Help a New Homeschool Group Start Up Quickly

Homeschooling is exploding in light of the COVID-19 pandemic and existing homeschool groups cannot accommodate all the newcomers.
But homeschool leaders want newbie homeschoolers to be successful and have support, so what’s to be done?

How about your existing homeschool group help start another homeschool group? It can be pretty easy. It’s called a “fiscal sponsorship” arrangement Here’s how it would work:

Step One:

Read up on a concept called “fiscal sponsorship.”
These blog posts will get you started:

Step Two:

Meet (online via Zoom) with the leaders of the new group. Explain the arrangement. The new group will exist as a “program” or a committee running the program under your existing homeschool organization.

The new program or committee leaders will get:

  • Use of the parent organization’s EIN (employer Identification Number)
  • Use of the parent organization’s nonprofit incorporation status. This means the new group does not have to form a new nonprofit entity
  • Use of the parent organization’s bank account. The parent organization may want to set up a new checking account for the new group with its existing EIN. Make sure the treasurer has online access to the new checking acocunt.
  • Use of the parent organization’s 501c3 tax exempt status. This is a HUGE advantage. The new group won’t have to apply to the IRS to grant tax exempt status. They can be up and running immediately!
  • Use of the parent organization’s bylaws. The new group will be under the parent organization’s bylaws as a new program, so the new group doesn’t need its own bylaws.
  • Use of the parent organization’s Policy Manuals, registration forms, etc.
  • Use of the parent organization’s website, Facebook account, and other online services for registration.
  • Coverage under the parent organization’s insurance policy. Another HUGE advantage. The parent organization should call its insurance provider and explain it is expanding. Ask for a new quote on what the increased cost will be. Make sure the new group pays the parent organization for their share of the insurance.

The new group will need to:

  • Set up a committee of at least 3 people to operate the new program. One of the parent group’s board members should be invited to all committee meetings to offer help and advice. She should report back to the parent organization on how the new program run by the committee is doing.
  • Find a location to hold their program, meet-ups, classes, etc.
  • Pay the parent organization their share of the insurance
  • Give financial reports to the parent organization at least every 3 months, although monthly is recommended.
  • Make 2-3 year plan for launching itself to be an independent organization.

Agreement in writing

I strongly recommend a written agreement signed by the Chair of the parent organization and the new program committee chair.

The agreement should outline the bullet points given above and add any other issues you think of.

If you want examples of agreements, you could look at some fiscal sponsorship samples
or read

Fiscal Sponsorship: 6 Ways to Do It Right by Gregory Colvin. It describes six models of sponsorship that have been approved and accepted by the IRS. It details how the models work and why, how they differ and how they are similar.

Summary of the book and its six models of fiscal sponsorship by the author: Fiscal Sponsorship: 6 Ways to Do It Right synopsis Colvin.pdf

Advantages

The advantage of this idea is that your group can help start a new group as a program and there is very little you need to do except offer advice! The new group will have the advantage of being able to focus on starting their activities and not have to worry about paperwork, setting up a bank account, government filings, etc. The parent group has already done all that!

This comparison chart of starting a new organization or creating a committee as a fiscal sponsorship under an existing nonprofit was created by attorney Gregory Colvin. It shows how fast a committee can get started on running a new program.

It can work!

This idea is really something new and existing homeschool groups could do together to help new homeschoolers learn from the experienced ones!

If you have more questions about fiscal sponsorship or starting a new homeschool group, I am happy to set up a phone consultation. Contact me and we can discuss what questions you have!

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Options When Starting a Home School Business

I’ve been homeschooling my daughter for about 4 years. I enjoy it, I worked at a private school for a year, but It’s been on my heart to start my own home school. I could really use some help and advice on how to start my school, and the proper legal steps to take.Thank You! -LS.


Dear LS,

Thank you for contacting me.

It is unclear from your email if you want to:

  • homeschool other peoples’ children (like a tutor) in your home or
  • start a homeschool program (like a nonprofit co-op) or
  • start a business offering classes, like a tutorial, a few days a week
  • start a micro school (as your business).

If it’s homeschooling other peoples’ children in your home, these blog posts will be helpful:
Is it a homeschool co-op or Mary Poppins?
Homeschooling Other People’s Children. Is It Legal?

If you want to start a nonprofit homeschool group like a co-op, my website has lots of information including this checklist of steps. It’s a good place to start.

