Eager to support fellow homeschoolers, many parents, especially moms, enter into a legal agreement with CC unaware of many of the business details, liabilities, and responsibilities that come with this relationship, and then feel obligated to remain in it - this is what happened to me. I was a Licensed Director for five years, until I terminated my agreement because of my growing legal and ethical concerns with CC. It has gotten even more complex since then.
Below is a summary of some of the details about being a CC Director, in the hope that those considering such a relationship will have additional information to consider and to bring to their legal and financial advisors before deciding to begin a CC-affiliated business.
Luke 14:28 says, "Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it?" While Jesus was talking about the cost of discipleship, the advice is clearly applicable to all areas of life, particularly in one in which one enters a legal agreement with a company claiming to "know God and make Him known." I hope this review helps.
- Math Map, LLC
- Classical Conversations Multimedia Inc.
- Homeschool Testing Services, LLC.
- CC International LLC (Classical Conversations Inc is the registered agent for CC International LLC)
- National Athletic Village, LLC
- Twin Fields Farm LLC
- a variety of "real property management" companies: Lily Commercial LLC, Phooka Land LLC, Pooka Properties LLC
- a residential rental company called Bortins Enterprises, LLC
- one company described as "management of personal property": NAV Brew LLC
- two investment companies: Probatorum LLC, Brother Rugger LLC,
- Carolina Geographic Rugby Union
- Classical Conversations Foundation (a CC-created nonprofit that sponsors the annual CC conference and CC Commencement; the Foundation also gives money to homeschool family mission trips, as well as helping "churches that may suffer from the destruction of property as well as those that may encounter persecution, such as political attacks, that may threaten to limit their work"; the 2021 annual report is here)
- Homeschool Now USA
The business model of CC
The answer is CC's business structure, which uses "licensees" to run this network of Foundations (ages 4-12), Essentials (ages 9-12), and Challenge tutoring programs (ages 12-18). CC's website states, "Classical Conversations is a for-profit business, with the purpose of cultivating consistent classical Christian homeschool community leaders. Directors are licensees and receive a license to use our brand and copyrights to offer services and materials within the licensed CC programs. Classical Conversations also has sales team members that make commission on every sale" (emphasis mine).
CC has a system of employees and independent contractors designed to support and manage its network of homeschool tutoring programs. In the US, two Regional Directors lead teams of Regional Sales Managers; these are CC employees. Under the Regional Sales Managers are Area Representatives (ARs), whose responsibilities often cover a significant portion of a state, and under them are Support Representatives (SRs), whose responsibilities cover a smaller area. Except in California, where they are employees, ARs and SRs are independent contractors who receive a sales commission based on the number of new and returning licensees, the number of per-student licensing fees paid, and a variety of other sales-related activities.
Under the SRs are Directors, homeschool parents recruited to establish and run what is usually a privately owned local tutoring program, under a license from Classical Conversations, Inc. While customers are often recruited with the promise of accountability and support from experienced mentors, according to CC's website, the three qualifications for a Director are:
- a commitment to homeschooling his or her children through high school
- a "Christ-centered worldview" (as defined by CC)
- a willingness to enroll all of his or her own children in an "appropriate local community", even if that means the parent becomes a "licensed Director at home to one student" (in which case, the parent would pay a licensing fee to CC for that child in order to teach him or her at home using CC's curriculum).
No experience with CC, with classical education, or even with homeschooling, is required.
The licensing agreement requires Directors to pay a per-student licensing fee to CC. All Directors (Foundations, Essentials, and Challenge) pay a licensing fee of $140 for the first student in a family at any level, and $15 per sibling at each level (each Challenge level is separate in this case). Challenge Directors pay another $140 licensing fee per student per semester (no sibling discount here).
This top-down sales structure has caused some to equate CC to a multi-level marketing program, and others to compare it to a franchise, although there are significant differences between CC and an MLM, and CC has never registered as a franchise. It is kind of like a business opportunity, but even with that, there are some differences. The significance of this is that were CC a franchise or a business opportunity, as defined and described by the Federal Trade Commission, they would also need to disclose certain information to potential franchisees or business opportunity partners. CC does not do this, which can make it a challenge for a potential licensee, aka Director, to make an informed decision about establishing this kind of business.
The process of becoming a Director
- A CC recruiter (usually an SR) and the potential Director have a conversation about the possibility of directing, often as early as January.
- The potential Director submits an application (information requested includes names and ages of his or her children, the church the potential Director attends, his or her personal testimony, gifts and training, physical handicaps that could hinder them from performing Director activities, and a summary of a talk about the Trivium by Dorothy Sayers), along with a nonrefundable $100 fee paid to the recruiter (SR). A small portion of this "application fee" (sometimes referred to as a Director Administration fee and sometimes a licensing fee) is sent to CC, and the rest is income for the SR.
