Homeschool leaders summer reading: Money Management in a Homeschool Organization

This summer I’m encouraging homeschool leaders to take time to become a better leader by reading through my books. This week I’m featuring my book,

When I originally published this book in 2008, it was a short 40 page ebook and had a horrible cover.  I was still learning and self-publishing was brand new!
MoneyMgmtCover
An update was badly needed and I tackled that project in 2014. The book ballooned to 131 pages and I subtitled it “A Guide for Treasurers.” I feel like I poured my CPA brain into this book.
Cover Money Mgmt HS Org
 Topics covered in this book include:
Chapter 1: Your Treasurer is a Gem!
Chapter 2: Checking Accounts Done Right
Chapter 3: Super Simple Bookkeeping Basics
Chapter 4: Show Us Your Books! Regular Reporting on Financial Status
Chapter 5: Establish a Budget: You’ll Thank Me Later
Chapter 6: Get What’s Coming to You: Collecting Fees
Chapter 7: Do I Have to Report This? Reimbursement Policies and Avoiding Taxes
Chapter 8: Using Software to Stay Sane
Chapter 9: Fraud: It Couldn’t Happen to Us
Chapter 10: Need More Money? Easy Fundraisers for Homeschool Organizations
Chapter 11: Risky Business: Insurance for Homeschool Groups
Chapter 12: Paying Workers: Hiring Employees and Independent Contractors
Chapter 13: Homeschool For Profit: Running a Homeschool Group as a Business

Here’s a special for the summer. Buy Money Management in a Homeschool Organization for 25% off. Get the paperback version for $7.50 (usual price $9.95). The ebook price is only $3.99.


Order Money Management in a Homeschool Organization paperback
Order Money Management in a Homeschool Organization ebook in Kindle or pdf

 

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Best of: Insurance for homeschool groups

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Here’s a collection of my best blog posts on insurance for homeschool groups:

Start off with my article, Insurance for Homeschool Groups. It discusses the three types of insurance a homeschool organization may need.

Then read through these blog posts for more information:

Three kinds of insurance for homeschool groups

Church requires homeschool group to have insurance

Does a Release of Liability agreement really count for anything?

Insurance provider works with homeschool groups

Do you need insurance on your officers?

I know that a lot of homeschool organizations have a difficult time finding insurance. If you have had success in finding an insurance company that understands homeschool groups, please leave their name in the comments so others can benefit from your knowledge.

Thanks!

Carol Topp, CPA

Insurance and fundraising for a homeschool team

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Carol,
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
Mary,
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

Church requires homeschool group to have insurance

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Carol,
A local church is requiring us to have insurance to rent their facility.  That has never been needed before.  Do you have any comments about or guidance for us regarding that?  I’m curious about what you’ve seen with other organizations, suggestions for getting short or long term coverage, etc.  Just what you know off the top of your head.
Thanks so much!
Natalie B in Texas

 

Natalie,

I wrote an article on insurance for homeschool groups. There are 3 types in insurance a homeschool group might be interested in buying. Sounds like you need the general liability type.
Insurance for homeschool groups

Some homeschool groups have a hard time finding insurance, but one homeschool leader found a helpful insurance company.

These blog posts I’ve written about insurance will be helpful.
http://homeschoolcpa.com/blog/insurance/

I hope that helps!

Carol Topp, CPA

Does a Release of Liability Agreement really count for anything?

Over on the I Am A homeschool Group Leader on Facebook,   Betty asked a great question:

 

Does a Release of Liability Agreement really count for anything? I see these all of the time; we had one last year as well, but with all of our insurance concerns this year I am beginning to wonder if they are valid at all. Will they hold up in court? Are they sufficient in lieu of insurance?

My reply:

The best information on using liability waivers I heard came from TJ Schmidt, an attorney with Home School Legal Defense Association (HSLDA). I heard him speak at a homeschool convention. He explained that waivers may deter people from suing you. A member may think twice about filing a lawsuit because he or she remembered  signing a liability waiver. That may be why insurance companies require waivers; they cut down on claims and lawsuits.