Offering services like classes to homeschool students is another option. Many people operate these programs or tutorials as sole proprietorship businesses. Classical Conversations Communities are one example. My ebook on Taxes for Homeschool Business Owners offers a lot of information on starting a business to serve homeschoolers.

Or if you want to start a full fledged 5-day per week micro school as your business (i.e., not a nonprofit) then read these blog posts:
Homeschool or microschool?
Fine line between a homeschool co-op and running a micro school

Of course, some homeschoolers start businesses using their experience (like me!). I wrote an articles titled, “Make Money from Your Homeschool Experience” You can read it here.

So as you see there are many options.

If you need more guidance, I would be happy to arrange a phone consultation with you. We can discuss whatever questions you have about your options.

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Closing Your Homeschool Group During COVID-19

Has COVID-19, the novel corona virus pandemic, caused your homeschool group to close, suddenly? How did you make the decision to cancel your program?

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:

  • Making hard decisions to close your homeschool program.
  • The benefits of having a team help you make quick decisions under stress
  • What to do if there is push back about your decisions.
  • Future decisions about re-opening.

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/

Homeschool theater program has income from advertising. Do they owe taxes?

Dear Mrs. Topp,

Our homeschool co-op has a yearly theater production that costs $35 per student to participate in the production. The theater teacher collects and uses all funds for the production. We now have local businesses that would like to advertise (by giving a donation) in the theater program. I understand that the business can use the donation as an advertisement write off, but what does the co-op or teacher do with the income, regarding the IRS?
Thank you for your time.

G.W.

Dear G.W.,

Good for your co-op for staging a theatrical production. I was in theater in high school and my daughter was in several homeschool theater productions too! It builds confidence!

The co-op teacher should turn over the funds to the co-op’s treasurer and he/she should deposit the money into a bank account that is established in the co-op’s name. A bank or credit union should open a nonprofit or a “club” account for the co-op.

They will want your EIN (Employer Identification Number) letter from the IRS. They may also want some official document like bylaws. My credit union wanted a letter signed by two officers stating that I, as the treasurer, had authorization to open an account for the nonprofit. Call your bank or credit union to see what they will require to open a nonprofit or club checking account.

You might find this podcast helpful: Tiny Homeschool Groups: Do We Need a Bank Account?

Income from advertising is NOT a donation from the donor. Do not give the donor a donation receipt. He received something or value (advertising) in exchange. He can deduct the cost of the ad in your theater program as advertising expense.

By the way, many nonprofits don’t accept ads, but rather “qualified sponsorships” and simply acknowledge their sponsors with a “thank you” in their programs. These are different from ads. Typically only the company name or logo is presented. No inducements to buy or product information is given in a sponsor thank you. Here’s a helpful explanation http://www.nonprofitlawblog.com/ubit-advertisements-vs-qualified-sponsorship-payments/

Advertising income is called unrelated business income for the nonprofit. Fundraisers and any income not related to your educational purpose is unrelated business income and and you must report it and pay tax on it.

Fortunately, the IRS has several ways to avoid paying the unrelated business income tax (UBIT):

  1.  The first $1,000 in income from an unrelated business will not be taxed.
  2.  If the fundraiser (or unrelated business) is run substantially by volunteers (i.e., no paid staff) then the proceeds are not taxed.
  3. If the fundraiser is not regularly carried on, such as a once-a-year event or bake sale, then the proceeds are not subject to UBIT.
  4.  If you are selling donated items, like in a garage sale, the income raised is not taxed.
  5. Qualified sponsorship payments are not unrelated business income.

Usually exception #1 or #2 will apply to small homeschool nonprofits, so your co-op should be able to receive income from advertising without worrying about paying tax on it.

It’s a good idea to create a line item in your record keeping labeled “Advertising Income” so it’s clearly differentiated from other income.

I hope that helps.

Carol Topp, CPA
HomeschoolCPA.com
Helping homeschool leaders

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

Shelly wants to offer a high quality, low cost homeschool program that doesn’t require parents to volunteer.

I told her the bad news: “You cannot offer all three.”

She can’t and you can’t either!

Business success (and failure) prove it:

McDonald’s provides fast food very quickly at a fairly reasonable price; But you have to admit the quality is not the best. They offer two things consumers want, but not all three.

Another example could be Starbuck’s coffee.  At Starbuck’s they offer high quality coffee drinks provided quickly, but we know that it’s not cheap! 

