Webinar Recording Homeschool Leaders: Planning an Uncertain Future

Homeschool leaders are facing an uncertain future and tough decisions this fall as the COVID-19 pandemic has caused governments to impose social distancing laws and new health and safety guidelines.

Carol Topp and three homeschool leaders hosted webinar for homeschool group leaders on June 1, 2020.

Here are some of the comments from live attendees:

Enjoyed the webinar very much! Took away some great snippets that have had my head swimming with possibilities for the coming school year. Really excited about this year!

My co-leader and I have much to discuss in the next few days. Things we didn’t realize we should be considering were brought to light. I think, as a result of our attendance last evening, our planning will be more strategic.

Thank you ladies for doing this. Very helpful and insightful. I really appreciate your time in putting this together.

The webinar was recorded and can be viewed on YouTube https://youtu.be/AaQ1c_XuUvY?

The topics discussed included:

  • Making Decisions as a Board
  • Planning Tools
  • Social Distancing in a Homeschool Group
  • Ideas from Homeschool Leader Panelists
  • How to Communicate Your Plans to Members

A handout of the slides is available. Slide Handout


Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Telling members about future plans regarding COVID-19

Many homeschool leaders are trying make plans for the fall of 2020 amidst the corona pandemic, social distancing requirements and concerns for member’s health and safety.

Recently one leader, Jennifer, shared on a Facebook group for leaders classical education programs called The Garden: Planting and Tending Classical Homeschool Programs what she has communicated at this point (early May 2020) to her member-families.

Jennifer graciously gave me permission to share this. We both hope it is helpful.


What about Covid?

As of right now, we DO plan to begin our school year on time. The board will be closely monitoring all of the happenings with Covid-19 and will make timely decisions as needed.

However, please know that we will not necessarily make decisions in line with local school systems. We will likely be more in line with local churches and of course we will honor the mandates from our local government.

We will strictly enforce our campus sick-policy which is carefully outlined in our handbook. I am confident that all of our families will be so careful to respect each other by being extra diligent in choosing to keep their family home if in doubt regarding the illness.

Everyone will receive an updated handbook at the Parent Orientation.

We want to be wise and we are eager to meet at (group name)!

Obviously, you may make a different decision from what Jennifer’s group decided, so please feel free to edit Jennifer’s email to your voice and your group.

HomeschoolCPA is planning a webinar for Monday June 1, 2020 at 8 pm ET for homeschool leaders to address how to make decisions about your fall 2020 programs.

Registration is now open (it’s free, but you need to register). There are three homeschool leaders who have agreed to be on a panel to explain how they are making their decisions.

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

How do you create a budget with uncertainty?

Laura is a new homeschool leader struggling with figuring out what to charge for her program. She asked this question on the I am A Homeschool Group Leader Facebook page

If you are a small homeschool group, how do you figure out costs? We know for the space for the year it will cost us $900. We want to split it as equally as possible but without knowing the total number going to register, we don’t know what to divide it by. -Laura


Laura,
In accounting there are fixed expenses (like your rent or website fees which does not vary with the number of families you serve) and variable expenses, which vary depending on the number of families you serve (like supplies and sometime insurance).

Variable expenses are usually easy to estimate and charge the families accordingly.

But fixed expenses like the website, rent, etc. need to be paid from what you charge families, too. Sometimes they are called overhead expenses. So I recommend that you estimate a minimum number of families you expect and then create a budget of what income you need to cover both the variable expenses and the overhead (fixed expenses).

Create several budgets with varying numbers of families.

Don’t be afraid to over charge. You need to accommodate for those overhead/fixed expenses.

I see lots of homeschool groups charging several fees for every last expense like $9 for insurance, $5 for the website, $20 for supplies, etc. That assumes that everything is a variable expense, but it’s not.

Instead, just charge the families one round dollar amount. Make sure it’s large enough to cover the variable expense, the overhead (fixed) expenses, and a buffer.

You need a buffer for unexpected expenses or surprises like a global pandemic!


Want advice from other homeschool leaders? Join with 1300 other homeschool leaders on the I am A Homeschool Group Leader Facebook page
We offer ideas, feedback and encouragement that only other homeschool leaders would understand!