Liability waivers are NOT sufficient in lieu of insurance. Waivers will not pay damages or attorney fees if there is a claim or lawsuit. That’s what insurance does.

Liability waivers also show that your organization practices due diligence. It demonstrates that you run an organizations that values safety and protection, which might be helpful in a claim or lawsuit.

Carol Topp, CPA

Insurance provider works with homeschool groups

Angela, a homeschool leaders in Arkansas, shared some helpful information about insurance for homeschool groups.

 

As our group grew and I began to understand the potential liability we, especially our leadership, was taking on and heard of more and more groups being sued, our board of directors decided it was imperative that we be insured.
Our search for insurance was very long, and discouraging.  We solicited quotes from companies and were completely turned down, or quoted prices that would have ruined our budget.   Then we found AIM!

 

AIMlogo

 

We were able to get insurance for our entire group for about $350/year.
They typically insure PTAs and Booster Clubs through public schools, and we did have to answer a few extra questions, but we have been pleased with the service.  Buying a policy was simple through their website.  Now, we have not made a claim yet, so I can’t speak to the side of things, but it is the ONLY affordable option we found in over a year of search.

 

Also, I think incorporation is a really smart move and covers a lot of the potential liability issues.

 

I hope that helps others.
Blessings,

 

Angela Knight
Director – ETCNWA

Thanks Angela for sharing this helpful information!

Carol Topp, CPA

Do you need insurance on your officers?

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In my article, Insurance for Homeschol Groups , I discussed several types of insurance a homeschool organization might need. One type is called Director and Officers Insurance, or D&O insurance.

D&O insurance provides defense for leaders if they are sued for wrongful acts in their capacity as leaders. Typical lawsuits against a nonprofit organization include mismanagement of assets and improper employment practices such as discrimination, wrongful termination, and harassment. Many small homeschool organization find that D&O insurance can be very expensive and sometimes forgo purchasing a policy.

But could that be harmful to your organization or leaders?

Since writing that article, I have found an excellent explanation of D&O insurance for nonprofit organizations written by the Nonprofit Coordinating Committee of New York. You may read the entire article here.

Here is a helpful excerpt:

Unlike general liability insurance — which any organization that has a physical plant would be foolish not to have — many nonprofits are uncertain whether they need D&O coverage. When a person becomes a board member of a nonprofit organization, she assumes a level of responsibility for the organization (“duty of care”), and exposes herself to claims for not running and managing it in a proper way. Whether or not your organization needs D&O insurance depends on what the likelihood is that one of your board members will be the target of such a claim.

Claims generally fall into two categories: bodily injury (physical harm) and non-bodily injury (non-physical harm, like discrimination or termination). The majority of claims are for bodily injury. Your general liability insurance covers board members, subject to policy terms and conditions, for claims arising out of bodily injury and property damage.

Directors & Officers liability insurance only covers non-bodily injury claims. Non-bodily claims include employment-related claims and mismanagement of funds.

Fear of non-bodily injury lawsuits would be one reason to have D&O insurance. Although there are very few reported cases, it doesn’t mean that claims have not been filed and then either settled out of court or dropped.

Generally, there are two types of lawsuits in which a claim might be brought against a board member: derivative lawsuits and direct or third-party lawsuits.

Derivative lawsuits are claims against a board member on behalf of the corporation. The typical claim here would be mismanagement of assets. But, under New York State law only a few people have “standing” or the right to bring such claims. They are: 1) board member(s) suing other board member(s) 2) members of an organization suing a board (if at least 5% of the total membership join the lawsuit), and 3) the state Attorney General.

Because of these restrictive standing rules, very few derivative claims are ever made. It should be noted that claims of these types are not made for awards to an individual, but rather to make the corporation “whole.”