Or how about MoviePass which allows you to go to a movie theater once a day for $9.95/month, or see three movies a month for $7.95. It’s cheap, convenient and high quality (these are first run movies, not oldies!)  Is Movie Pass able to offer all three! Nope! MoviePass is having serious financial problems. It is losing $40 million a month, and those loses are expected to increase. Their attempt to offer all three is crushing them and they are on the road to failure.

How does this apply to homeschool groups?

Your group can offer two of the three things that homeschool families may want:

High quality: maybe small classes, qualified, caring teachers, fun enrichment classes or rigorous academic classes

Low Cost: Affordable prices, low fees, maybe even free!

Convenient: No time commitment from the parents, maybe even a drop-off-the-kids-and-leave option for homeschool parents who need to work.

Many homeschool co-ops offer quality and low cost but have a requirement that the parents stay in the building and help by teaching or serving in a classroom or other jobs. Hence the name “cooperative.” The parents keep the cost low by cooperating together to run the classes.

A tutorial program might offer academic classes taught by highly qualified teachers with no volunteer commitment for the parents, but it will not come cheap. The tuition may approach that of private schools.

 

Shelley wanted all three (drop off academic classes at a low price) and I explained that she could not sustain the program unless she either charged more or started requiring the parents to volunteer.

“But many parents can’t pay more,” she complained to me. “And they work, so they need the drop off feature. They can’t stay and volunteer.”

She had 3 options:

  1. Find other sources of funding including fundraisers, donations and grants.
  2. Require parents to volunteer. This was going to be be very difficult since Shelly was having problems even recruiting board members to meet once a  month!
  3. Close the program and start over. The expectations of the parents was so entrenched that they should get drop-off classes at a low fee, there was no changing that! The entire program needed an overhaul.

My book Money Management in a Homeschool Organization has a chapter on fundraisers for homeschool groups.

Money Management in a Homeschool Organization available here

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

New homeschool co-op wants simplicity. Any taxes due?

Hi Carol.
I started up a group of a few families last year as a homeschool co-op in our community. As we have grown a little more this year, I would like to start up a checking account.

My question is, after I get an EIN and open the checking account for the co-op, what is required at tax time, if anything, for having that account?

I don’t want to be recognized yet with the IRS as a 501c3, just for sake of simplicity at this time. Am I going to be required to do anything because of having this checking account?

We do not pay teachers, the account is strictly for fees and supply costs.

This semester we will only be taking in about $2,500 at max. and that is stretching it.

Thank you for your advice.
Callie


Callie,

I have answered your questions in some blog posts that you may find helpful:

Will getting an EIN put us on the IRS radar?

Best of: Checking accounts for homeschool organizations

We’re not 501c3 and don’t want to be!

The last blog post explains you have a few choices if you collect money and provide a service:

  1. Stay small and self declare 501c3 tax exempt status. This is the simplest option and the one I recommend for Callie’s organization.

    She will have to call the IRS once to self-declare her 501c3 status and get added to the IRS Exempt Organization database so the group can file their annual IRS Form 990-N.

  2. Consider another tax exempt status such as 501c7 social club. This is applicable to support groups or clubs, but not for Callie’s homeschool co-op.

  3. Apply for 501c3 status, especially if annual revenues exceed $5,000/year. I can help with that.

  4. Pay taxes as a for-profit business. That’s the least simple way to go! I don’t recommend it!


If you are starting or running a tiny homeschool program (usually less than $5,000 in income in a year), then you’ll benefit from my resources and podcast series for Tiny Homeschool Groups.

Tips for Starting a Tiny Homeschool Group


Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

Homeschool Teacher Accused Molester: How to Safeguard Children

The headlines that came proclaimed something we all fear: A homeschool teacher molests 17 year old girl.

Arkansas mom held for sexually abusing teenage girl

As homeschool leaders we never want to read about the horrific things that could happen in a homeschool program.

In this specific case, the events between the accused and victim did not take place during the co-op time.

Take time to assess your risk based on your activities. Develop, communicate, and stick to a plan. The links below will help.

Check with your state to determine who is mandated to report child abuse.

In this case, a parent reported her concerns to the pastor of he church where the homeschool co-op was held. He is a mandatory reporter and the pastor reported the abuse to the police.

Reporting is typically confidential.