Other leaders in the Facebook group ‘ offered this advice:

You might start by deciding what the maximum amount your families would be willing to pay. For example, if you don’t want your families to pay more than $50 per family for the use of space, you know you need a minimum of 18 families (to cover a $900 facility fee).

Our first year, we took our best wild guess at how many families we thought we would have. We underestimated just to be safe. We had money left over because we had more families join than we budgeted for which was great. That allowed us to have some buffer money in case we had years with low enrollment.

In my experience it is always better to slightly overcharge rather than undercharge. It’s a great thing to have enough money to pay for unanticipated costs without having to ask the families (for more money) every time.


You might find my book Money Management is a Homeschool Organization helpful. I discuss budgets and show a few sample budgets.


Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

A budget can reduce stress

 

As a homeschool leader, are you “a people person” and hate dealing with numbers or a budget? Do numbers or a budget stresses you out?

Numbers on a budget can help homeschool leaders plan and look to the future. A budget can do a lot to reduce stress.

If you make a plan and know what might be coming, it will help you set priorities.

 

I’m writing this during the COVID-19 pandemic, something none of us planned for!  But hopefully, we will be returning to “normal” (whatever that will look like!) sometime soon.

Aren’t we glad that many scientists and hospitals had already made pandemic plans? Yes, we have had shortages and problems, but we’ve coped a lot better because some leaders made plans.

A budget helps you and your leadership team ask yourselves :

  • What is important to us in our group? Is it cost, convenience or quality? You cannot offer all three! Choose two.
  • Is it important that we keep the cost extremely low? A budget that aims for low cost is going to be a very different budget than one aiming for top quality.

Good, easy and cheap. Your homeschool program cannot offer all three!

A budget helps you focus, plan, and set your group’s priorities.   So, believe it or not–having a budget might sound like it is a limiting thing, and some people don’t like budgets. But instead a budget can bring great freedom and relief from a lot of stress.  


If you need help establishing a budget, start with my article  Budgeting basics

And consider ordering my book Money Management for Homeschool Organizations.

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
HomeschoolCPA.com
Helping Homeschool Leaders

IRS guidance on nonprofit boards

A client recently asked me what the IRS had to say about nonprofit boards. In general, the IRS is not the rule enforcer on nonprofit hoards. The states define the requirements to be a nonprofit and the size and make up of the board

As the IRS puts it,

“And while the tax law generally does not mandate particular management structures, operational policies, or administrative practices, it is important that each charity be thoughtful about the governance practices that are most appropriate for that charity in assuring sound operations and compliance with the tax law. As a measure of our interest in this area, we ask about an organization’s governance, both when it applies for tax-exempt status and then annually as part of the information return that many charities are required to file with the Internal Revenue Service.”

Click to access governance_practices.pdf

IOW, the IRS asks questions in its application for tax exempt status and in the annual returns nonprofit file (Form 990). These questions try to drive good behaviors.

In an IRS document titled Governance and Related Topics – 501(c)(3) Organizations the IRS recommends good practices for nonprofit boards. Some of the topics covered in the 8-page document include:

  • Mission-Know your mission, and purpose and review it regularly
  • Organizational Documents– includes bylaws and Articles of Incorporation (for nonprofit corporations) or Articles of Association (for unincorporated associations).
  • Governing Body-your board should consist of qualified, involved members who are independent and not dominated by employees or paid staff.
  • Governance and Management Policies-Have policies on compensation, conflicts of interest, investments, fundraising, documenting governance decisions, document retention and destruction, and whistle blower claims.
  • Financial Statements and Form 990 Reporting– The board should ensure the nonprofits funds are properly spent.
  • Transparency and Accountability-The Internal Revenue Code requires a charity to make its Form 1023 exemption application, Form 990, and Form 990-T available for public inspection.

How is your board doing in these areas? Need improvement?

How about we talk about it?

I’d love to set up a conference call or Zoom video chat with your board to discuss ways to improve your nonprofit’s governance. All this leads to better run organizations and less work and stress on your hard-working board members!

Contact me today and we can set up a call.

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Can my CC group become a nonprofit and use the Form 1023-EZ?

I have been a director of a homeschool educational group (Classical Conversations) as an individual DBA. I have been paid but the money goes back into paying others for my kids’ education and materials for the group – generally no profit. It is not an LLC or corporation. Can I incorporate in the state and file the IRS Form 1023-EZ form?
Jodi

Jodi,
Even though your CC business was not profitable, it was still a business. Having no profit does not make your business a properly formed nonprofit organization. To be a legitimate nonprofit organization you need a board, bylaws, and nonprofit mission.

