Tips and Resources for Efficient Nonprofit Compliance

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Posted on September 10, 2018 by Harbor Compliance in Nonprofit Compliance.

In each state where your nonprofit is registered, you have numerous ongoing filing obligations, from annual reports to registered agent renewals to charitable solicitation registrations. Each state handles has different forms, deadlines, procedures, and administrative preferences for handling those requirements. In some states, filing is done through a dedicated online portal; in others, forms are uploaded or emailed. Some states still rely on paper forms sent by mail or fax. For nonprofits operating or fundraising in more than a handful of states, this amounts to a very time-consuming, paperwork-intensive process with deadlines running throughout the year.

Even for our compliance specialists, who handle these filings year-round for our clients in all 50 states, there are always changes and nuances that require adjustment to ensure rapid processing. For nonprofit staff who handle compliance less frequently, managing these filings can create some serious administrative headaches and challenges.

To save you time and stress, our specialists put together the following professional tips and helpful resources for managing the most common nonprofit compliance tasks efficiently.

Annual reports

Due annually or biennially in each state where your nonprofit is registered, these reports provide secretaries of state with up-to-date information on your organization. Deadlines are scattered throughout the year, and administrative practices differ widely from state to state.

Pro Tip: Do not attempt to manage this task manually! Use appropriate software to track deadlines and monitor your status, and send automated reminders to staff of all upcoming deadlines. Missing an annual report deadline can jeopardize your good standing, with consequences that can haunt your nonprofit for years to come.

Resource: Find everything you need to know to file your annual reports on time in Annual Reports: The Ultimate Guide. The guide includes deadlines, filing instructions, and contact information for state agencies nationwide, all in one document that you can print, share, and keep in your files.

Registered agents

Each year, you must maintain an active registered agent in every state where your nonprofit is registered. The registered agent is responsible for receiving legal documents (including notices of lawsuits, or service of process) and forwarding it to you for response.

Pro Tip: While technically anyone with a physical office location may serve as your registered agent, this is a case where going “off the grid” is a mistake. If the state serves a notice and your registered agent is inactive or unavailable, or fails to get the documents into the right hands in time, your nonprofit is nonetheless liable for the contents. This can lead to serious consequences such as loss of legal standing and protections, personal liability of officers and board members, and default judgments entered against your nonprofit.

Choose a proven, professional registered agent with nationwide service for all of your needs. Don’t settle for anything less than same-day, electronic document delivery from a recognized provider. Using a single registered agent service for all of your states also reduces your staff’s paperwork burden, especially when your provider is able to consolidate billing, as we are able to do for our clients.  

Charitable solicitation registration

Forty-one states require nonprofits to register or complete other requirements to solicit donations from their residents. Solicitation is the act of asking for funds, whether or not you receive a donation in response, and it takes place where the potential donor resides. With so much fundraising happening online, many nonprofits are unsure where they are required to register.

Pro Tip: Outline your nonprofit’s fundraising footprint, including every state where your fundraising requests are being sent. Solicitations on social media, websites, or other online platforms are potentially reaching audiences across all 50 states, requiring registration in 41 states. If your nonprofit is small, or if your fundraising is limited, you may be exempt from many requirements. Unfortunately, this doesn’t always reduce the paperwork, since you may still need to file exemptions.

Fundraising registrations, like other state filings, must generally be renewed. The easiest way to ensure consistent compliance is to incorporate these requirements into the same system that you use to track annual reports, registered agents, and other state filings.

Resource: Our Fundraising Compliance Guide is an online reference that provides all the information you need to navigate the relevant tate requirements. The guide is searchable and user-friendly, with a map that links to complete filings instructions in every state. If you would also like a print reference, Charitable Solicitation: Navigating the Complexities, which we recently produced in partnership with Charity Navigator, also provides a comprehensive overview of the requirements. In addition, we run a monthly webinar on fundraising compliance, which is a lot more fun than reading state requirements! You can register for an upcoming session here.

Tax exemptions, business licenses, and other filings

Nonprofits also have numerous tax filings to manage each year, including tax exemptions, renewals, and tax returns. In addition, nonprofits must maintain accurate records with state authorities, reporting changes in office addresses, names of officers and directors, and contact information.

Pro Tip:  Sometimes nonprofits assume that if they’re exempt from a state requirement or tax, they don’t need to file. Very often, they still need to file paperwork verifying their status. The best way to manage this is to include these filings in the same system as your other regulatory tasks.

A handful of states require business licenses for nonprofits, and many of our clients have further license requirements at the state or local levels such as occupational permits, gaming licenses, and more. Once again, it is best to manage all of these through a single software platform.

Best practices for total nonprofit compliance

Keeping up with regulatory requirements is a challenge for nonprofits of all sizes. With varying deadlines, filing procedures, and requirements to track in each state, the best approach to every aspect of compliance is to consolidate and automate as much of the work as you can. Specifically, best practices include:

  • Consolidating tasks under one functional area of your nonprofit.
  • Sharing compliance resources among several staff members to ensure continuous compliance if someone is absent or leaves.
  • Automating as much of the process as you can using appropriate compliance software.
  • Setting up automatic reminders of all compliance due dates for the entire nonprofit in one place.

Fully managed compliance + compliance software: the simplest solution

Managing all of these filings in-house means investing a lot of staff time in paperwork that you could otherwise be devoting to your nonprofit’s mission and programs. If you would rather leave the worry and hassle of state filings to a specialist and free up those hours for tasks closer to home, we can manage all of these filings for you, including identifying your requirements, preparing the applications, and managing renewals.

In addition to fully managing the paperwork for you, we provide our clients with state-of-the-art software that interfaces with state agencies, so your staff can access records, pull custom reports, and monitor your status in any state. Our dedicated account teams also provide support and guidance anytime you have questions.

To talk to a compliance specialist about what fully managed compliance services could mean for your nonprofit, get in touch or give us a call, 1-888-995-5895.