End of the Year Compliance for Nonprofits

End of the year compliance for nonprofits is complex. Do a thorough year-end review.

In my previous post, I discussed end of the year compliance activities for small businesses. Running a nonprofit is a different animal altogether. Typically, nonprofit organizations have many more ongoing responsibilities.

Failure to keep up with compliance activities can result in loss of your hard-earned 501(c)(3) status, good standing with the state, and other penalties.

What follows is a list of end of the year compliance activities for nonprofits. Your organization might have additional activities not on this list. In the same way, I might have listed something that doesn’t apply to your nonprofit.

The point is to get you thinking about compliance responsibilities, both at the end of the year, and throughout. Let’s get to it:

State-level Compliance

1) Annual reporting

Does your state have an annual report requirement? Have you filed it timely, and paid the appropriate fees?

2) Charitable Solicitation Registration

In which states is your organization soliciting funds? Have you complied with state charitable solicitation requirements, and included the appropriate disclosure statements on your fundraising materials?

3) Charitable Solicitation Renewals

Many states require you to renew your charitable solicitation license on a periodic basis. So, if you HAVE registered, make sure they’re all current.

4) Other Renewals

Does your organization have DBAs, licenses, permits, or exemptions that require renewal?

5) Moving to a new state

Has your nonprofit begun, or will it begin transacting business in another state? If so, you will have to foreign qualify! This process includes appointing a registered agent, obtaining a Certificate of Authority, filing for new tax registrations and exemptions, registering for charitable solicitation, and for applying for licenses and permits.

6) Annual board meeting

Have you held an annual board meeting? Make sure to keep minutes of this and any other meetings throughout the year.

7) State 990 filing

Bet you thought this was an IRS filing, didn’t you! Well, it is, but some states want a copy of it for charitable solicitation registration and renewal, state tax exemption, or various other reasons. Be sure to provide a copy as requested.

8) Changes to address or registered agent

Has any corporate or registered agent information changed, such that you need to update the state? This may include filing an amendment to your Articles of Incorporation or a change of agent form.

IRS Compliance

9) IRS Form 990

This is the big one. Be sure to file IRS Form 990 timely. Failure to file this form can lead to revocation of your hard-earned 501(c)(3) tax exemption.

10) Review board composition

IRS Form 990 stipulates no more than 49% of the board can comprise of family members, and has other composition requirements. Do a review, and take necessary actions.

11) Review policies and standards

This may include investment policies, conflict of interest policies, employment policies, whistleblower policies, and bylaws. Make sure these policies are current, and that your organization’s activities align.

12) Donor acknowledgement receipts

The IRS stipulates that your organization must give donors a receipt upon receiving a contribution. Here’s a great resource template for you.

13) Employee & executive compensation

If you compensate employees and executives, the compensation must be deemed reasonable. You will make full disclosure of this information on Form 990.

Miscellaneous Activities

14) 2015 budget approval

Have you come up with your organization’s 2015 budget? Has the board of directors approved it? Make sure any conflicts of interest are resolved according to your organization’s Conflict of Interest Policy.

15) Review of employees & payroll

Has your organization hired a first or new employee? Have you filed necessary tax applications and other IRS forms? Make sure your employer insurance is up-to-date. If the employee is in another state, you’ll have to foreign qualify (see #5).

Are you up-to-date on payroll information, including payroll taxes?

16) Grant reporting

Did your organization receive any grants? Have you completed grant reports, which attest to the progress towards the goals you mentioned in the application?

That seems like a lot to review. Well, it is. Nonprofits are held to high standards of compliance by the IRS, the state, and even your donors. You have several options to make sure your organization meets its ongoing and end of the year compliance requirements.

If you’re a small organization, the task might not be so bad. Do a review of this and next year’s activities, and see if there are any gaps. Then, check with the IRS, state, and local authorities for information on completing the task.

If you’re a large organization, you’ll have significantly more activities to review. You might be equipped with a proactive board, or have employees assigned to doing an end of the year compliance audit.

Most importantly, you don’t have to do it alone! Harbor Compliance can help. With our Annual Compliance Solution, our nonprofit specialists will help you with your end of the year compliance review, and with your activities throughout the year. Use our expertise to stay compliant. Start 2015 with peace of mind – simply contact us to get started!