By the way, your children’s tuition and homeschool expenses are not a business deduction on your tax return. So you may have been profitable from a tax perspective after all. See my ebook Taxes for Homeschool Business Owners for details on what are tax deductible expenses.

Therefore, you can convert your business to a nonprofit organization, but you will not be able to use the shorter, online IRS Form 1023-EZ to apply for 501c3 tax exempt status.

The Form 1023-EZ specifically asks if the nonprofit organization is a “successor to a for-profit business.” The newly formed nonprofit would be a successor to your business because most of the assets or activities are taken over by the nonprofit.

So you must file the IRS full version Form 1023 to receive tax exempt status for the newly formed nonprofit organization. The IRS will request an explanation of your prior business and how the nonprofit is different from the business on Schedule G Successors to Other Organizations.

I addressed this specific situation in my first webinar of this series on Create a Nonprofit for Your Homeschool Community. You might find it very helpful to decide if you want your CC Community to convert to a nonprofit. I discuss the difference in mindset, setting up a board, and more.

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Tax Assessor Clears Confusion on CC Communities Using Churches

There is a lot of confusion about whether Classical Conversations Communities should be using churches for their Community Day activities.

Background: Unlike most homeschool programs and co-ops, Classical Conversations Communities are usually not nonprofit organizations. Instead they are for-profit businesses owned by the Communities’ Directors who have licensing agreements with Classical Conversations, Inc. This may cause problems when a CC Community meets in a church. Many churches avoid hosting businesses on their property for several reasons including:

  1. Jesus chastised the money-changers in the Temple in Mark Chapter 11. Many churches have a policy against business owners conducting their business on church property.
  2. Churches enjoy property tax exemption from their state governments for their religious activities. Hosting a business may threaten that property tax exemption and churches would have to pay property tax. Churches want to avoid violating their property tax exemption and therefore do not typically allow business to be conducted on their property.

I wrote a long FAQ page about homeschool groups using churches here.  

One tax assessor in North Carolina, Jeremy Akins, kindly answered several questions regarding CC use of church property in his county Alamance, NC.

His document “Classical Conversation FAQ” answers several questions including:

  • How authoritative is this document?”
  • My CC Community operates out of a church. Does this put the church at risk of losing its property tax exemption?
  • Classical Conversations is Christian education. It aligns with the values and beliefs of the host church. Shouldn’t we be covered under the religious rather than nonprofit educational exemption?
  • What if my church wants to set up a CC Community operated by the church itself?
  • We only use the fellowship hall and outdoor areas for 6 hours per day, 30 days per year. Isn’t this an incidental use by members of the general public? I’ve heard this doesn’t jeopardize the exemption.
  • What if I want to operate a CC Community with all volunteer staff (no payments to the Director / Tutors, just the cost of the curriculum, license fee and facility fee)?
  • Are you saying that a CC Community cannot be structured as a for-profit business?

You can read Mr. Akins’ response (5 pages) in full here.  Alamance County NC Classical Conversations FAQ.pdf


Although Mr. Akins’ FAQ document is limited to his jurisdiction (Alamance County, NC), he does make his assessment based on state-wide laws. Additionally, his FAQ gives helpful insight into how a property tax assessor thinks and evaluates a for-profit homeschool business using church property to conduct its business.



Nonprofit Status for CC Communities

I would like to expound on one question that Mr. Akins answered:

Does this mean my CC Community must obtain 501(c)(3) status?”

No, although that is something your Community may consider. All that is required for the purpose of the exemption is a North Carolina status as nonprofit.

Let me explain the difference between nonprofit and tax exempt status:

Nonprofit status is granted by your state, usually the Secretary of State’s office. Creating a nonprofit corporation is forming a new legal entity.

501c3 tax exempt status is offered by the IRS to eligible nonprofit organizations.

Think of it like being married: Your state approves marriage licenses and your form a new family entity when you get married. You also are eligible for tax benefits from the IRS (called Married Filing Joint) if you are eligible and want it. Your homeschool group doesn’t have to apply for 501c3 tax exempt status with the IRS. Just like a married couple does not have to file a joint tax return; they can file Married Filing Separately. While that usually costs more in taxes, but it can be done.

