Board members who won’t do anything

 

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I hear from a lot of homeschool leaders that they have board members who don’t do much. How frustrating.

Here’s some advice:

Do something. The problem is likely to get worse and a board member who is not participating can demoralize the entire board.

But stay hopeful. Many board members need a reminder to be more conscientious. You’re all in this together. Some inactive board members may need to be let go. They may be grateful that you’ve given them a graceful way to reduce their work load or even leave the board.

  • Check to be sure that expectations were made clear to the board member before he or she joined the board. “I know you joined the board recently and I’m not sure that you realize that we ask all board members to attend the annual dinner and, hopefully, to help sell tickets. Let me explain to you what most board members do, so you can see whether you’ll be able to work on this with us.”

Here’s a good list of Requirements of Board members.to get you started.

  • Hold a board discussion at which expectations are reconsidered and reaffirmed. Agree on a list of minimal expectations for every board member, and ask people to suggest how they might individually help as well.
  • Be sensitive to possible health issues or personal reasons why a good board member isn’t participating as much as he or she has in the past.

Remember, homeschool leaders carry a lot or responsibility. Your inactive member may be having health, marriage, or parenting problems that she is not sharing with you. Show grace and compassion and she may be so grateful for your support that she becomes active again.


Sorry, but the rest of this content is available only to my email subscribers! I know that’s a little bit sneaky, but I want my email subscribers to get special content like this list of steps to help an inactive board member.

Subscribe to my email list and get helpful tips for dealing with a board member who won’t do anything as well as special reports, discounts and and helpful resources that I don’t share on my blog or website.

 

 

 

My book, Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out also has helpful advice in picking board members, managing volunteers, and running a successful homeschool organization.

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Carol Topp, CPA

HomeschoolCPA.com

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What financial reports do we need to generate monthly?

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Hi Carol,
We have purchased QuickBooks and our treasurer is working hard to learn  the software. What financial reports do we need to generate monthly?  We need these reports to be a simple process.The Balance Sheet and Profit and Loss statements in QuickBooks looks overwhelming.

Hilary S.

Hilary,

QuickBooks  can be as simple or as complicated as it needs to be. The reports your treasurer generates is based on what the board wants to see.

When I was treasurer, I gave my board a Profit and Loss statement.  They really liked to see the budget in one column and actual income and expenses in another column.  Then they could see how we were doing compared to our budget. This report can be generated in QuickBooks as a Budget Report.

I also created a mini balance sheet.  I took the amount in the checking account and then listed payments to be made.  This gave the board an idea of how much cash we had on hand and where it was planned to go.

If the stCover Money Mgmt HS Orgatements in QuickBooks are too overwhelming, then perhaps you’re not using QuickBooks correctly.  I frequently see QuickBooks users make their Chart of Accounts too long.  Then the Profit and Loss becomes 2-3 pages long.  I recommend that a Profit and Loss be kept to one page or less.

My book Money Management in a Homeschool Organization could be a big help to your treasurer. It has tips, samples and lots of examples.

 

If your treasurer would like my help in setting up QuickBooks, I’d be happy to help.  She can e-mail me with what needs to be done and I’ll give you an estimated cost.

I hope that helps.  I wish you the best of success!

Carol Topp, CPA


Want more tips on managing money in your homeschool organization? Sign up for my email list and I’ll send you my list of “best practices.”

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Compensation to homeschool board members is taxable income

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This is an excerpt from my new book, Paying Workers in a Homeschool Organization-2nd edition.

Compensation to board members is taxable income

I was recently reviewing the bylaws for a homeschool organization that stated,

Members of the Board of Directors may receive reasonable compensation for their services and may be reimbursed for actual expenses incurred in the maintenance of their duties.

A homeschool organization can compensate your board for their service, but compensation to board members is taxable income. If the board member is an officer (chair, vice chair, secretary, or treasurer) they must be paid as employees. Other board members who are not officers can be paid as independent contractors and given a Form 1099-MISC.

Did you catch that? If officers are compensated, the IRS laws* say they must be paid as employees. That means creating paychecks, paying payroll taxes (Social Security and Medicare), preparing W-2s and quarterly filings with the IRS and your state, and may mean unemployment and workers compensation taxes too!