Direct or third-party lawsuits are brought by an employee or by a person not connected with the corporation who asserts a claim against it or its board on account of some non-bodily injury.

Employment practices like termination and discrimination are the largest exposure in these types of claims. If you have a small, friendly staff, and feel unlikely to have employment claims resulting in a lawsuit, you might not think it necessary to carry D&O insurance. However, when employees feel they have been wronged and are angry, they may file a claim even if it is baseless. At that point, you will have to hire lawyers. Your D&O then becomes a legal defense policy.

Indeed, Swords’ view is that D&O insurance is essentially legal defense insurance, noting that “99.99% of the cases brought against a board are going to be thrown out, but you’re still going to have to pay the legal fees if a claim is filed.”

In this connection, the “deep pocket” theory is relevant. This theory holds that only people with money are likely to be sued. Lawyers may file a suit based on a bogus claim against “deep pocket” board members with the hope of securing a settlement for their client. Organizations that have a board made up of “ordinary” people who aren’t known to have vast amounts of money may then be comfortable without D&O insurance.

I think their explanation of D&O insurance being “legal defense insurance” is very understandable. They also point out that most of the lawsuits filed against nonprofits are related to employees.  If your homeschool organization does not hire employees (and most do not), your risk is low and D&O insurance may not be necessary.

Carol Topp, CPA

Insurance for homeschool sports

Thanks to homeschool leader Kathi S from PA who told me about insurance for her homeschool group’s sports activities.

The Amateur Athletic Union (AAU) is one of the largest, non-profit, volunteer, sports organizations in the United States. A multi-sport organization, the AAU is dedicated exclusively to the promotion and development of amateur sports and physical fitness programs.

From their website page on insurance:

It can be extremely difficult and expensive to obtain insurance coverage for individual amateur athletic competitions. Yet if insurance is not obtained, the personal assets of the individuals conducting the event may be at risk. Many owners of sports facilities, especially municipalities and schools, will not permit the use of their property or facilities unless it can be demonstrated that both they and the entity/individuals conducting the event are covered under an insurance policy. Without insurance, the opportunity for amateur athletes to compete in organized sports programs is substantially limited.

Kathy’s homeschool organization pays only $12 a year for each student to participate in a volleyball club they offer.  That seems very affordable to me!

Read more here:http://www.aausports.org/Insurance/Overview.aspx

This may bring a lot of piece of mind to homeschool leaders running sports programs.

Carol Topp, CPA

Related article: Insurance for Hoemschool Groups

Is insurance needed for small homeschool groups?

Do small homeschool groups need insurance?

Often they do, especially of their host/landlord requires general liability insurance.

To help you discern your risk and need for insurance, Harvey Mechanic, an attorney that specializes in nonprofit law, lists some potential claim areas:

POTENTIAL CLAIM AREAS:

1. Discrimination (Age, Race, Sex)
2. Wrongful dismissal of employee
3. Mismanagement
4. Financial failure/bankruptcy
5. Poor administration resulting in losses
6. Causing the organization to incur unnecessary tax liability
7. Imprudent investments
8. Misuse of contributions
9. Conflict of interest
10. Unauthorized loans
11. Failure to obtain competitive bids
12. Unwarranted expansion
13. Failure to obtain government funding or lower interest loans
14. Misuse of government funds or grants

How many of these situations could occur in your homeschool organization? Probably some, but not all. Large nonprofits like the Red Cross or a hospital face many of these potential risks and need insurance.

In my article, “Insurance for Homeschool Groups,”  discuss the various types in insurance a homeschool group might need and how to lessen your risks to obtain a reasonably priced insurance policy.