The same is true for a nonprofit organization. If a nonprofit does not apply for 501c3 tax exempt status with the IRS, the nonprofit will owe federal income tax on any surplus it has each year. The nonprofit organization will be required to file a federal corporate tax return (Form 1120) to report its income, expenses and profit. The federal corporate tax rate is 21%. So most eligible nonprofits apply for 501 federal tax exempt status and avoid paying 21% of their profit to the IRS.

Please understand that Mr Akins’ FAQ is addressing property tax exemption on churches, not federal income tax exemption, so he is addressing that tax and its tax basis.

Resources for Nonprofit and Tax Exempt Status

I have some resources to explain nonprofit and federal income tax exempt status. I do not make assessments regarding state and county property tax. They are different taxes and different tax agencies. I focus on federal income tax exemption from the IRS.

Difference between nonprofit and tax exempt status (3 minute video)

Do I Have to Be Tax Exempt? (3 minute video)

Is My Homeschool Group Required to Have 501c3 Tax Exempt Status? (13 minute podcast)

Creating a Nonprofit webinar: This webinar recording is helpful for new nonprofits, existing homeschool group, or for a business wanting to convert to a nonprofit organization. The webinar runs about 90 minutes and covers:

  • The difference between a business and a nonprofit organization
  • The advantages and disadvantages of being a nonprofit organization
  • Forming a board: who can be one it, what do they do, etc.


I have helped several CC Communities convert to nonprofit organizations and assisted over 200 organizations apply for 501c3 federal income tax exempt status. If you have questions about the process, start with the resources above. If you have specific questions, we can arrange a phone consultation.


Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

If I’m Not a Homeschool Leader, What am I?

The COVID-19 pandemic has meant that many homeschool leaders have no group to lead. Some may enjoy the break from responsibilities, but other feel lost and lonely without their groups.

Carol Topp, the HomechoolCPA, is joined by Doreen Browning, co-moderator of the I am a Homeschool Group Leader Facebook group and Jamie Buckland, Classical Program Consultant.

Listen as Carol, Doreen and Jamie discuss:

  • Leaders without a group can feel lost, lonely and without a purpose
  • Perhaps this is the time to “pour in” instead of the usual pour out
  • Resources to help you pour into yourself or others (see below)
  • Keep up with board meetings.
  • Do some things you never have time to do.
  • You need to be replaceable!

In the podcast, Jamie mentioned some resources she uses to “pour in” to being a better leader. Here’s her list:

Carol Topp has found these resources to be very helpful:

  • Homeschool Organization Board Manual by Carol Topp, CPA- a template to create your own board manual of important documents and a training guide for board members. Read more below…
  • BoardSource.org– lots of good articles for nonprofit board members in their resource library
  • Lessons From The Nonprofit Boardroom: 40 Insights For Better Board Meetings by Dan Busby and John Pearson

Join the Facebook group for homeschool leaders: I am a Homeschool Group Leader. 1200+ homeschool leaders offer ideas, encouragement and respectful exchange of ideas. https://www.facebook.com/groups/72534255742/


Jamie Buckland, the Classical Program Consultant is available for phone consultations regarding starting and running a classical homeschool group. Contact her at https://jamiebuckland.net/


Homeschool Organization Board Manual

Homeschool board members should keep all their organization’s important papers in a safe and accessible place. Usually, a 3-ring binder works well.

Author and homeschool advisor, Carol Topp, CPA, has 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

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
  • Best Financial Practices Checklist
  • How to Read and Understand Financial Statements
  • Developing a Child Protection Policy

How are nonprofits monitored, regulated, and governed?

A homeschool leader asked me recently, “Who holds nonprofit organizations accountable? Is it the IRS?”

While there are some issues, such as taxes and tax-exempt status, where the IRS has some oversight of nonprofits, the true watchdogs of nonprofit organizations are their own boards and their states.

BoardSource.org has a article that explains who monitors and regulates nonprofit organizations. They list the organization’s board of Directors as the “first line of defense against fraud and abuse.” The board is followed by the states’ Attorney General, the IRS, donors and finally the media.

