What does it take to be a nonprofit?

For years, I have heard homeschool groups leaders say things like this:

“We’re not an official nonprofit.”

“We’re not a recognized nonprofit?”

“We’re not a registered nonprofit”

Or sometimes, the leaders say this:

“We’re a nonprofit but we don’t have bylaws.”

“We’re a nonprofit, but we don’t have a board.”

So this blog post will explain what it takes to become a nonprofit organization!

Three things you need to be a nonprofit:

1. Board: Chose a group of at least 3 unrelated people to lead the group so no one carries the burden of leading alone (and because it is required in most states).

2. Bylaws: Write up bylaws to structure your group. This is the basic formation document that establishes a nonprofit, its purpose and basics of how it is structured.

Sample bylaws here

3. A purpose or mission other than to make money! For homeschool groups their purpose is education, usually the education of children, but it can be education of parents as well.

But we’re not an “official” nonprofit

So what do homeschool group leaders mean when they say their group is not “official” or “registered”?

They probably mean that they have not formed a nonprofit corporation in their state (which is done by filing Articles of Nonprofit Incorporation) in their state.

Advantages of Nonprofit Incorporation

But these “unofficial” groups may not realize it, but they have probably formed a unincorporated nonprofit association when tho or more people gathered for a common purpose or cause. Unincorporated nonprofit association the default when two or more people unite for a common purpose to benefit the public in some way.

They ARE a nonprofit, just an unincorporated nonprofit! 🙂

People form nonprofit unincorporated associations all the time; often without being aware of it. For example, if you and several of your neighbors get together to help raise funds to keep your local library branch open, you’ve formed an unincorporated nonprofit association.

Stephen Fishman, J.D., https://www.nolo.com/legal-encyclopedia/what-an-unincorporated-nonprofit-association.html

So dear homeschool leader, if your group is two or more people united for a common purpose to benefit the public, call yourself what you are: an Unincorporated nonprofit association!

If you lack bylaws

Well, your group may not need bylaws if it is just a gathering of friends like a playgroup or a group that informally meets for park days or field trips.

But if your group has a bank account, charges fees, needs insurance, rents space, and has some sort of leadership, then you should create bylaws.

Most state laws for nonprofits require some sort of “formation document” and bylaws can be that formation document. Other formation documents are Articles of Incorporation for nonprofit corporations or Articles of Association for unincorporated nonprofits.

I offer sample bylaws to get you started

If you lack a board

Every group (except the informal gathering of friends, playgroup or park group) needs to have leaders-at least 3 is recommended by most nonprofit experts. A nonprofit should not (and legally CANNOT) be operated by one person.

So gather two other people who show an interest in your group’s activities and purpose. Ask them to help you lead. It will more firmly establish that you are a nonprofit and lessen the burden on you.

If you lack a board or leaders, then this homeschool group you’ve been running could be seen by the law as your business-which means you were supposed to be reporting the income and expenses to the IRS! And it also means that you are 100% responsible for any bad thing that happens when your group gathers! That’s pretty risky!

The biggest drawback to the unincorporated nonprofit association, and the reason nonprofits often abandon this form in favor of a nonprofit corporation, is that it has no separate legal existence apart from its members. Because it is not respected as a separate legal entity, its members generally can be personally liable for its debts and liabilities.

Stephen Fishman, J.D., https://www.nolo.com/legal-encyclopedia/what-an-unincorporated-nonprofit-association.html

Get your act together

So it’s not that hard to establish an unincorporated nonprofit association. You may have done it without realizing it!

  1. Assemble a board of at least 3 people to help lead
  2. Create bylaws
  3. Clarify your purpose and include it in your bylaws

Helpful Resources for the next step

Your group may need to move beyond the unincorporated nonprofit association to be an “official” nonprofit (meaning a nonprofit corporation) if your group collects money, needs insurance, or involves more risk, especially if your group involves children who are risk-magnets!

These resources will help you grow beyond the informal gathering of friends to official nonprofit status:

Board Training video set: Training in the roles and duties of board members and how to run a board meeting

Board Member Manual: a template for board member binders to keep important information

IRS and Your Homeschool Organization: 501c3 Tax exempt Status book that explains nonprofit incorporation and applying for 501c3 status

Create a Nonprofit Webinar: 90 minute webinar that explains forming a board and a nonprofit corporation.


Carol Topp, CPA
HomeschoolCPA.com
Helping Homeschool Leaders

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