Your leadership needs to know what to do if there is a report of suspected abuse. It is never the leadership’s responsibility to investigate, only to report to authorities.

Often, leaders feel they should investigate to see if it really happening – feeling that they need to have the claim substantiated before reporting, but that’s not true.

 

Resources to Safeguard Children

There are lots of websites that offer guidelines on assessing your risk and creating a response plan. Below are two that will get you started.

This important thing is not that you read these sites.

The important thing is that your board create and stick to a plan.

Get educated and act on it.

Managing and reducing risk in your program

Key Principles in Youth Protection

Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders…to safeguard children

Tips for Starting a Tiny Homeschool Group

 

Carol,

What are the absolute essential things a small growing co-op needs to do to organize and avoid future headaches? We are entirely run by volunteers, and moms are required to remain on site, either teaching or assisting in some way. Right now we have 13 families and 35 kids ranging from infant to 10th grade.

-C Wilson

 

Dear C,

While the bigger homeschool groups get most of the attention on this website, tiny homeschool groups are abundant.

You asked an excellent question. I created a 4-part podcast series to help answer your question.

 

And here’s a blog post that sounds very similar to your group:

12 moms want to start a homeschool co-op. How to get started

 

My ebook Homeschool Board Member Manual may be very helpful. It’s a way to organize your group’s important paperwork and a board training guide.

 

Finally, tiny homeschool leaders are encouraged to join the Facebook group for homeschool leaders I am a Homeschool Group Leader. Join over 1,000 other leaders for support and information.

 

That’s a lot to help you get started! Divvy up the jobs. Don’t start even a tiny homeschool group on your own. Gather a board  and start learning together!

 

Carol Topp, CPA

Helping Homeschool Leaders

Is your homeschool group “just a bunch of moms”?

I’ve heard this too many times from homeschool group leaders to ignore it any longer.

“We’re just a bunch of homeschool moms”

It’s usually used along with one of these sentences,

…therefore we don’t want to (or need to) ...

  • be formally structured
  • follow the law
  • pay taxes
  • apply for tax exempt status
  • pay our workers as employees (according to the law)
  • record our income or expenses
  • notify our church host of the for-profit nature of our group, etc…

I’ve heard or read just about every one of these excuses!

Does saying “we’re just a bunch of homeschool moms” imply that:

  • homeschool moms are incapable of running legitimate businesses or nonprofit organizations?
  • homeschool moms can’t understand legal and tax issues?
  • homeschool moms are claiming ignorance as a defense against obeying the law?

Homeschool moms are intelligent, capable women. I know of hundreds of homeschool moms running businesses and nonprofit organizations very successfully and legally. I know some that are accountants and lawyers or, in the true spirit of homeschooling, are self-educated to understand complex tax and legal situations.

So let’s not imply that homeschool moms are not capable or not intelligent by saying “we’re just a bunch of homeschool moms”!

Instead, we should do what we do at home with our children:

Get educated about the legal and financial aspects of running a homeschool organization.

I have resources to help:

 

Carol Topp, CPA

Helping Homeschool Leaders who are smart and capable!

 

Tiny Homeschool Groups: Are We a Nonprofit?

Tiny Homeschool Groups: Are We a Nonprofit?

Tiny homeschool groups have different challenges than large programs. They are limited on resources, volunteers, and activities. But they still have questions about legal status, money and taxes that the large homeschool organizations have.

In this 4-part podcast series, Carol Topp, CPA answers the common questions that tiny homeschool groups face. All podcasts are available at HomeschoolCPA.com/Podcast

  • Episode #175 Are We a Nonprofit?
  • Episode #176 Do We Need to File Anything?
  • Episode #177 Do We Need to Pay Taxes?
  • Episode #178 Do We Need a Bank Account?

In this episode of the HomeschoolCPA podcast, Carol Topp will share:

  • Should our homeschool group be a nonprofit?
  • What does it take to be a nonprofit?
  • Aren’t we just a bunch of homeschool moms?
  • How can we avoid unnecessary paperwork?
  • How can we keep this simple?

Join the Facebook group for homeschool leaders: I am a Homeschool Group Leader. 600+ homeschool leaders offer ideas, encouragement and respectful exchange of ideas. https://www.facebook.com/groups/72534255742/

 

Featured Product

The  Board Manual for homeschool organizations will be very helpful to organize your board and run your homeschool organization successfully!

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

Read more about the Homeschool Organization Board Manual