Forming Your Learning Cooperative into a Non-Profit Private School for Home Educators

Step 1 - First Steps, Tools & EIN Number
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Step 1 - First Steps, Tools & EIN Number
Step 2 - Creating Your Bylaws & Articles of Incorporation
Step 3 - Incorporating Your Group
Step 4 - Joining a Professional Education Association
Step 5 - Forms that Demonstrate Your Educational Purpose & Structure
Step 6 - Completing the Non-Profit Application
Step 7 - Obtaining State Corporate Income Tax Exemption
Step 8 - Applying for Sales Tax Exemption
Step 9 - Official Papers of the First Meeting of the Board
Step 10 - Optional Accreditation & Meeting State Requirements
Programs Available to Non-Profits
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Why Form a Nonprofit Corporation?
Nonprofit organizations receive many benefits.  Some examples are free banking, grants, tax exemption, tax deductions for donors, discounts on mailing and other rates, and donations from stores. 
 
If your group has the additional title of a private school, depending on the private school laws in your state you may also receive additional benefits that protect your educational choices from outside influences.  Private schools, especially those that are NOT taking money from the state or the federal government, are able to operate without the red tape that other schools often struggle through. 
 
Incorporating your organization protects you and your members from possible lawsuits and liability exposures.  Other steps that we will describe here will help your organization to develop a solid structure, such as bylaws and the articles of incorporation.  Forms that you will develop and send with your IRS application will demonstrate the educational purpose of your organization but will have the added benefit of helping your group to function more efficiently.
 
The key is to not let the "structure" overwhelm your organization.  You want your "identity" to remain intact, while you enjoy the benefits this status affords.  The entire process will take about a year, start to finish, so you will have plenty of time to "grow" into the changes OR change your mind. 
 
So, let's take a look at where to start...

TOOLS TO ORDER 
The first suggestion, and what I feel is the most important, is to immediately order a copy of the Nolo "How to Form a Nonprofit Corporation" guide.  This will be your "bible" through the nonprofit process.  This book was my sole text and is an EXCELLENT resource.  On these webpages I will repeatedly recommend the pages to read in the NOLO book for each recommended step we outline.  It is impossible for me to include all the information that is necessary in this process.  The NOLO book is a MUST.  Make sure to order a copy that has the forms on CD-ROM. 
 
ORDER THE 501C3 APPLICATION
It is also time to order the 1023 form (501C3 application), the instructions for 1023, and publication 557. 
 
 
COMPLETE THE ONLINE EIN APPLICATION
Use this link to apply online for an EIN number (business tax id) for your organization.  Here is your first decision and it's an important one.  If you are intending to try to become a private school you will want to pick a name that has either academy or school in the title.  In other words, if you have formerly been called "ABC homeschool group," you may now wish to become "ABC Academy."  If you are NOT planning on becoming a school but will instead be applying to become an "educational organization" you may keep your name. 
**There are differences in benefits to your organization when deciding to apply for either an "educational organization" or "private school" status with the IRS.  The main difference is the benefit you may gain within your state as a private school.  Some states have homeschool laws that are more stringent than others and being a private school may give your families educational freedom.  Others may have laws that are the same for both groups.  If you are looking to offer your learning cooperative the protections afforded to private schools in your state than you will want to become an "academy" or a "school."  If you are merely looking for the tax benefits and other basic benefits that apply to ALL nonprofit groups, than "educational organization" status may be enough for you.  Both choices require the completion of the IRS 501C3 form, which we will cover later.  But if you need to change your name later down the road, many other forms will need to be changed as well.  So decide NOW if you want to be a "school" or not.  The NOLO guide will give you plenty of information to decide which status will be best for you. You may also need to do some digging into the private school laws for your state to find out what benefits may be afforded.
 
OPENING A BUSINESS CHECKING ACCOUNT
Next, you will need to open a business checking account in your new name.  Tell the bank you will be applying for nonprofit status and give them your EIN number. 
 
ORDERING AN EMBOSSER
Go to your local office supply store (Staples, Office Depot) and order an embosser with your school name.  These are cheap enough.  You can get fancy and have art work on the stamp if you like but it is not necessary.  You will be submitting paperwork this coming year and the embosser will add an official look to your documents.
 
 
CREATING A FREE WEBPAGE
Assign a member that is computer savvy to create a basic webpage for your group.  I recommend using tripod.com for their free web services and you can make a pretty nice looking page (such as this one!).  Your webpage should support your claim that you are either a nonprofit "educational organization" or a "school/academy."  If you already have a webpage, you will need to edit it to include language that demonstrates your desired status.  Be creative and show the educational structure of your group.  Your website address will need to be included in certain applications for your nonprofit status so you will want to take advantage of this opportunity to show others how you educate children.  Look for examples on the web of other small private schools or educational organizations.
 
INSURANCE
If you have not already purchased liability insurance, you should do so at this time.  A group with 10 or more families can absorb this cost relatively easily. 
 
The following companies offer insurance to learning cooperatives/private schools: (feel free to email me with others and I will link them here)

Franklin Mutual http://www.fmiweb.com/

Brotherhood Mutual http://www.brotherhoodmutual.com/

Western World Insurance http://www.westernworld.com/