- If the potential Director is considered "qualified" by the SR, he or she is offered a licensing agreement.
- The homeschool parent signs the licensing agreement and is now referred to as a "licensed Director" (LD) by CC.
- Almost immediately, the Director begins holding Information Meetings, accepting applications from potential customers, finding tutors, and finding a host facility, if he or she is not going to be attached to an already existing location. In most places, this is a church.
- The Director attends a Community Leader Orientation (CLO) led by the SR. Just prior to this, or at this, he or she will be given the Director Licensing Guidelines, an 80-some page document of CC's "best practices" and guidelines for licensed Directors. Part of the SR's job is to "uphold the integrity and quality of Classical Conversations leadership and programs in the assigned territory...[and] uphold best practices when supporting the communities and leadership". The DLG contains the best practices the SR is responsible for upholding.
- Either before or after the CLO, the new Director will be given access to additional "onboarding" documents and videos with another 60-some pages of suggestions and information for a new Director: (a) how to set up his or her business; (b) possible legal relationships a Foundations/Essentials Director can establish with his or her Essentials and Foundations tutors (employee, independent contractor or sublicensee), (c) how to choose customers and the role of a local statement of belief in that process (and how to create a local statement of belief), and (d) how to find a host facility, including how to explain CC to a potential host church in a favorable and persuasive way.
- The DLG and onboarding documents frequently encourage a Director to obtain legal and accounting advice from local experts for setting up his or her business. Perhaps this would happen at this step, now that a Director has all of the information he or she needs to ask informed questions of a lawyer? (Seriously, it makes no sense to recommend that someone ask a lawyer for advice AFTER she has already signed the contract - though better late than never!!)
- The Director embarks on the busiest time of the CC year - summer: finding tutors, advertising, vetting potential customers (using CC's qualification system), purchasing supplies, holding information meetings, attending and putting on Practicum, planning with tutors, holding parent orientation meetings, etc.
- The Director begins the academic year, which also includes activities like holding Information Meetings and Open Houses. By December, he or she will be asked to commit to Directing again the next academic year.
The business model of a Director
CC lists the Director's "business structure options" as sole proprietor, independent nonprofit, or a business entity agreement. As an additional option under "sole proprietor", they suggest the use of an an organization called Followers in Fellowship to "meet the host church’s needs to have a relationship with a 501c3 entity". This blog post and this article, both by CPA Carol Topp, give excellent information about what it means to be a sole proprietor and an LLC, and can help you ask informed questions of your lawyer and accountant.
Regarding the options of forming a nonprofit or using Followers in Fellowship, here are a few observations.
- Any nonprofit needs to have a Board of Directors made up of individuals who have no conflict of interest, which is then responsible for securing teachers and administrators, either volunteer or paid, for their program. A Director cannot just choose to set up his or her business as a nonprofit, because that is not how it works. Rather, a group of individuals would choose to work together to establish a nonprofit, including choosing an independent Board of Directors, write by-laws, incorporate with the state, etc. This takes time and should be considered far in advance of actually deciding to be a Director.
- CC tells Directors that, regarding the relationship of a nonprofit with those in leadership, "The Support Representative has the responsibility to work alongside the board to uphold the integrity and quality of Classical Conversations leadership and programs. He or she will approve qualified candidates for the Non-Profit to give the CC Sublicense under the Entity Agreement. The Support Representative will still be expected to uphold best practices when supporting the communities and leadership" (emphasis mine). A responsible Board of Directors for a nonprofit will consult its lawyer well before entangling it in a relationship with an outside licensor, potentially with the authority to approve or disapprove one or more of the nonprofit's employees.
- A business that does not make a profit is not the same as a nonprofit!
- Followers in Fellowship was begun in March of 2019, by a homeschooling advocate from South Carolina, Joe Tyler, The stated purpose of FIF is "preserving and advancing Christian education in the United States through support of Christian education groups and programs." It is listed as a public charity with the IRS (EIN number 83-3764654) with the location being in Lexington, SC.
- Among other things, FIF offer to "help facilitate meeting spaces and athletic fields for its members...by leasing facility space that the group finds if the space is suitable for the group's educational program....If fees are required for the space/fields, FIF will charge the Members an appropriate fee and then make the necessary payments to for the space/fields."
- To get these benefits, FIF invites leaders of "education groups" to join an FIF Chapter as a Chapter Member. Each Chapter Member may bring another six Associate Members with him or her for a reduced cost, as long as those associate members "have a common purpose or task with the Chapter Member (i.e., same education group or education project)."
- Each CC "community" that is not a single non-profit is merely a group of classes led by legally independent for-profit business owner peers. There is not a legally distinct entity "CC of ___".
