Top 10 Tips for Homeschool Leaders: Bylaws

“Are bylaws and a board really necessary or is that only for homeschool groups that are 501c3 nonprofits?” was a great question asked by a homeschool leader at a workshop given to homeschool leaders in Wichita, Kansas.

In this second part of a 5-part series on Top 10 Tips for Running a Homeschool Group, Carol Topp, CPA, will answer that question and discuss bylaws and boards. She even explains IRS 501c3 tax exempt status too!

 

Each episode can be found at HomeschoolCPA.com/Podcast. In the 5 part podcast series Carol will cover:

Episode # 180 Board duties

Episode # 181 Bylaws

Episode # 182 Preventing fraud

Episode # 183 Paying Workers

I Episode # 184 Insurance and Record keeping

 

In the podcast Carol mentions how a tiny homeschool group should maintain its tax exempt status by filing and annual IRS Form 990-N. Here’s how to do that:

How to get added to the IRS database and file the Form 990N

 

You might find Carol’s podcast series for Tiny Homeschool groups helpful

Tiny Homeschool Groups: Are We a Nonprofit?

 

Featured Resource:

 

Start a Nonprofit and Get Tax Exempt 3-webinar set

Webinars are a great way to learn!

This 3-webinar set will help your homeschool group get established as a nonprofit, apply for IRS 501c3 tax exempt status and maintain it with IRS and state annual reports!

Everything you need to know in an easy-to-understand video format. This set includes the 3 videos (90 minutes each), an ebook The IRS and Your Homeschool Organization by Carol Topp, CPA, the slide handouts, IRS forms, and templates to help you apply for 501c3 status on your own!

Learn more.

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Top 10 Tips for Homeschool Leaders: Board Duties

Homeschool Leaders: Board duties

What does it take to be a board member of a homeschool group? Is it just attending meetings? Carol Topp, the Homeschool CPA explains the 4 duties of nonprofit board members:

Duty of Care, Loyalty, Compliance and Management.

 

This is the first part of a 5-part series on Top 10 Tips for Running a Homeschool Group, a workshop given to homeschool leaders in Wichita, Kansas. You will probably find many of the audience questions would be a question you might ask as well!

Each episode can be found at HomeschoolCPA.com/Podcast. In the 5 part podcast series Carol will cover:

Episode # 180 Board duties

Episode # 181 Bylaws

Episode # 182 Preventing fraud

Episode # 183 Paying Workers

Episode # 184 Insurance and Record keeping

 

 

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

 

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Board, bylaws and budget for homeschool groups

A homeschool leader is asking some excellent questions about writing bylaws, establishing a board and collecting money.

Dear Carol,
I am co-directing an established homeschool group and we are in the process of writing by-laws. My question is:

  • Is it okay to not allow members to have a vote pertaining to the decisions of the homeschool board?
  • Can the by-laws be set up to allow suggestions and recommendations from the members at the approval of the board?
  • Also, is it legal to initially appoint a board without a vote and then fill vacancies at the discretion of the established board?

Our concern is to protect the vision of the homeschool group.

Your website has been a tremendous help to us. Thank-you for your time and ministry to homeschoolers.

Misty M

 

Misty,
You have asked several good questions. Your group is fortunate to have you as a co-director.

Yes, it is OK to not allow members to vote; I have been on several nonprofit boards that do not have members vote.

Yes, you can set up your bylaws to allow final approval of ideas to be a board responsibility. You may establish a practice of considering suggestions and recommendations; you may not need to formalize the practice in the bylaws.

Yes, you can appoint a board without a member vote. This is done quite frequently on nonprofit boards, especially fine arts boards (i.e., art museums, symphonies, ballets, etc). Many boards find new board members from interested members, volunteers or patrons.

As a guideline, your board should remember their fiduciary duty (duty of care and duty of loyalty) to manage the funds with the purpose/mission of the organization in mind and not for private gain or benefit.
The board’s job is

  • to provide for fiscal accountability,
  • approve the budget, and
  • formulate policies”

From “Major Duties of Board of Directors

In other words, think first of what is best for the organization.

You might find my Homeschool Organization Board Manual to be helpful.

It is a template to create a board member binder. It has lists of important documents to keep in your binder and tools to help you run your meetings smoothly including a sample agenda that you can use over and over again.

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.

I hope that helps!

Carol Topp, CPA

Should our bylaws include an indemnification clause?

I’m reading your amazing ebook The IRS and Your Homeschool Organization, and I noted a difference in the bylaws example in your ebook vs your website.

There is an Article 7 Indemnification on the website sample bylaws.

Is an Indemnification section necessary to have in our bylaws?

