Do you teach online? Have you considered running your online business as a not-for-profit organization?
It turns out that educational endeavors are eligible for not-for-profit status.
I teach online classes for homeschooled kids through WizIQ. I teach because I love teaching and I teach about concepts (such as racism and poverty) that are important to me and that I believe everyone should know about. A little awareness is essential if we are going to continue to inhabit this planet.
I also make my classes available to kids regardless of their ability to pay.
However, I am not a “do-gooder.” I am not here to change the world. I have worked for many not-for-profits, and they are often poorly run by charismatic leaders. I do not want to work all day and all night for a cause.
I do hope to earn some money and live a pleasant life, so it never occurred to me to run my business as a not-for-profit organization.
What is a not-for-profit
A not-for-profit (501c3) is an organization that is run by a mission and a board of trustees. The purpose of the organization is to forward the mission, not to earn a profit. The board sets the policies and the employees carry them out. The mission can be charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, or preventing cruelty to children or animals.
Not-for-profits can have a profit
It turns out that not-for-profits can have a profit. The CEO, trustees, officers or employees of the organization cannot directly benefit from the profit. The profit must be turned back into the organization, to continue its mission. If the organization dissolves, all of the assets must be given to a similar not-for-profit organization. However, employees can receive a salary and their salaries can be substantial. They can also receive benefits.
There are hoops to jump through
Generally speaking, most educational institutions will be 501c3. Yes, there is a lot of paperwork. There are a multitude of different sized and shaped hoops that you must jump through. However, I assure you, that if you are a reasonably intelligent person, with a modicum of organizational skill, you will be able to create an application for a not-for-profit that is likely to be accepted. I have seen it done. It is not too hard. It is necessary that:
-You are truly driven by a desire to educate.
-You have a carefully prepared budget and you do not mind having a limited profit.
-You can find people willing to serve on your board of trustees.
When you start a not-for-profit in this way, you are essentially finding a board to hire you. After the board is formed, you are at the mercy of the board, so it is essential to find board members that you trust. They can fire you, and put your former assistant in charge.
The benefits of starting a not-for-profit
As a not-for-profit organization, you have more social collateral. You are more likely to be trusted by potential students.
You are able to accept donations.
You be eligible for many different grants.
You are not required to pay certain taxes.
Your personal assets are protected. If your organization goes bankrupt, you do not lose everything. There are exceptions. You cannot use the corporation to shield illegal or irresponsible acts. If you do, you are no longer protected.
The disadvantages of starting a not-for-profit
Not-for-profits take time, energy and money at the start-up. The applications cost. You will also likely have to employee a lawyer or an accountant. It is likely to cost somewhere between $200 and $800 dollars.
To maintain your tax exempt status, it is essential to keep meticulous papers and records. You are likely to be audited and will have to account for your money.
When you form a not-for-profit, you are no longer the boss. The board of trustees hires “you.” It is a bit nerve wracking to toss your baby business into the hands of a board. Choose your mom.
As a not for profit, your business has to maintain transparent records. Anyone can request to inspect your books and you have to make them available.
There are plenty of resources about forming a not-for-profit available on line. The IRS has this helpful and well-organized PDF called, “Applying for a 501c3 Tax Exempt Status.” There is also this page from the IRS, which provides step by step information and this interactive questionnaire.
Go do it!
WizIQ providing perfect platform to teach online and has the technology that you need to get your organization started. Start learning more about it, now!