Now is the Best Time for Your Church to Start a School

By Raul Rivera

When the new tax reform was passed in December 2017 a lot of changes came with it. Most notable are the changes that directly affect individual taxes.

But there are, however, other “less notable” changes that churches may in fact find beneficial.

For example, have you thought about what it would be like if your church opened up a school in your community? Perhaps opening a school is something God has placed on your heart.

What kind of impact do you think your school would have on the youth in your community? How many more families would your church be able to reach and impact for all eternity?

One thing that I have found to be true, and I say it at nearly all of our conferences, is that even atheists want to send their children to Christian schools.

If you have been thinking about starting a church-run private school or private school in general, then now is the perfect time to do so.

In this blog I will share with you some simple steps you can begin taking to start your church-run school.

But first, I want to explain to you why now is the perfect time to start your church-run school and what the new tax reform has to do with that.

New tax reform provides win for private schools

We have worked with many pastors throughout the years who, when starting their church, had it in their hearts to also start a Christian school that provided a superior educational experience alongside Christian principles.

But at the time they simply did not have the funding to start such an endeavor.

Perhaps you can relate to that scenario.

When the new tax reform was passed, it included expansion of Section 529 plans to include elementary and secondary education.

In short, this change means that families can now use 529 college savings plans to pay for public, private, or religious elementary or secondary school expenses.

This is a big deal because it will help allow more parents who have a 529 plan to send their children to private K-12 schools.

What is a 529 plan?

Prior to the new tax reform, a 529 plan was simply an investment account designed to help families save for college.

The earnings from the money invested in the 529 plan grows tax-free throughout the life of the account, and it is not subject to annual income tax.

Funds can be withdrawn from a 529 account tax-free as long as the money is used on qualified educational expenses such as:

• tuition,
• room and board,
• computers, and
• other expenses that are required to enroll in or attend university.

As of January 1, 2018, tuition for private elementary and secondary schools are also considered qualified educational expenses.

In short, those with 529 plans for their children’s education can withdraw up to $10,000 tax-free per year, per child, and use that towards K-12 educational expenses.

This is good news for church-run schools as many parents who initially established a 529 plan for their children’s college education can now consider enrolling their children in private school.

If you have been thinking about starting a church-run school or a standalone private school, then you will want to consider taking the initial following steps.

7 steps to start your church-run school

There are some important steps to take to get your school up and running smoothly. Here are some definite steps every church-run school should take to ensure compliance and a healthy start.

1. Choose at start date, along with your calendar and tax year. Some schools operate on a fiscal year of January to December, and others choose June to May. Choose the fiscal year that works for you and be sure this is noted in your bylaws.
2. Choose your educational philosophy and curriculum. Be sure that your curriculum is consistent with your state’s requirements for matriculation and receiving a diploma for grade schools. For colleges and universities, your accreditation process may affect your curriculum choices. You can also consider extracurricular activities like foreign languages, arts, music, sports, and more.
3. Create a working budget. This will let you know how big or small you can start. You may want to start with only a few grades or a limited number of students. You can always add more grades and more students as your school grows in funding and staff.
4. Determine the staff you need to get started. How many teachers and administrators can you hire with your current budget? This may require you to fine tune your enrollment. Be sure that you take into consideration your state’s requirements for student teacher ratios for private schools.
5. Make sure your church has the required language in its articles of incorporation. For some of you this may mean that you need to amend your church’s articles of incorporation. If you are unsure about that or need any assistance, give us a call at 877-494-4655, and we’ll be happy to help.
6. Research state laws to be sure that your school is compliant with regulations overseeing the operation of private schools.
7. Follow the IRS guidelines for nondiscriminatory practices. The IRS provides great resources for schools, to help you comply with federal regulations; they are: Publication 557, Form 5788 and instructions, and Schedule E of Form 990 for schools and its instructions.

Train up a child

Not all are called to education, but many churches are meant for it.

Proverbs 22:6 says, “Train up a child in the way he should go, and when he is old, he will not depart from it.” The steps listed above are a launch pad, the basics of beginning a nonprofit school.

Once you start to dream and implement the vision, you can do much more. Not only can you provide excellent education, but you can foster children’s spiritual growth and help them to become all that God has created them to be.

If you are in the planning stages of beginning a church-run school, we can help. Give us a call today at 877-494-4655 to find out what the next steps are for you and your church.

Recommended blogs for you:

• "How to Start a Church the Right Way"
• "Tax Reform Implications for Churches and Ministries"
• "Should Ministers Opt Out of Social Security?"

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