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I am a homeschooling mother and Certified Public Accountant (CPA) combining my experience and knowledge to help homeschool organizations such as co-ops, support groups, music and sports programs. HomeschoolCPA answers questions from homeschool leaders on many topics such as nonprofit status, liability, paying teachers, tax exempt status and taxes.
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9:32 AM, Jul. 28, 2008
Homeschool group part of church ministry. Any problems?
(view similar articles on Q&A from Homeschool Leaders)
HomeschoolCPA recently received this question via e-mail:
Hi Carol,
I am the leader of a 15 years old home education support group in Ohio. We are considered a ministry of our church and our under their tax-exempt status, however we currently have by-laws and our own checking account, we approve membership, and collect fees. We offer a lot of choices/activities for our families including Friday classes, field trips, concert & theater opportunities, history fair, science fair, geography bee, mom's nights, Stanford Achievement Tests, etc.
My questions/concerns: Since we are under our church's tax-exempt status, is it a conflict to have our own bylaws? Do we jeopardize our tax-exempt status or the church's by operating as a separate entity? Over the years, we have accumulated a fairly large balance in the checking account. Is there a maximum we should have? It's our desire to work hand in hand with the church and the protection of the church and it's authority has always been a blessing to the group.
I appreciate your help,
Sharon W
Dear Sharon,
You are indeed fortunate to have such a supportive relationship with your church! It is one of the best possible situations a homeschool group can find.
I read through your bylaws and although I am not a lawyer, I am quite familiar with nonprofit bylaws and homeschool bylaws in particular. I think your bylaws spell out your relationship with your church quite clearly. I do not think there is any conflict with the church in having your own bylaws. I believe that church women's groups have been existing for years with bylaws for their specific groups. You are in a similar situation to these women's groups. I do not see a threat to the church's tax exempt situation. You are clearly part of their ministry.
I also think it is very wise to have a separate checking account. Congratulations on the surplus! Normally I would recommend nonprofit incorporation if you carry a large surplus, but since you are a ministry of the church you do not need nonprofit incorporation. There really is no maximum amount that you can have as a surplus. Some small groups find $100 is a tremendous amount, but a nonprofit like the Red Cross needs millions in surplus to meet emergency needs. In general I'd recommend that if you have more than one year's operating expenses in surplus, you might consider making some donations and gifts, perhaps starting with your host church, but there are many other projects you might consider. If you have have a future need or a plan for the money (such as purchasing equipment or hosting a convention or a big event), you might consider reserving some money in a savings account. It's perfectly legitimate for a church or nonprofit to earn interest on their savings. You could also discuss your surplus with the church treasurer and see if he has any recommendations for your surplus.
I hope that helps. God Bless your efforts!
Carol Topp, CPA
HomeschoolCPA.com
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