Thank you,
Nicole

 

Nicole,

I’m glad the book is helpful!

You asked, “Is an Indemnification section necessary?”

 

What:

Let’s start by explaining what indemnification is. It means ‘to indemnify’:

indemnify

to compensate for damage, loss sustained, expense incurred, etc.
to guard, secure against anticipated loss; give security against (future damage or liability).

 

How does it work?
A nonprofit organization might include in their bylaws a clause such as this:

Indemnification
“The Organization agrees to indemnify, defend and hold harmless the board members, its officers, directors and employees, from and against all liability, loss, cost or expense (including attorney’s fees) by reason of liability imposed upon the Organization, arising out of or related to organization’s activities, whether caused by or contributed to by the members or any other party indemnified herein, unless caused by the sole negligence of the member or any other party indemnified herein. Organization may maintain insurance, at its expense, to protect itself and any such person against any such liability, cost or expense.”

Why have an indemnity clause:
It assures nonprofit board members that the nonprofit organization will pay any legal fees related to the organization’s activities or their board service (unless caused by the sole negligence of the board member). Typically, the nonprofit purchases Directors and Officer (D&O) insurance to pay for the legal bills when and if they arise.

Some people will not serve on a nonprofit board without an indemnity clause and without Directors and Officer insurance. So having this clause in the bylaws and a D&O policy helps attract and retain board members.

 

Why not have an indemnity clause:
Some nonprofits are small and they do not have the financial means to pay legal bills of board members or purchase Directors and Officer insurance.

True Story: I am on the board of a local charity (not a homeschool group) and we were reading over the bylaws word-by-word and updating them (a great idea to do that every few years!). The bylaws had an indemnification clause much like the one above. We were all a bit confused by the language and unclear what it meant.
One of the long-time, experienced board members said that the last sentence was the most important. It said: “The organization may purchase insurance for such indemnification as determined by the board.” This is a tiny charity, all volunteer, and we do not carry insurance to cover Directors and Officers. We decided to delete the indemnification clause since we had no resources to pay for attorney fees or D&O insurance. The indemnification clause was a promise we could not keep.

 

What should we do?

It’s best to research indemnification and talk it over with your board. Your board can decide to include it in your bylaws or not.

This is not legal advice. I recommend you contact an attorney if you need additional assistance.

 

Carol Topp, CPA

Helping Homeschool Leaders

Homeschool leader stepping down: Who to notify?

Hi Carol,

I am stepping down from the leadership of my homeschool group and wonder what I need to do. What forms to file, contacts to make, etc. Can you direct me, please? We are a 501c3 in Pennsylvania.

Thanks in advance!

Jill

 

Jill,

Congratulations on your “retirement”! Well done, good and faithful servant. 🙂

There might be quite a few things to do to remove your name from state and IRS documents.

In my ebook Homeschool Organization Board Manual I explain what to do when a board members leaves or the board changes.

This Board Manual might be helpful to your remaining board members since it is a combination of a template for your board to create binders to keep important documents and a board training manual to explain the board’s duties and responsibilities.

 

 

 

It is common for nonprofits to change leaders and signers on the checking account quite frequently, maybe annually! Here’s what you need to do if your board members change.

Notify the Internal Revenue Service (IRS) when you file your annual information return, Form 990-N, 990-EZ or 990 that the board members have changed. You do not have to notify the IRS mid-year; only notify them when you file the 990.  The 990-N electronic postcard only asks for one officer’s name. The Forms 990-EZ and 990 have you list all board members.

Notify your State: Your state may require an annual report to the Secretary of State Office and/or the Attorney General. Often the states require an annual update and on that report you list the current board members. Each state is different, so you’ll have to research the details for your state. Research using this helpful website: https://www.harborcompliance.com/information/nonprofit-compliance-guide

Change Your Mailing Address: You can change your address with the IRS by simply providing the new address on your annual information return, Form 990-N, 990-EZ or 990.

Changing your address with your state may involve several agencies including the Secretary of State and Attorney General. Each state is different, so you’ll have to research the details for your state. You can research using this website: https://www.harborcompliance.com/information/nonprofit-compliance-guide

Change the Responsible Party on your EIN: You can change the responsible person on your organization’s Employer Identification Number (EIN) by filing an IRS Form 8822-B https://www.irs.gov/pub/irs-pdf/f8822b.pdf.

Change your Registered Agent: If you are a nonprofit corporation in your state (meaning you filed official Articles of Incorporation with your state), you assigned a Registered Agent. This is a personal who is a resident of your state and should always know how to reach your organization. Many states list the current Registered Agent on their websites. Do a search on “YOUR STATE Corporate search” then follow links to your state governments’ list of corporations (both for-profit and nonprofit). The list of corporations is usually maintained by the Secretary of State’s Office.

