Michelle asked a question about fund raisers in a homeschool group:
Hi Carol,
We have had fund raisers in the past (Butterbraids, a frozen pastry) and have made approx. $1,500 doing that fund raiser. We had a cooking class that prepared hot lunches and the co-op made money on those. We will have less than $100 left in the check book. We have a Fed ID #. What do we do? What about next year? Is fund raising not a good idea for us as you say in your website? We thought about charging more for membership (we charge $35/ yr now) and if people wanted to do individual fund raisers that would be up to each family. What do you think? Thank you so much for your help to the homeschool community and for whatever answers you can give us.
Sincerely,
Michelle P
Dear Michelle,
Did I say fund raising is not a good idea? I didn’t mean to. Hopefully, I just warned groups that fund raising can be a lot of work.
Charitable Solicitation filings
If you hold fundraisers by selling products to the public (outside your own membership) you may need to report your “solicitation” to your state, typically the Attorney General’s office.
In my home state of Ohio, nonprofits have to file a Charity Registration form if they do fund raising to the public. One year my homeschool co-op sold candles door to door and had to file a seven-page financial report with Ohio’s Attorney General Office. That report was such a nuisance (and the fund raiser was so much work) that the co-op no longer does sales to the public.
Investigate what your state requires from groups doing fund raisers. These websites have information on nonprofit reporting requirements by state:
https://www.hurwitasociates.com/
https://www.harborcompliance.com/fundraising-registration
In general I encourage groups to get most of their income from membership fees and not depend too much on fund raising. Fund raising can be very successful or turn out very poorly. It is also a lot of work with sometimes only a few people doing all the work.
Individual fundraisers
I’m not sure what you mean by “individual fund raisers.” I do know that it is not proper to “award” a family for raising more money than another family, nor is it proper to set up individual accounts. It’s not right because it is not in keeping with the nonprofit motive or with the idea of a group benefit. In short, individuals are not supposed to benefit; the group is supposed to benefit.
My book Money Management in a Homeschool Organization covers fundraising and offers some ideas for easy fundraisers.
Are you up to date on your state filing requirements for your homeschool nonprofit organization? Do you even know that your state may require annual reports?
Most states require some reporting from nonprofit organizations on an annual basis. My webinar on IRS and State Filings for Homeschool Nonprofits will explain the state reports and help you research your state’s requirements.
Carol Topp, CPA
HomeschoolCPA.com
Related question:
Our support group is running a Conference for the first time. In order for the second to be successful I’d love to include a funriser that was offered by a vendor. This company cannot travel so far but would ship product for us to sell.
Because we are not buying the product ahead there is no debt. They are the ones getting checks so they would be responsible for Sales Tax.
Too good to be true?
Sounds like a good deal to me. Just remember that the IRS looks at selling products as Unrelated Business Income (UBI), and is subject to tax. In other words, your income from your tax exempt purpose(education) is tax-exempt, but your income from unrelated activities (selling products) is taxable income. There are a few ways to avoid UBI tax: Any amount under $1,000 is not taxed, or if you use all volunteers to sell the product the income is not taxed.
Carol Topp, CPA
We homeschool in NC. We would like to have a fundraiser to help pay for field trips, etc. We would like to do is have a food drive for a local charity. We would have a decorate your food donation box type of thing and have a contest for the one that got the most monetary votes. After prize money was taken out we would get what’s left. This would not only give us a little extra money, teach our kids the importance of helping others, but it would also help the charity. Is this legal?
That’s sounds like a wonderful charity fundraising event. It sounds *legal*, but the real question is “Would it be *taxable*?” Maybe not, if your homeschool organization ran the event. If your family is holding the event, the IRS may see the fundraiser as a business (i.e. taxable income).
Hi! I’m still quite new to homeschooling. Is it legal (and/or good “etiquette”) for an individual (i.e. ours) to raise money as individuals; like for our curriculum which is a bit more than we can generally afford in total.
Kristin,
Yes it’s legal for your family to raise money to pay for your homeschooling expenses, it just needs to be reported as taxable income on your tax return. Here’s a blog post related to earning money as a fundraiser: Can my individual homeschool have a fund raiser?
As for “etiquette,” I have not seen many families use fundraising to pay for their homeschooling expenses. I guess it’s seen as a personal expense and homeschool families do not expect others to bear that expense for them.
Most homeschool families look for additional income like a second job or work-at-home income. Sometimes homeschool families ask for gifts such as zoo or museum memberships, piano lessons, etc. in lieu of Christmas presents.