Are Homeschool Support Groups Automatically Tax Exempt?


I help homeschool groups file for tax exempt status with the IRS.

Most of them are homeschool co-ops and want 501(c)(3) status as a “qualified charity” because they have an educational purpose and desire tax deductible donations, tax -free profits and sometimes other perks that come with 501(c)(3) status.

But there is another type of tax exempt status that may apply to homeschool support groups: 501(3)(7) Social Club.

Here’s what it takes to be classified as a 501(c)(7) Social Club:

1. Purpose is for pleasure, social or recreation. A nonprofit motive and no part of the net earnings may inure to the benefit of any person having a personal and private interest in the activities of the organization

There must be an established membership of individuals, personal contacts and fellowship. A commingling of the members must play a  major role in the life of the organization.

Common examples include  college fraternities or sororities, country clubs, garden clubs, hobby clubs, etc.

2. Limited membership: membership is limited and consistent with the character of the club

3. Supported by membership fees. In general, your club should be supported solely by membership fees, dues, and assessments. A section 501(c)(7) organization can receive up to 35% of its gross receipts from sources outside of its membership without losing its tax-exempt status. For example, up to 35% of your total revenues can come from fund raising.

4. Business activities. If your club will engage in business, such as selling products or services, it generally will be denied exemption. However, your organization can provide meals, refreshments, or services related to its exempt purposes only to its own members or their dependents or guests.

5. Tax treatment of donations. Donations to social clubs are not deductible as charitable contributions on the donor’s federal income tax return.


These criteria fit a homeschool support group. The members are limited to homeschool parents (or those interested in homeschooling), meet for social reasons, are supported by membership fees (and maybe a little bit of fund raisers), do not sell products or services and do not collect tax deductible donations.

So most homeschool support groups can be considered 501(c)(7) Social Clubs.

Most homeschool co-ops do not fit this description because they sell services (classes) and have an educational purpose, not a social or recreational purpose. They may qualify for 501(c)(3) tax exempt status as an educational organization.

Confused about whether your organization is a 501(c)(3) “qualified charity” or 501(c)(7) Social Club?

This chart may help: Compare 501c3 to_501c7

Here’s the good news: If your organization fits the bill to be a 501(c)(7) Social Club, you do not have to file the IRS application (Form 1023 or 1024) like 501(c)(3) organizations must. 501(c)(7)s  are allowed to “self-proclaim” their tax exempt status.

Here’s the bad news: The IRS requires all tax exempt organizations for file an annual information return , Form 990/990EZ or 990N.  Failure to file the Form 990/990EZ/990N for 3 consecutive years means your tax exempt status is automatically revoked. Need help getting your tax exempt status reinstated? I can help.

Carol Topp, CPA

Ever tried team teaching in your co-op?


Have you ever tried team teaching in your homeschool co-op?  Most homeschool parents are pretty independent, or may have a Lone Ranger mindset and may never consider team teaching.

But you may be missing out on something good.

Elain from The Community Co-op blog shares how well team teaching worked for her.

Team Teaching Saves the Day!

When the founders of co-op got together and got serious about starting this not for profit organization, we asked ourselves, “How can parents lead quality, consistent classes?”

After all, it’s one thing to homeschool your own children, quite another to plan an entire semester, and lead a class of 12 or more children!

Some of us had prior teaching experience in some form or another, one teaching in a school, another teaching adults in continuing education — but most parents coming in as volunteers wouldn’t have that.

Lori had the idea of Team Teaching. The idea is that two parents are the Leads of the class and lead as, well, a team. The two leads plan the class together and teach together. If one person is having a hard time with a project, or an explanation, the other team member is there to step in and help out.

Another part of the team work is ongoing debriefing, checking in, how’s it going? How did I do today? Was that clear? Did the class flow well today? Do we have the right number of stations set up?

Initially, I was hesitant about this team teaching thing. Bit of a Lone Ranger type. In our first year of co-op, I didn’t have a co-lead, it just worked out that way, there didn’t happen to be someone available.

This year, I do, and it’s great! No more Lone Ranger for me. My co-leader and I got together to plan our class, Studio Art. She had a wonderful idea that I never would have had — why not have as our organizing theme, the history of art? You know, the entire history of art, starting with the cave paintings?

One semester in to the plan, it’s going great. The class this year is larger than last year, but since we have this teaching team in place, class actually feels easier.

After the Winter Break, we’ll start in on the Middle Ages!

