Running Your School

Federal tax laws govern the tax-exempt status of most not for profit private schools. These schools are usually classified as 501(c)(3) institutions. In order to maintain their tax-exempt status 501(c)(3) institutions must file a Federal Return Form 990 at the end of each fiscal year. In it they must prove compliance with federal laws regarding discrimination and political activity. Failure to do so could trigger an investigation into compliance with those non-discrimination laws. If an institution were found to be in non-compliance, the penalties which could be levied are severe. This process is certainly not the end of the world, but what busy school administrator has time to deal with a federal inquiry into its employment and admissions practices! It is simply easier to get it right the first time, that is, when you actually file the Form 990.

Like most of the tax laws and their attendant regulations on the books the laws governing 501(c)(3) corporations are complex. Always seek the advice of counsel to make sure that your school meets fully the requirements of applicable laws. Here are some of the steps which you must take to show that your school has not discriminated.

Publish notices of non-discrimination prominently in your regional or metropolitan newspapers.
Include a photocopy of these announcements and the dates of publication as appendices to your Form 990.

Include of a notice of non-discrimination in every school publication soliciting candidates for admission.
Typically these will include the school's catalog, video, flyers and notices for publication. Include copies of these documents as appendices to the Form 990.

Include of a notice of non-discrimination in any advertisements for faculty or staff positions.
These will include newspaper advertisements, ads in trade journals or similar venues, including electronic ads which appear on the Internet. (In fact advertisements on the Web are available to such a wide audience it would be hard to imagine a more effective way of proving that you were not discriminating. Indeed it shows that you are casting the widest possible net for your prospective employees.) Once again include copies of each advertisement as an appendix to your Form 990.

Proving that your institution does not discriminate involves good record keeping. Keep copies of anything which will prove the fact that your school is proactive and fair in its efforts to comply with the letter of the law regarding non-discriminatory practices in employment and admissions.