No government agency exists exclusively to monitor the activities of nonprofits

BoardSource.org

“Nevertheless, nonprofits have many lines of defense against fraud and corruption:

  • Boards. All nonprofits are governed by a board of directors, a group of volunteers that is legally responsible for making sure the organization remains true to its mission, safeguards its assets, and operates in the public interest. The board is the first line of defense against fraud and abuse.
  • Private watchdog groups. Several private groups (who are themselves nonprofits) monitor the behavior and performance of other nonprofits. Some see their mission as serving as advisors to donors who want to ensure that their gifts are being used effectively; others are industry or “trade” groups that provide information to the public and encourage compliance with generally accepted standards and practices.
  • State charity regulators. The attorney general’s office or some other part of the state government maintains a list of registered nonprofits and investigates complaints of fraud and abuse. Often the state attorney general serves as the primary investigator in cases of nonprofit fraud or abuse. Almost all states have laws regulating charitable fundraising.
  • Internal Revenue Service. A small division of the IRS (the exempt organizations division) is charged with ensuring that nonprofits are complying with the requirements for eligibility for tax-exempt status. IRS auditors investigate the financial affairs of thousands of nonprofits each year. As a result, a handful of organizations have their tax-exempt status revoked; others pay fines and taxes. In 1996, legislation authorized the IRS to penalize individuals who abuse positions of influence within public charities and social welfare organizations. Formerly the only weapon available to the IRS was to revoke tax-exemption, which resulted in the denial of service to the clients and constituents the organization was created to help. Because they fall short of revocation of tax-exempt status, these provisions are called intermediate sanctions.
  • Donors and members. One of the most powerful safeguards of nonprofit integrity are individual donors and members. By giving or withholding their financial support, donors and members can cause nonprofits to reappraise their operations.
  • Media. Most of the major scandals involving nonprofit organizations in recent years have surfaced as a result of media investigations and the resulting news stories. While many nonprofit leaders feel misunderstood or even maligned by negative media coverage, this media watchdog role has resulted in increased awareness and accountability throughout the sector.”

The full article (and many more excellent articles about nonprofit boards) is available at :

https://boardsource.org/resources/legal-compliance-issues-faqs/


Resources for Homeschool Boards

So how is your board doing in its oversight and prevention of fraud and abuse?

My book Money Management in a Homeschool Organization devotes a chapter to helping your nonprofit avoid financial mismanagement.

Additionally, the Homeschool Board Member Manual will help train your board in its duties and help organize your important papers.

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Stay Connected with Your Homeschool Group During COVID-19

The COVID-19 pandemic and the requirements to practice social distancing has meant that many homeschool groups can no longer meet face-to-face. How can homeschool groups stay connected during this time?

Carol Topp, the HomechoolCPA is joined on today’s podcast by Doreen Browning, co-moderator of the I am a Homeschool Group Leader Facebook group and Jamie Buckland, Classical Program Consultant.

Listen as Carol, Doreen and Jamie discuss:

  • How we can enjoy and redeem this time of isolation and refocus on homeschooling and our families.
  • How to encourage interactive communication, not just one-way communication.
  • Tools to use to stay connected: some new and some very old school (mail and phones!)
  • While we are having a health emergency, there is no educational emergency.
  • Are we too dependent on our co-op classes and tutors?
  • Encourage parents that they are equipped to homeschool their children without your wonderful group!

Join the Facebook group for homeschool leaders: I am a Homeschool Group Leader. 1200+ homeschool leaders offer ideas, encouragement and respectful exchange of ideas. https://www.facebook.com/groups/72534255742/

Webinar: Starting an Academic Homeschool Program

Are you interested in starting a homeschool program with a classical and academic focus? Jamie Buckland started Appalachian Classical Academy (ACA) after running a for-profit classical community. Now she is the Executive Director of ACA. She explains how ACA is set up with not one but two boards to run the Academy as a nonprofit organization!

Jaime and Carol teamed up to present a webinar on the ABCs of Starting an Academic Homeschool Program. You can benefit from their combined knowledge in this webinar (and you’ll get several helpful resources as well). http://homeschoolcpa.com/how-to-start-an-academic-homeschool-program/


Jamie Buckland, the Classical Program Consultant is available for phone consultations regarding starting and running a classical homeschool group. Contact her at https://jamiebuckland.net/