Thanks, Elain, for sharing your story! Sounds as if team teaching is Co-operation at its best!

Carol Topp, CPA

Overcome Common Co-op Problems

My guest blogger today is homeschool leader, Caren Joye. She shares a great article

How We Overcome Common Co-op Problems

Truly, there can be some negative aspects to homeschool co-ops, and we want to avoid or prevent as many problems at Academy Days as we can. As a Christian co-op, we try to keep our focus on what the Lord wants for our children. We are also respectful of the fact that our families are homeschoolers first and foremost. Our goal is to go along side the parent and enrich what they already do at home.

Here are specific ways we try to prevent the most common co-op complaints.

picgensciToo much like school
Co-op is not a school! The primary teacher is always the child’s parent, not the co-op teacher. Unlike some local co-ops, we do not administer tests nor assign grades. Our weekly classes are spent on discussions, debates, simulations, re-enactments, experiments, and hands-on activities that enrich studies at home, such as the science experiment pictured at left. Since co-op meets only once a week, the majority of coursework is completed at home, so really only the parent knows the full extent of her child’s knowledge in a subject. It stands to reason that the parent, then, would be the one to assign grades.

Too much homework
Only high school classes and a few junior high classes actually have homework. All kindergarten and elementary classes are enrichment only. Co-op is supposed to lift our burdens, not increase them, so co-op is all about projects, experiments, educational games, simulations, re-enactments, learning activities, discussion, debate, arts and crafts that can be completed during class time. We do not want homeschooling families stressing over homework in addition to regular curriculum studies at home. Plus, only the parents know how their child learns, and that child should be free to learn that way without pressure to conform to the majority. As a result, the responsibility for homework is placed on teenagers, who should be learning how to manage their time anyway, particularly in preparation for college. Even then, because some families use a different curriculum at home, we try to be reasonable regarding homework even for high schoolers.

Too many illnesses
We do not want co-op to be a source of illness for any family. A standing rule is to stay home if you or your children are sick or even just recovering from an illness. We have a substitutes list and a list of illnesses, and we expect members to be symptom-free for 24 hours before they return to co-op. As a result, we do have a lot of absences, but we much prefer filling in for an absent parent than catching a cold from a sick child or teacher.

pixcwToo many unsupervised children
Co-op is not a drop-off service, so we do not have children running around without parental supervision. If your child is at co-op, then you must be, too. As a small Christian co-op, we lovingly correct and encourage our children and try to channel their energies into positive directions. Plus, we intentionally keep classes small to prevent a “crowd-control” situation during class time. Except for PE, classes are limited to 12 students, although the number usually ranges between 4 and 10, as pictured in this 5th-6th grade creative writing class.

Too much work for parents

Many hands make light work! You do not have to teach, but all parents at least commit to helping in a class. Everyone gets one break period in the four-period day, and usually two. Additionally, most classes have two teachers, so teaching each week does not fall on just one person. Furthermore, teaching itself is limited to lessons and activities during class time; teachers do not have to correct homework nor prepare and grade tests. Also, every class has at least one parent helper, if not two, for additional help.

Too expensive
We aim to keep co-op affordable. Unlike other local co-ops, no one at co-op gets paid, and all our workers are volunteers with a degree, special knowledge or passion for the subjects they teach. Class fees, which range from $2 to $15 for the entire 14 weeks, pay for materials only. Because many of us homeschool on a budget, we diligently search for the cheapest copier in town and research the Internet for the lowest prices on books, so we can pass those savings on to our members.

Too disorganized
A group cannot function efficiently without some organization. Written procedures help our group rely on a plan instead of on quick decisions made in a crisis. Plus, guidelines ensure our safety and help us manage the use of the facilities that the Lord has provided for us. We know that parents and children are most comfortable in an environment where they know where they are supposed to be and what they are supposed to do in any given situation. We try to provide that structure while at the same time maintain flexibility. As a result, our co-op runs very smoothly; indeed, many of our members who used to participate in other co-ops have stated that our co-op runs more smoothly and comfortably than any others they have attended.

Too much conflict
Personality conflicts and misunderstandings may be inevitable in a group environment, but we aim to manage them by proactive means. To prevent becoming a “mega co-op,” we limit membership by keeping classes small. In addition, we have written procedures which help everyone understand expectations. Also, we advocate the resolution method commanded by God, that of peacemaking – which includes overlooking an offense, reconciliation, negotiation, mediation, arbitration and accountability.

