  • board duties
  • job descriptions
  • how to read financial statements
  • a list of best financial practices
  • an article from HSLDA attorney Darren Jones on “Developing a Child Protection Policy”
  • and more.

 

 

All this is to help your board get organized, trained and ready to run a successful homeschool organization!

Best of all, this Homeschool Organization Board Manual is customizable! It is delivered to you as a Word document, so your homeschool group can put their name and year on the cover, type specific information in the document, and print out pages for each bard member!

And it’s beautiful! Homeschool mom, Tara Mitchell did the graphic design for me so it’s lovely to look at too!

And it’s very affordable! $9.95.

You only order one copy for your organization and then I give you permission to print off as many copies as you need for each board member!


Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

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What homeschool leaders should do this summer to be ready for next year

Sometimes homeschool leaders take the summer off to have a break for running their homeschool programs. But Carol Topp, the HomeschoolCPA, doesn’t want you to completely forget about your homeschool group this summer. She offers a few tasks that you should do this summer to make the fall much easier!

Listen to the podcast

Carol mentioned this list of topics for your board to discuss: http://homeschoolcpa.com/calendar-of-board-topics-for-homeschool-groups/

Homeschool Co-ops:
How to Start Them, Run Them and not Burn Out

Have you ever thought about starting a homeschool co-op? Are you afraid it will be too much work? Do you think you’ll have to do it all by yourself? Starting a homeschool co-op can be easy! This book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out will give you ideas, inspiration, tips, wisdom and the tools you need to start a homeschool co-op, run it and not burn out!

Click Here to request more information!