- In a video for new Directors (Spring 2022), a CC employee states, "The benefit of becoming a FIF member are that it may meet the host church’s needs to have a relationship with a 501c3 entity. FIF membership is less expensive than establishing your own nonprofit or 501c3 and it is fast and easy. Another tremendous benefit is that a Director can choose to continue managing the local financial details as they see fit and appropriate" (emphasis mine).
- Joining FIF does NOT make one's business a nonprofit entity. FIF specifically states that any educational group does not have to be a 501c3 for its leaders to become members, and CC states in its guidance for new Directors that "Directors are members of FIF, there is no impact on their existing license arrangement with CC, nor their current business structure" (emphasis mine). CC licensees who are members of an FIF Chapter pay any rent to FIF, who then pays the church; licensees continue to operate their businesses on church property as for-profit business owners without direction or oversight from FIF.
- FIF Board members include Gregory Stockton, who works for CC as the Product Sales Director, and the Chair of the Board, Gabriel Rench, who hosted Robert Bortins on his CrossPolitic radio show in an hour-long program promoting Classical Conversations and on another show about education. Classical Conversations is also a corporate sponsor of CrossPolitic (see the scrolling list of sponsors listed on their website at https://crosspolitic.com). Gabriel Rench’s brother Aaron is a principal owner of Canon Press, the publisher of many textbooks that CC has adopted and requires for their Challenge classes. In fact, Canon Press is the biggest publisher of books in the CC bookstore other than CC itself.
- FIF's national headquarters are in Lexington, South Carolina, but it is a North Carolina non-profit organization (CC Inc.'s home state). Its registered agent is WASLAW, LLC, the same law firm that has handled much of CC's legal business.
The location question
At the same time, CC encourages Directors to approach churches for hosting even as a for-profit business owner, saying, "Because we believe education is an act of worship, it is our religious freedom to worship in this way. We want you to feel comfortable and confident communicating how our convictions undergird this business choice." CC provides sample letters for Directors to use, all of which refer to the tutoring program as a "community", and not a for-profit business.
Some, in an attempt to alleviate concerns about the property tax exemption problem have attempted to equate the running of a weekly for-profit homeschool tutoring program at a church to a church event, such as a wedding, where a business such as a florist performs a business activity for pay on church grounds. However, there are some key differences. A wedding is a one-time religious event for an individual in which private businesses (whose primary place of business is NOT the church) perform a service support that event. A for-profit tutoring program is a regular event in which the business is (usually) paying the church rent and is using the church as its primary place for its customer activities.
CC claims that "some tax assessors" have determined that "Christian-based education", even when offered by a for-profit business, constitutes "worship, which supports the religious purpose associated with the use of church property." Other tax assessors disagree. Because this is a situation that varies greatly state by state, it is extremely important for potential Directors to discuss this with their legal counsel; if it is clear that serving customers in a property-tax-exempt location is not an option, the cost of doing business in another commercial location may be so high that running a CC-affiliated tutoring program will not be financially feasible.
Business or ministry?
With regard to a local belief statement, CC "recommends a consistent and specific way for [Directors] to invite families into community. This process should remain constant, no matter how familiar you are with the individual families seeking membership." This process includes the steps of developing a "local belief statement" that is shared with prospective customers, along with the CC Inc. Statement of Faith, during a "family interview" meant to determine if beginning a business relationship between the family and this tutoring program will be mutually beneficial.
Customers are expected to sign the local belief statement as an acknowledgement of it, not necessarily in agreement with it. CC provides new Directors with a "Sample" local belief statement, which includes position statements on a number of social issues, saying the Pledge of Allegiance each week, and submitting to authority. With regard to that last point, this sample local belief statement closes with this statement: "For the purposes of _____________ community’s faith, doctrine, practice, policy and discipline, final interpretive authority rests in local leadership (Director(s) and tutors), in consultation with Classical Conversations leadership, including the Support Representative, Area Representatives, and corporate leadership, as well as the leadership’s personal pastors, as needed" (emphasis mine).
As a business owner, a Director's income includes all money paid by customers: application fees, supply fees, all tuition, and facility fees. Expenses include money paid to tutors, the cost of supplies, per-student licensing fees paid to CC, facility rent, insurance, county and state business expenses (business license, cost of setting up an LLC, banking expenses, advertising, etc.), and the cost of experts such as an attorney and accountant (something I very strongly recommend!). It's also important to remember that even if a Director gets into this business in part to cover his or her own children's CC program expenses (tuition, books, etc.), those expenses do NOT count as "business expenses" when filing taxes and do NOT reduce the amount of taxable income.