We started Academy Days co-op in fall 2006, so we are still a young co-op. Each semester we address a new issue and smooth out fewer and fewer kinks. As we do individually in our own lives, we are working on perfection!

About the Author:
Carren W. Joye is the author of Homeschooling More Than One Child: A Practical Guide for Families (ISBN 0-595-34259-0), Alabama State History Curriculum for grades K-9, and A Stay-at-Home Mom’s Complete Guide to Playgroups (ISBN 0-595-14684-8). A homeschooling mom of four children, she has founded four successful playgroups, a homeschool support group, homeschool covering, and homeschool co-op. For more information on her books and state history curriculum, visit her web site at

Co-ops help with socialization of homeschooled children

Here’s a great article about how a homeschool co-op helped one family with their concerns about socialization.

Breaking the homeschool barrier

Cheryl Littlejohn and her husband Tom have been homeschooling for five years. Before that, Derek and Carrie were attending a local private Christian school affiliated with their former church. When changes in the church and school made them uncomfortable with the children’s educational situation, they began looking into homeschool programs.

The parents had two major questions: Would homeschooling be an effective choice in their education, and would they miss out socially? In the end, they decided to give it a try. “When considering our educational choices, in light of the changes in our lives, we felt that homeschooling was best for our family,” Cheryl said.

The socialization her kids get at the co-op is the other key to the Littlejohns’ homeschool success.

Five years later, all worries Tom and Cheryl had about their children’s socialization and academic progress have been dismissed. Their resources are plentiful, their schedule is flexible, and they can customize the curriculum. They plan field trips with other homeschooled families — an IMAX movie about the Lewis and Clark Expedition and a trip to a feline rescue center in Clay County are examples — and vacations rely only on Tom’s work schedule, which allows them to do things like take an extended off-peak trip to Europe.

And she’s not worried about her kids’ future any more than any other concerned parent. The education they’re getting is sound — Derek is the president of the local branch of the National Honors Society for Homeschoolers — they’re well-developed socially, and they’re tuned into college preparation. Five years ago, she was afraid of the stigma, but the accessibility of the SAT and ACT levels the playing field. Even if parents did inflate their kids’ grades, the proof would be in the pudding when it came to standardized testing.

“Our decision to homeschool is in no way a statement on other people choosing a different course for their kids,” Cheryl said. “We have friends whose kids have done quite well in the public school system, and others who have been successful in the private Christian realm. At this time, we feel that homeschooling is best for our family.”

Read the entire article here

Carol Topp, CPA

Can a small group be an IRS qualified charity?

In the past week, I have received two emails from homeschool leaders in MD and CA with  a surprisingly similar situations.

In both groups, a small number of homeschooling families were  joining together to hire a single teacher to teach their children once or twice a week. Both groups were very small, only seven families total, but they were paying each instructor quite a bit of money-$11,000 annually in one case and $17,000 in the other. This meant that they exceeded the IRS threshold of $5,000 annual gross revenue and needed to consider filing for 501c3 tax exempt status.

They had several concerns such as a contract with the teacher, how should the teacher be paid and could the group qualify for 501c3 tax exempt status as an educational organization?

Here were some of their questions:

I found your website and found it to be most interesting and helpful to homeschool co-ops.  I would like to schedule a personal consultation with you.  I am part of a homeschool group that informally hired a teacher to teach certain classes in past years, but this coming year the teacher wants a contract.
Rosemary in MD

I saw your website and had some general questions for you.  Appreciate your ministry to homeschoolers. We are trying to decide whether our group should be a sole proprietorship owned by person or try to establish a nonprofit. What would be the pros and cons of each? What if we can’t afford to file for tax exemption at this time?  What are our choices if our gross receipts are around $11K/year?
Teri in CA

There are several options for homeschool organizations who are trying to decide how to structure themselves. I advised the leader from CA to read this article:

When to become a 501c3?

I offered a private phone consultation and discussed the concerns and options with the leader from MD. I explained that I doubted the IRS would grant 501c3 “qualified charity” status to a group with only seven families. An IRS qualified charity is supposed to serve a public good, not the needs of only seven families.

Instead of pursuing 501c3 tax exempt status, we discussed that the hired teacher is really running a for-profit business (a sole proprietorship) with seven families as her customers. I shared with her several sample contractor agreements the teacher could use in her business.