To change the registered agent for your organization, go to your Secretary of State’s website and look for a document called Change of Registered Agent.

Notify the bank: You will probably have to visit your bank in person with the new checkbook signers. They will need identification (like a Drivers License). At that time they can change the mailing address on file.

Make sure you remind the new treasurer to change the password for online access to the checking account as well.

 

I hope that helps!

Carol Topp, CPA
HomeschoolCPA.com
Helping homeschool leaders

Converting a Homeschool Business to a Nonprofit: The Basics

 

Sometimes a homeschool group that started as a for-profit business now desires to convert to a nonprofit organization for its many benefits. Can that be done? How hard is it? How costly is it?

In the next 3 podcast episodes Carol Topp, CPA will explain how to convert a for-profit business into a nonprofit organization.

Show Notes

In this first episode covering the basics Carol discusses:

Your organization’s purpose will not be making a profit but now will be educational and maybe religious.

The control of the group’s mission and activities shifts from the owner to a board. A nonprofit is not owned by anyone. At least 3 members need to be on the organization’s board.

  • Officers are Chair, Vice, Secretary and Treasurer. Add more board members if needed.
  • Board members should be unrelated to each other (by family and by business relationships) and unrelated to any paid employees. So a board cannot be all the paid staff/teachers/tutors, but could be parents, community members, etc.

The Board has duties of care, loyalty, management (or obedience to law)

  • The board has authority and responsibility. No “rubber stamp” boards!
  • An officer of the Board signs all contracts, agreements, licenses, etc. not the Executive Director
  • The board has control, not the Exec Director. The board decides who to hire and fire, what purpose and activities are,

Conflict of Interest Policy. A paid staff member (Executive Director) can attend board meeting, but no vote because she has a conflict of interest. Sample Conflict of Interest Policy can be found at HomeschoolCPA.com/Samples.

Webinar

In the podcast I mentioned that I’m offering a webinar on Create a Nonprofit Organization for Your Homeschool Community

This is good for both new nonprofits, or if you’re unsure if your group is a nonprofit (!), or for a business wanting to convert to a nonprofit.

The cost is only $10!

For more information visit HomeschoolCPA.com/CreateNP

 

 

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Join the webinar tonight on starting an academic homeschool program

 

Are you considering starting a homeschool program? An academic program, not a co-op and not a for-profit business either. But a nonprofit organization with an academic focus, maybe a classical emphasis, too.

You’re motivated! But where to begin?

Carol Topp, CPA, the Homeschool CPA and Jamie Buckland are teaming up to to help you!

ABC’s of an Academic Homeschool Program

An hour-long webinar on Monday February 18, 2019 at 8 pm ET

Jamie Buckland of Classical Program Consultant has run both a for-profit classical homeschool program and is currently the Executive Director of Appalachian Classical Academy, a nonprofit 501c3 organization. She will share about Administration and Curriculum

  • How your culture affects an academic program when it comes to logistics.
  • What to look for in the Board of Directors
  • Why have an Advisory Council
  • Why employ tutors
  • How to train employees
  • How to assess employees
  • Why charge tuition
  • How to communicate with families
  • How to determine curriculum for your program

Carol Topp, CPA is the owner of HomeschoolCPA.com and has assisted more than 80 homeschool organizations apply for tax exempt status. She is the author of 15 books and will share about Business

  • Why and how to organize as a nonprofit
  • Applying for 501c3 tax exempt status
  • A timeline: How fast can you get this done?

There will be time for questions and answers.

  • Cost is $30 and includes live webinar access and ability to view the recording.
  • Jamie’s extensive questionnaire for homeschool parents looking to create a homeschool program.
  • Copy of Carol’s ebook The IRS and Your Homeschool Organization.
  • Slide handout

Getting an hour with these two experts and their materials would typically cost you $165.

Carol Topp, CPA

HomeschoolCPA.com

How to start an academic homeschool program



Learn the ABC’s of starting an Academic Homeschool Program

Have you considered wanting to start a homeschool program? An academic program, but not a co-op and not a for-profit business, either. But a nonprofit organization with an academic emphasis–maybe with a classical education focus.

Sounds like a great idea! But where to begin?

Feeling overwhelmed?

We’re here to help.

Carol Topp, CPA, the Homeschool CPA and Jamie Buckland are teaming up to to bring you:

ABC’s of an Academic Homeschool Program

This 90 minute webinar is packed with information to help you launch an academic homeschool program.