A Foundations/Essentials Director's take-home pay will generally be 40% or less of all tuition payments for Foundations, and 30% of all tuition payments for Essentials (tuition for both of these is $375 per student). A Challenge Director's take-home pay will generally reflect the per-student tuition ($1390), minus all expenses (including a $125 licensing fee for a first student in a family, $15 per sibling, plus $140 per student per semester). However, the potential Director needs to keep in mind that there are many other business expenses (local business license, transportation to and from events, legal and accounting expenses, etc.) that will reduce the amount that will ultimately go into a Director's pocket.
It is very helpful to discuss the financial side with a qualified accountant BEFORE you make a decision about beginning a CC-affiliated business, especially if you are in a situation where extra income could end up costing you greatly by pushing you into an income bracket where you would pay additional taxes or be disqualified for certain financial assistance.
The issues that Directors must deal with and make sound legal and financial decisions about include: setting up a legally compliant business, the possibility of endangering a church's property tax exemption, the possibility of misclassifying workers, obtaining adequate insurance, understanding the potential implications of using a "local belief statement" as a part of the process of selecting customers for a for-profit business, and dealing with conflict between customers, workers, and oneself - all while trying to homeschool one's own children (which is supposedly why Directors get into this, right?).
FIRST, I suggest that you think this through very, very, very carefully. The journey of being a Director is fraught with so many potential legal potholes and distractions from one's own homeschool journey, that in my opinion it just isn't worth it. It wasn't for me. Looking back, I wish I had never agreed to tutor or to be a Director for Classical Conversations.
SECOND, it is important to remember that whatever CC Inc.'s convictions, beliefs, and practices are, a Director's business is not Classical Conversations. It is a legally separate business, and if a Director makes a wrong step in business, CC's legal team is not going to come to the rescue. It's important to get the details right and to understand how to do that, at least in the big areas mentioned in this article (worker classification, business set-up, property tax exemption, insurance), before you are in the middle of recruiting and advertising and feeling like now people are depending on you to see this thing through, no matter what it costs you.
If, however, you are interested in pursuing this business idea, these are my suggestions:
- Get legal counsel from the beginning, BEFORE you sign the licensing agreement, as well as advice from a qualified accountant. I recommend finding experts familiar with business law, insurance, nonprofit law (because of possibly running your business in a church facility), labor law, contract law, and franchise law. Even Classical Conversations tells Directors to do this! (But they generally tell you that after you have signed a licensing agreement; I'm telling you to do it before you sign anything.)
- Having obtained legal counsel, request from CC ALL of the documents that will guide or govern your time as a licensed Director: the licensing agreement, the current year's Director Licensing Guidelines, all tutoring contracts, and all Director Onboarding documents and videos.
- Have your lawyer read and watch/listen to all of these and then advise you on a) whether to enter into a legal relationship with CC; b) how to do it ethically, including how to hire or contract workers (PLEASE ask for legal guidance especially on the "sublicensing" idea); c) whether or not you should use any of the tutoring contracts CC provides for Directors; d) what you should and should not do as a for-profit business, especially with regard to using a church as your primary place of interaction with your customers and using CC's Statement of Faith and a Local Belief Statement as part of the process of choosing tutors and customers; and e) a clear understanding on what your rights are and what your licensor (CC) may and may not require you to do. Legally, the only thing a Director is obligated to do is what is in the licensing agreement that he or she signs. That is all that CC can hold them to. HOWEVER, the licensing agreement states that CC can end the agreement at any time and for any reason - and history shows that if a Director does not follow the "best practices" in the DLG (which an SR is obligated to uphold), that Director is very unlikely to be relicensed, and may even have his or her licensing agreement terminated early, which then obligates him or her to deal with financial arrangements in a different way. So on a practical level, it is very wise not to sign a licensing agreement until a potential Director has carefully examined the DLG as well.
- Having obtained legal advice, discuss and pray about this with your spouse. Use the information in the DLG to understand how many hours you will likely put into launching your new business, how much money you will likely make, and how much control over your business and even your personal life you may be ceding to CC.
- Do not pay the SR (or any CC representative) any "application fee" for directing until you have gone through steps 1 through 4 - unless you are willing to lose it. Why would you do that before you know enough to decide if this is a wise decision and to get competent legal counsel? Why would they ask you to? Also, do not accept any money from customers or send any student licensing fees to CC Corporate, or even put them in the CC system (which then enables customers to pay the nonrefundable enrollment fee) until you have gone through all these steps and are certain you are going to do this and how.
- If CC will not agree to this, will not give you time to get the legal advice you need, and/or will not give you these documents in advance, that should be a red flag - do you really want to be in a legally binding relationship with a company that won't be transparent about such important issues?
- If you cannot afford competent legal counsel to help you with all of these steps, you may not be able to afford to get into this legally binding business relationship.