There is a sample contractor agreement available in my ebooks Money Management in a Homeschool Organization and Paying Workers in a Homeschool Organization.

Thank you again for the consultation.  It answered a lot of questions for me, and I appreciate your support. Thank you also for the contractor agreements – I have been reading through them.
Rosemary in MD

If you have a unique homeschooling situation and would like to schedule a private consultation with me, please send me an email at Tell me a little about your group and we can arrange a mutually convenient time to talk.

Carol Topp, CPA

Homeschool co-op teachers influence the future!

EmilyToppSo many wonderful people have influenced my daughters by teaching at our homeschool co-op.  I will be forever grateful to them!

When Amy Puetz announced she was looking for stories form homeschool graduates, I asked my daughter, Emily, to write something.

Here is an excerpt:

When I was in fifth grade, my mother enrolled me in a homeschool co-op because she thought it would be “good for me.” Unfortunately, I was less than enthusiastic about the prospect of trying something new and facing “real teachers.” In hindsight, however, I can see that the co-op was one of the greatest blessings of those years of homeschooling!

The volunteer instructor for my public speaking class was a veteran homeschool mother, Mrs. Hill. In her class, I learned how to follow a syllabus, complete weekly assignments, and learn from a teacher other than my own parents. I also benefited from Mrs. Hill’s patient encouragement and instruction, as she shared her passion for communicating for Christ with my class. Because each of my co-op teachers led a class in her area of expertise, their passion developed my love for learning beyond what I would have experienced working with just my mom and sister at home. Although I did not particularly enjoy speaking in public, I appreciated Mrs. Hill’s encouragement. Specifically, her praise—from a source other than my parents—reinforced my self confidence and motivated me to work diligently even in my least favorite subjects. On the car ride home from co-op, I would frequently say to my mother, “Guess what I learned from Mrs. Hill today!” The co-op provided a unique opportunity to learn from other adults, without sacrificing the integral element of family from my homeschool experience.

Read my daughter’s thank you to co-op teachers in Thank You! 20 Homeschool Grads Tip Their Hats to Homeschooling Parents Compiled by Amy Puetz

Amy is offering this as a fee ebook at her website.

If you as a homeschool parent, leader or co-op teacher need a bit of encouragement, read Amy’s Thank You book. It will be the “shot in the arm” you need!

Thank You! 20 Homeschool Grads Tip Their Hats to Homeschooling Parents

Homeschool Co-ops now avaliable at Rainbow Resource

I am pleased to announce that Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out is now available at Rainbow Resource, the largest homeschool catalog I have ever seen, with 1300+ pages! I love that catalog. I spend hours looking through it. I am honored to now be included in its pages!


Rainbow price  $11.75

Order here

Read more about Homeschool Co-ops here.

(P.S. if you prefer an electronic version of Homeschool Co-ops, I have a special going on through the end of July. Buy the electronic version of Homeschool Co-ops for $10.00 and receive a copy of my 60 page ebook Questions and Answers for Homeschool Leaders. Learn more here.)

Carol Topp, CPA

Homeschool Co-ops now available as an ebook!

HomeschoolCo-opsCoverMy book, Homeschool Co-ops: has been available in print since 2008. It has been helpful resource for many homeschool leaders, as  Dawn in Janesville, WI wrote me:

I am the director of a 40+ family homeschool co-op.  We have already purchased one book, and I read it in a weekend.  It has been an awesome resource.  My Assistant Director has just finished reading it, and we are in agreement that we should purchase a set of at least 5 for our board.  We would like to offer it to the board as a resource as well as for our membership to check out to read.

Now Homeschool Co-ops is available as an electronic book, available for immediate download as a pdf.


Price $10.00

Table of Contents

Sample Chapter

What’s the difference between an ebook and the print version?

The content is exactly the same. I have the ebook laid out with two pages of the book on one sheet of paper (horizontally), so it takes fewer sheets of paper if you wish to print out the book or portions of the book.

See a sample of the pages: Two-page Layout Sample

Why would I want an electronic version?

You receive the book immediately. There is no waiting for delivery.  It is stored forever on your computer. It will not get ripped, lost or eaten by your dog.

Can I print out several copies of the ebook to share with my co-op members?

No, sorry, but you cannot print out several copies. Electronic books have copyrights just like a print book. You may make one copy for your personal use. Your friends will have to purchase their own copies of the print or ebook.

What is the price of the ebook?

The ebook price is $10.00.

