I like crime novels and murder mysteries. So I was intrigued with a series of cases that the Ohio Attorney General shared regarding bad acting nonprofit board members.
Board members paying themselves for board work
Most of these cases involved board members’ breach of their fiduciary duty.
They usually paid themselves a boatload of money when the organization dissolved.
That’s a “no-no” for nonprofits with 501c3 tax exempt status. When a 501c3 dissolves the money goes to another 501c3 (including churches) not to the board members.
Two board members claimed the money they paid themselves was “a retroactive payment for service as trustees.” Ohio’s Attorney General disagreed and ordered payment of $16,380 in restitution and a $1,820 civil penalty. The board members were also ordered to not serve in any role in a charitable organization for one year.
Failing to file IRS and state reports
Another board of a nonprofit, a cheerleading gym, failed in their fiduciary duties by failing to file the annual IRS information return, Form 990, and failing to file a statement of continued existence with Ohio Secretary of State’s Office. The board members’ (a married couple) penalty was $10,000 and a 5 year ban from serving a charitable organization and can never incorporate another nonprofit.
So forgetting to file your IRS and state reports can get you in pretty serious trouble!
If you are unsure of what reports your homeschool organization should be filing I have some resources for you:
- Keep Up to Date with State Filings (podcast episode)
- IRS and State Filings webinar. $10 for a 60 minute webinar that explains what reports the IRS and your state may require.
- State Filings Letter-Let HomeschoolCPA do the research for you! We will compose a customized letter explaining the reports that your organization needs to file with your state and the IRS. $100.
I hope I NEVER read of a homeschool organization getting penalized for breaching its fiduciary duties!
Read more about board duties.
Podcast episode on Board duties
Please talk your job as a board member seriously.
Ask a lot of questions about how the money is being handled and what reports your homeschool group should be filing each year.
My book Money Management in a Homeschool Organization is a good place to start.
Carol Topp, CPA
Helping Homeschool Leaders