Many homeschool organizations file to become nonprofit corporations in their state and they are usually asked:
Are you a mutual benefit corporation?
Well, most homeschool groups benefit their members with mutual support, so the answer is “Yes”, right?
Most states recognize three types of nonprofit corporations:
- Mutual Benefit
- Public Benefit
You pick the type when you file Articles of Incorporation in your state.
A mutual benefit nonprofit corporation provides an association of people with a common benefit. Mutual benefit corporations are formed for common gain purposes such as providing insurance for members (many insurance companies still have “mutual” in their names, such a Mutual of Omaha.) Other examples include social clubs, business leagues, and veterans groups. Homeschool support groups may fit this category.
A public benefit nonprofit corporations is organized for a public, educational or charitable purposes. Examples of public benefit nonprofit corporations include charities, social service organizations, schools, foundations, and scientific and research organizations. Homeschool co-ops may fit this category.
Religious nonprofit corporations include those organized primarily or exclusively for religious purposes. Examples of religious nonprofit corporations include synagogues, churches and other places of worship.
Only public benefit and religious nonprofit corporations are eligible for 501(c)(3) tax exempt status with the IRS.
Mutual benefit nonprofits may be eligible for other types of IRS tax exempt status such as 501(c)(6) trade associations or 501(c)(7) social clubs.
Most homeschool co-ops are public benefit organizations because they serve a public good (i.e. education of children) and are not mutual benefit organizations.
Our Articles of Incorporation state we are a mutual benefit corporation. How do I change them?
You will have to amend the Articles of Incorporation. Start researching “amend nonprofit corporation and YOUR STATE” on the internet. It usually involves holding a board meeting to change the Articles of Incorporation, filing some paperwork with your state and paying a small fee to your state (typically $30-$50).
Need to discuss this more? Contact on of HomechoolCPA’s Recommended Consultants and arrange a phone consultation to discuss your homeschool organization.
Carol Topp, CPA
Helping Homeschool Leaders