During the month of July 2010, I am offering a special bonus. When you purchase Homeschool Co-ops as an ebook, you will receive  a free copy of another ebook, Questions and Answers for Homeschool Leaders.

Questions and Answers for Homeschool Leaders

QALeadersCover3DTable of Contents
Read a Sample here

This  62 page ebook contains the most frequently asked questions from homeschool leaders on the IRS, nonprofit and tax exempt status, boards, conflict, money, fund raising, volunteers, paying workers and insurance. As you read the questions from other leaders and answers from Carol Topp, CPA, you will find practical and helpful guidelines on a variety of topics to run a successful homeschool group.

How will this work?

Click on Order Now button and you’ll be taken to my shopping cart program. It looks like this:


1. You enter your credit card number, email and name.

2. You will be directed to another website page, my download page. On that page you will be able to download your ebook immediately by clicking a link. The ebook will open as a pdf file.  You will need Adobe Reader to view and print it. Get Adobe Reader for free here.

3. Save the document on your computer.

4. You can read the ebook on your computer screen or print it out.

You only have until July 31, 2010 to buy the electronic version of Homeschool Co-ops and receive the bonus copy of Questions and Answers for Homeschool Leaders. Order your copy today!

OrderNowButton Price $10.00 for Homeschool Co-ops ebook (and bonus ebook)

Plan a summer mini music co-op


Summer is here, so now is a good time to consider running a mini homeschool co-op. Mini co-ops that are small, focused on one subject and only last a few weeks are a great way to try out the co-oping idea. Renee shares some great ideas on running a music co-op in the summer. It can be fairly quick and easy to plan and a lot of fun.

How to Plan a Summer Music Class for Your Homeschool Coop

A summer music class for your homeschool group can certainly be a lot of fun. It will help the summer months to be a lot more enjoyable. Planning a summer music class is a lot easier than you think. The first thing that you can do is find out if any of the parents in your co-op play’s instruments. If they do see if they would be willing to teach something about the instrument they play, and how to play it. The kids do not need to actually have the instrument to learn some interesting facts about it, and how it is played. You can have the parents give simple demonstrations of how the instruments are played. If you have more than one parent that is willing to instruct the class, you can allow them to each pick which day they want to teach the class.

You may also be able to get a tour of a local music school. Taking a tour of the local music school can certainly be a lot of fun for all of the kids. If you live near the New York area, there are plenty of locations that you can go to that may give you a free tour. Do a basic Google search for a location near you that has a music program. Music schools are really best for this type of tour. Most towns have at least one music school which is located nearby. The music class can be held once a week to kind of switch up from the ordinary during the summer months. If there are kids in the co-op who are currently learning to play instruments you can also have them demonstrate their skills. The kids will enjoy having the opportunity to show off some of their skills, and they will also be helping others to learn about instruments as well.

To wrap up the classes at the end of the summer, you can plan a fun music fest for the entire co-op. This can basically be a barbecue that you plan for the students, and the family members. You can have each of the families chip in, and cover the expenses of the event. You can reserve a spot in your local park, and have plenty of food, and activities based around music. Why not check with the families to see if each family can come up with a fun music activity for the event. This can be a nice project for each family tow work on during the course of the summer.

I think homeschool parents are some of the most creative people around! This is a great way to do a mini co-op on a specific subject.

Have a great summer!

Carol Topp, CPA

Hold a Homeschool Cotillion

A homeschool co-op or group is a terrific place to teach manners and etiquette.  Read about how one homeschool co-op held a homeschool cotillion.

How to Hold a Homeschool Cotillion

First, let me address why your kids could benefit from a cotillion. Table manners and etiquette are something to which every child should be exposed. I don’t know about you, but dinner at our house isn’t a very formal affair. We usually use only the utensils that are necessary for that meal and don’t spend a lot of time discussing the proper way to set a table or which fork to use.

The kids were paired into couples ahead of time based on height and age. Another photographer and I took pictures of each couple as they were announced at the top of the stairs. The event was held at the local church that has hosted our co-op classes for years. There was a per-child fee used to purchase the food from a local wholesale club, and we rented the dishes and silverware from a party rental company. Moms dressed in black pants and white shirts while inwardly chanting “serve from the left, clear from the right!”

I would like to encourage you that this is a doable event for a homeschool co-op.

You should visit the blog post and see the pictures and read up on the details!  Wonderful!

If they can do it, so can you!

Carol Topp, CPA