1. Legal Entity Compliance:
Nonprofit organizations must comply with federal, state, and local laws that apply to them. This includes registering as a legal entity in each applicable jurisdiction, and understanding the associated legal requirements for filing taxes, operating the organization and making decisions. Nonprofits should also be aware of any special tax provisions or deductions that may be available to them.
2. Organizational Financial Requirements:
Nonprofits must ensure that their financial operations are in full compliance with applicable laws and regulations, including the proper reporting of income and expenditures. They should also have updated policies and procedures in place for all associated financial processes, such as budgeting, auditing, fundraising, grants management and cash flow management.
3. State Tax Reporting and Exemptions:
Nonprofit organizations may be exempt from certain state taxes or required to file special tax returns in order to remain compliant with local regulations. It is important for nonprofits to understand their state’s requirements for filing taxes and claiming exemptions when applicable.
4. Licensing Compliance:
Depending on the type of nonprofit organization, certain licensing requirements may apply. Nonprofits should ensure that they have obtained the necessary licenses and permits in order to remain compliant with applicable laws.
5. Governance and Policies:
Nonprofits must develop and maintain a set of clear and up-to-date policies for governing their operations. This includes board governance, member rights & responsibilities, conflict of interest codes, employee policies, etc. It is important for nonprofits to ensure that these policies are properly documented and communicated throughout the organization.
6. Business Entity Monitoring:
Nonprofit organizations should regularly monitor their business entity status to ensure compliance with all applicable laws and regulations. This can include ensuring registration documents are kept up-to-date, checking on the status of any licenses or permits required to operate in a specific jurisdiction, and filing annual reports with applicable state agencies.
7. Employee Classification and Record keeping:
Nonprofits must ensure that all employees are properly classified as either independent contractors or employees. It is important for nonprofits to have clear policies and procedures in place regarding employee classification, recordkeeping, and payroll tax requirements.
8. Investment Compliance and Reporting:
Nonprofit organizations must be aware of applicable rules and regulations for investing funds, including any associated reporting requirements for investments made by the organization. Nonprofits should understand their responsibilities when it comes to monitoring investments to ensure compliance with applicable laws.
9. Data Privacy and Cybersecurity Compliance:
Nonprofits must ensure that their data is secure and protected, in accordance with applicable laws. This can include having policies and procedures in place for responding to a data breach, implementing proper security protocols, encrypting sensitive information, etc.
10. Conflict of Interest Policy:
Nonprofits should have clear policies and procedures in place to address any potential conflicts of interest that may arise from within the organization or from outside sources. These policies should address how the nonprofit will handle such situations in order to remain compliant with applicable laws and regulations.