I am the leader of a support group with around 65 families. Our group has a board and bylaws. We also have a co-op of about half the members of the larger group. The co-op requires members to be a member of the larger group. The co-op has separate leadership and it’s own checking account. The bylaws don’t address the co-op specifically.The co-op pays the leadership and teachers from their account. Tuition and fees are charged for participating families. Teachers are written checks from the co-op’s account monthly. “Teacher Gift” is always written in the memo in the checks. For the most part, curriculum for the classes are decided upon by the leadership of the co-op. Those in the leadership of the co-op serve no other volunteer function in the main group (their leadership on the co-op has been counted as their volunteer service for all the 7 years the co-op has existed ). Another member of the group has complained that their paid leadership service is not volunteer service and should not be counted toward the main group. I do agree with this. But it seems that we need to address this and some other issues that aren’t quite right.
Should our groups separate? The larger group has not reviewed the co-op’s financial records. The co-op only gave out 1099’s last year for the first time. I know that whatever is done, there will be hurt feelings and I am at a loss to know where and how to tackle these issues. Where and what should I start with?
Thanks in advance.
Tina
Tina,
Here’s my advice. Read my book Paying Workers in a Homeschool Organizations.
Good for the co-op for finally giving 1099-NECs to the teachers! But they should stop writing “Teacher Gift” in the memo. These are not gifts. They are payments for services. Additionally, teachers should be paid as employees, not Independent Contractors.
It is very untypical for homeschool co-op leaders to be paid. Paying board members in a nonprofit organization is not typical and not recommended. It creates a conflict of interest and compromises the duty of loyalty the board should have to the group over their own interests.
Since the co-op is paying their board members, they are employees, not Independent Contractors. Employees require quite a bit more paperwork and may involve paying unemployment tax and workers compensation taxes. I discuss paying board members (don’t do it!), and the difference between independent contractors and employees in the Paying Workers book.
You also said: “Another member of the group has complained that their paid leadership service is not volunteer service and should not be counted toward the main group. I do agree with this. But it seems that we need to address this and some other issues that aren’t quite right.”
You are correct that you cannot pay a volunteer, so perhaps the volunteer service is not fulfilled because the leaders are paid.
You asked: “Should our groups separate? The larger group has not reviewed the co-op’s financial records.” Obviously the larger support group has neglected some of their responsibilities of oversight of the co-op. See my blog post on leader responsibilities
Perhaps it is time to weigh the pros and cons of being separate groups. A lot goes into that decision.
If you wish to discuss your group’s issues and concerns, I recommend a consultation with one of HomeschoolCPA’s Recommended Consultants. These consultants are all homeschool leaders themselves.
I hope that helps.
Carol Topp, CPA
HomeschoolCPA.com
Helping homeschool leaders
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Hi,
I wanted to thank you so much for writing back and give a little update. The officers met and decided to work at correcting any errors we may be making. We have a meeting scheduled with the co-op directors in the next couple of weeks. I think it is so important to set a good example in everything you do.
Once we get all the information on the finances, then we can make the necessary decisions about our groups. I am praying for a smooth road.
Your website is very helpful and I have shared it with all the officers of our group. We are so very appreciative.
Tina
This site has such great information and I thank you!
I’m not sure that my group is really considered a co-op and my husband and I are perplexed with the contractor vs. employee status. I pay individual professionals to come and teach the classes. The teachers choose their own curriculum and teaching style and in what order to teach their subjects. But I do have somewhat of a schedule to make sure that subjects such as Spanish and Art are part of each grade level. So I do have some control of the scheduling. The teachers generally bring in their own supplies but occasionally I purchase something that is then owned by our group. I have 3 teachers that are actually paid. I also have 2 people that volunteer but their children get free tuition.
I’m concerned because we make just enough money to pay the teachers and pay rent to the church. Paying for the things that come with employee status as well as workers comp will pretty much put us under and we will have to close.
So, are the teachers in the situation ok to be independent contractors since they have a lot of freedome or do the still need to be employees and do we need to workers comp?
Thank you so very much for your help!
Traci
Traci,
It seems as if you are very careful about the 3 elements of worker classification that the IRS looks at:
Behavioral Control,
Financial Control, and the
Type of Relationship itself.
You’re focusing on behavioral control and somewhat on financial control, but you could shore up the relationship by having a signed contract with each paid teacher. You should also avoid giving any benefits to the paid teachers such as free tuition for their children.
Many co-ops are having the teachers paid directly by the parents and completely avoid paying them from the homeschool group’s checking account.
I cover the three IRS tests in my ebook Paying Workers in a Homeschool Organization. You can download it here.
Hope that helps!
Carol Topp, CPA