Managing Your Nonprofit for Resilience

APPENDIX 5A Simple Compliance Checklist

UNFORTUNATELY, STORIES ABOUND of nonprofits that commit employment law violations, allow impermissible conflicts of interest, or violate fundraising law. Every time one of these reports surfaces, the nonprofit sector suffers another black eye, and public confidence erodes.

Most of these issues could have been avoided by proper nonprofit compliance.

But many nonprofit leaders continue to ask, “What is nonprofit compliance? What areas of my organization does it affect? How can I ensure compliance with a minimum of distraction and expense?” This appendix answers those questions.

Definition of Nonprofit Compliance

Nonprofit compliance is the process of providing reasonable assurance that your organization obeys applicable laws, contracts, and commitments. As the Standards for Excellence put it, “Nonprofits must be aware of and comply with all federal, state, and local laws.”¹ As a result, they “should periodically conduct an internal review of the organization's compliance with known existing legal, regulatory, and financial reporting requirements, and should provide a summary of the results to the Board of Directors.”²

The Standards' compliance provision is correct, but it may not go far enough. In addition to legal, regulatory, and financial reporting requirements, a nonprofit organization should account for obligations it has made to other organizations and stakeholders. This may include funders, staff, clients, and volunteers.

Nonprofit ...