Does your homeschool group really want to deal with payroll? It can become an excessive burden on a treasurer or expensive if your organization hires a bookkeeper or payroll service. If you do choose to compensate your board members, I highly recommend using a payroll service.

*“Exempt Organizations: Compensation of Officers” https://www.irs.gov/charities-non-profits/exempt-organizations-compensation-of-officers


I spent at lot of time doing research on this book so that homeschool leaders will know if they are paying their volunteers, board members, and workers legally and correctly.

I hope the book is helpful and lets you sleep at night not worrying about an IRS audit of your worker classification.

Carol Topp, CPA

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Paying Workers in a Homeschool Organization-2nd edition

$9.95 paperback
130 pages
Copyright 2017
ISBN 978-0-9909579-3-5

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Are discounts to homeschool board members taxable compensation?

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My homeschool group gives a fee waiver of our dues to our board officers. Would that discount be reported to our officers as taxable compensation?

Melissa

 

Melissa,

This is an excellent question because I’ve encouraged homeschool groups to offer discounts on membership fees to their volunteers or board members as a way to show appreciation.

The IRS defines compensation as:

compensation includes salary or wages, deferred compensation, retirement benefits…, fringe benefits (personal vehicle, meals, lodging, personal and family educational benefits, low interest loans, payment of personal travel, entertainment, or other expenses, athletic or country club membership, and personal use of your property), and bonuses.[i]  (emphasis added)

[i] Instructions for Form 1023 https://www.irs.gov/instructions/i1023/ch02.html#d0e1909

 So free or reduced fees that are educational benefits is taxable compensation to your board members.

So here’s my advice:

  • Keep your fee waivers to board members small and insignificant. The IRS does state that insignificant benefits to volunteers is not taxable income.
  • Consider showing appreciation with noncash gifts such as food, chocolate, or flowers. Buy resources to make their jobs easier including helpful books, hiring a payroll company (your treasurer will love it!), accounting software, etc.
  • Have the amount of fee waivers decided by a separate, independent committee or put it to the vote of the full membership. The board should not vote themselves a fee waiver. Its a conflict of interest.
  • Add a provision to your bylaws allowing a small fee waiver (or tuition discount) to board members or other volunteers. Consider granting a percentage discount instead of a dollar amount such as 20% off the fee.

 


Have more questions about compensation to board members in your homeschool organization?

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Paying Workers in a Homeschool Organization-2nd edition

$9.95 paperback
130 pages
Copyright 2017
ISBN 978-0-9909579-3-5

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Carol Topp, CPA

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Common mistakes in homeschool group bylaws

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Nonprofit attorneys at Veneable LLP posted 15 Most Common Nonprofit Bylaw Pitfalls: How to Avoid the Traps

I adapted their suggestions (all excellent if you want to read their entire list) for homeschool organizations and added some of my own tips as well.

Common Nonprofit Bylaw Pitfalls

1. Understand your state’s nonprofit corporation law.

Veneable LLP advises, “Nonprofits need to be sure that their bylaws do not permit practices that are prohibited by the state nonprofit corporation act.”  It’s not a lot of fun reading state corporation laws (I’m read several of them!), so this is where a pro bono lawyer would come in handy. Ask  your members if anyone has a lawyer in the family who would be willing to check your bylaws against state nonprofit corporation laws.

2. Make sure your bylaws are consistent with other regulatory documents.

If your homeschool group is an educational organization (and most are!), make sure your bylaws do not contradict IRS requirements for 501(c)(3) tax exempt organizations. There are certain things the IRS prohibits 501 (c)(3) organizations from doing such as distributing its assets to members. Read the IRS prohibitions .

3. Be sure to address all foreseeable scenarios.

What if you need to remove a board member? Do the bylaws address that? How will the board member be replaced? Try to think of how things could go wrong or how a  group of disgruntled members could take over your organization. Veneable LLP is correct is stating, “It is important to take the time to carefully walk through all of the “what-if” scenarios to avoid holes in the bylaws.”