Insurance for homeschool groups

Carol Topp, CPA

Planning a Homeschool Co-op

Faye, a homeschool mom and columnist for the DC Examiner.com, has a great list to help start a homeschool co-op (edited slightly for brevity):

Although it is wonderful to be able to plan lessons, activities and programs that best meet your child’s needs, sometimes banding together with other homeschoolers can be a huge blessing!  Planning a homeschool co-op is a large undertaking, but with some good people and a strong foundation, it can benefit you and your family in many ways. Whether you want to have a group for regular field trips, or you are looking for a way to provide some structured school time in a group setting, a homeschool co-op could be just the ticket.

If you are interested in starting your own homeschool co-op, I would like to offer some suggestions.

1.  Start with your homeschool support group and friends.  Who would be willing to help you get things started?  2-5 people is a good number for a planning group (more than that and it might seem impossible to find a time when everyone can meet!).

2.  Spend some time brainstorming about what the “ideal co-op” would be.  Would you meet once a week, or every morning?  Will the group be for just a certain age group (ie: only elementary-age)?   Do you want to offer set classes, with textbooks, tests, homework, etc?  Or perhaps something more relaxed, like clubs and projects?

3.  Once the group has ironed out a general idea of what the first year could look like, you will need to find a place to meet.  This may prove to be one of the most daunting tasks!  Try the local library or community center, a church or firehouse, or maybe even an empty business.

4.  After you have secured a space, it is time to invite homeschooling families to join you!  It can be tempting to hang up flyers and spread the word via homeschool yahoo groups and blogs.  However, a word of caution.  I have heard many, many stories about co-ops, and the one thing that resonates over and over again is the importance of having a group of like-minded people.  Now, that doesn’t mean that you all have to believe in the same things–far from it!  At our co-op, we enjoy having new points of view for the kids to consider.  However, if it is important that the co-op be Christian-based, that might not be a good match for someone who is agnostic.

5.  For your co-op to grow and thrive, people have to be willing to work together, to pitch in, and to get along.  It is an “army of volunteers”, and if the adults/kids don’t get along, the co-op will suffer and perhaps never get off the ground.

6.  Once you have a location and a few families have indicated interest–YEAH–you are in business!!  Meet with your planning group and decide what classes/clubs/projects you want to offer.  Some ideas to choose from:

  • Art/drawing
  • Science
  • History
  • Foreign language
  • Physical education

7.  Finalize which classes you will offer, decide on a start date, then work out registration details and fees.  If there is a fee to use your facility, all families will need to divide that expense. Many facilities will also want you to carry a separate insurance policy (for one local co-op, it is @$35.00/family/year.)

8.  Do an Internet search to find forms you may need/want to have (registration, emergency info, family info, student info, etc.)  The planning group can share these tasks so no one person feels burdened.

9.  Plan a park day for families to meet, get everyone registered, order your materials, and you’re on your way!

10.  You might also consider getting a website set-up exclusively for your co-op.  Homeschool-Life.com offers a low/no-cost website service for homeschoolers, and it allows you to have group registration, to use message boards, to provide event reminders, etc.

11.  Be sure that everyone who chooses to participate is willing to help with some aspect of the group, whether it is teaching a class, cleaning up, watching the little ones, or helping as needed.  “Many hands make work light” is certainly a true statement when it comes to a homeschool co-op!

12.  Resist the urge to “do everything” in your first year.  It will be tempting to do this, believe me!  Try to offer just a few things to the group (no more than four).  See how that works out, ask for feedback, and your group can grow from there.

It is a tremendous amount of work to get a co-op up and running, but the rewards cannot be overstated.  As the group grows and expands, your kids will have incredible opportunities for learning, friendships, and fun!  If you have experiences with, or suggestions for a homeschool co-op, please share them in the “comments” section below.  I am sure there are many good ideas right here in our own community!HSCo-opsCover

Faye might be right that it is work to start a homeschool co-op, but there is help.  My book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out will walk you through the start up and  running your group.

Also my website www.HomeschoolCPA.com has many helpful articles on starting a group, getting a checking account and buying insurance.

You can do it! Just get some help from those who have gone before you!

Carol Topp, CPA