The cost for the recorded webinar is $20 and includes :

    • Jamie’s extensive questionnaire for homeschool parents looking to create a homeschool program.
    • Copy of Carol’s ebook The IRS and Your Homeschool Organization to help you understand nonprofit and tax exempt status
    • Webinar slide handouts

Getting an hour with these two experts and their materials would typically cost you $165.


The ABC webinar with Jamie Buckland and Carol Topp was top notch! Very informative. It was presented so clearly and in an organized manner. I thank you ladies for making your knowledge available to us-Beth M.

The webinar was extremely helpful.-Erika


 

Jamie Buckland of Classical Program Consultant has run both a for-profit classical homeschool program and is currently the Executive Director of Appalachian Classical Academy, a nonprofit 501c3 organization. She will share about Administration

  • How your culture affects an academic program when it comes to logistics.
  • What to look for in the Board of Directors
  • Why have an Advisory Council
  • Why employ tutors
  • How to train employees
  • How to assess employees
  • Why charge tuition
  • How to communicate with families

Carol Topp, CPA is the owner of HomeschoolCPA.com and has assisted more than 80 homeschool organizations apply for 501c3 tax exempt status. She is the author of 15 books and will share about Business

  • How to organize as a nonprofit
  • Applying for 501c3 tax exempt status
  • Converting a for-profit business to nonprofit
  • A timeline: How fast can you get this done?

Then Jamie wraps up by discussing Curriculum

  • How to determine curriculum for your program

$20.00 includes unlimited viewing, ebook, handouts and handouts of slides.

Carol Topp, CPA

HomeschoolCPA.com

Should your homeschool Director serve as a board member?

Sometimes a homeschool groups gets large enough that they want to hire or pay their Director. In nonprofits that position is usually called the Executive Director or even Chief Executive Officer (CEO).

It is usually the first paid position in a nonprofit.

The Executive Director is similar to a pastor at a church. He (or she, depending on your denomination) is hired by the board of the church and does a lot of the day-to-day running of the church.

It’s similar in a homeschool nonprofit: the paid director is hired by the board to manage the day-to-day operations of the organization.

But should that hired Director serve on your board?

BoardSource (an excellent website for help in running your nonprofit board) says., ”

BoardSource also recommends nonvoting status for chief executives, unless not permitted by law. We embrace nonvoting status in recognition of the fact that actual or perceived conflicts of interest may naturally come along with the pairing of this position with board member status.

 

I, too, like the idea of a paid Director serving as a nonvoting board member.

I’ve seen it work well on some boards to have the Director attend meetings, give a report, share her opinion, etc, but not be allowed a vote.

When I served on my church’s board of trustees, the pastor came to the meeting, gave a report, was free to voice an opinion, but had no vote. That way he avoided a conflict of interest.

The paid Director should not vote because she has a conflict of interest: Is she thinking of the good of the group first and foremost or is she thinking about her job and her paycheck?

The volunteer Director does not have that conflict of interest, so he or she is usually still given voting rights.

If you decide to pay your Director:

  • Make sure you update your bylaws
  • Adopt a Conflict of Interest policy.
  • Read about paying people in your homeschool organization.

Need help with those issues?

 

My book, Homeschool Organization Board Manual can help with:

  • Sample Conflict of Interest policies
  • Sample Bylaws
  • Board descriptions
  • Compensation and Benefits for Board Members

 

Carol Topp, CPA

HomeschoolCPA.com

 

 

Board member of a homeschool nonprofit feeling vulnerable!

I’m the president of a homeschool co-op. Am I personally liable if someone were to sue or come after the co-op? I already feel slightly vulnerable in this area as the president and having my signature on our building contract, etc.

Danielle,

Danielle,

As president your are an officer of our nonprofit organization and as an officer there are certain responsibilities that you carry more so than other board members and certainly more so than the co-op’s family participants.

With the authority comes responsibility.

But responsibility does not automatically mean personal liability, if you do your fiduciary duties and do not commit acts of gross negligence or fraud.

What are those fiduciary duties?

Duty of Care, Duty of Loyalty, Duty of Management and Duty of Compliance

To better understand these duties as board members and do them here’s some help:

A prudent board member can reduce the risk of lawsuits by understanding the duties and

  • incorporating as a nonprofit
  • obeying the bylaws and laws in general
  • carrying insurance
  • being educated on nonprofit duties and risk

To get educated, there are some excellent resources online for nonprofit boards like these:

Each of these websites have excellent resources to help you run your nonprofit.
Ultimately, feeling slightly vulnerable will probably force you to manage risk, do your duties, and run the organization properly, so that’s a good thing!
In other words, it keeps you on your toes to feel the weight of responsibility!
Carol Topp, CPA
HomeschoolCPA.com