4. Keep your bylaws flexible.

From the attorneys at Veneable LLP, “Building flexibility into the bylaws including a range for the exact number of board members and allowing the board to designate additional officers not named in the bylaws, can help the organization moving forward. Bylaws should provide an outline of the governance structure but also should allow some flexibility if and when changes are needed in the future. ”

5. Reserve the details for policies, not bylaws.

“Bylaws generally should be a relatively concise and easy-to-navigate document, leaving the details to policies, which can be more easily revised in the future. This way, bylaws will not need regular amendment.” advise Veneable LLP. Frequently homeschool organizations have policies on sick children, membership requirements, dress codes, late payments, student conduct, etc. These do not belong in the bylaws, but in separate policies.

6. Keep your bylaws current.

One homeschool group used bylaws that mentioned notice of meetings could be delivered by telegraph! Time to update those bylaws! 🙂

7. Ensure that your purposes clause reflects your organization today.

Veneable LLP advises, “Most nonprofits also have a purposes clause contained near the beginning of their bylaws, and many times that purposes clause will differ from the purposes clause in the articles of incorporation. The two clauses should be fully consistent and, therefore, an organization might want to include a clause in the bylaws which simply refers to the purposes clause as written in the articles of incorporation. In addition, the purposes clause in the articles of incorporation should be reviewed, keeping in mind that a clause drafted 30 or more years ago may not accurately or fully reflect your organization today.”

An example would be for faith-based homeschool organizations to be very clear that they have a religious purpose, so that their religious freedoms are protected. If your religious purpose is not clear in your Articles of Incorporation, then it’s time to amend your Articles. This is usually done through your Secretary of State’s office.

8. Closely review the meeting and voting procedures for members and directors.

Review how members (if there are voting members) and directors are permitted to meet and vote. Many homeschool organizations do not have voting members; the board makes all the decisions. In this situation, it’s important to be very clear in the bylaws how the board is chosen.

9. Do not make your bylaws too difficult to amend.

Occasionally your bylaws may need an update. Usually bylaws require a super majority of 2/3 or 3/4 of the board to change the bylaws. One homeschool group found that their bylaws required a meeting of members with two week notice before they could change their bylaws. This was quite difficult to accomplish in the summer and slowed down their ability to make necessary changes.

I hope you find these tips on bylaws helpful. Take time for your board to review your bylaws (hopefully you can find them!) and update them as needed. If you don’t have bylaws, you can start with my sample bylaws  or do an internet search on “homeschool bylaws.”

Carol Topp, CPA

Serving on a nonprofit board: What is required?

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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

Jennifer,

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

 

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

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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?

Lisa

Lisa,

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).

https://nonprofitquarterly.org/governancevoice/5516-not-paying-your-taxes-your-board-could-be-personally-liable.html

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

Calendar of Board Topics for Homeschool Groups

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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?

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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?

Ashley

 

Ashley,

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:http://homeschoolcpa.com/leader-tools/sample-documents/

Carol Topp, CPA

Create a board binder of important papers for your homeschool organization

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I was helping a homeschool leader apply for 501(c)(3) tax exempt status for her homeschool co-op when she mentioned that she had created a binder of important papers. That’s an excellent idea!

I suggested she create three binders and share them with her board members, especially:

  • The secretary who is the keeper of the paperwork for the organization
  • The treasurer who is responsible for the annual reporting to the IRS and their state.
  • The board president whose job it is to make sure everyone else is doing their jobs.

All the board members are responsible for management of the nonprofit and compliance with nonprofit laws. Having a binder of important papers that leaders can to pass down future leaders will make sure the organization is managed well and in compliance with all its reporting obligations.

Here’s what to put in your homeschool organization binders:

  • Employer Identification Number (EIN) letter from the IRS.
  • Articles of Incorporation from your state. This should be the official certified copy with a date stamp proving that your Articles of Incorporation were filed with your Secretary of State.
  • Bylaws. Date them so you have the most recent copy.
  • IRS 501(c)(3) determination letter.
  • IRS Annual Information Returns, the Form 990N, 990-EZ or full 990s
  • IRS Form 8822-B to change the contact name associated with your EIN or to change your address
  • Any state annual reports you file. (If you don’t know what reports you need to file with the state, contact me and I can help.)
  • Helpful articles from HomeschoolCPA.com
  • Books by Carol Topp, CPA especially Money Management in a Homeschool Organization
  • HomeschoolCPA.com website.

 

I highly recommend that you laminate or protect in plastic sheets these important documents.

Pass these binders down to the leaders who succeed you!

Carol Topp, CPA