Year End Compliance for Nonprofits

     As a seasoned nonprofit C F O, I fully understand how stressful it can be at the end of the year. Aside from reviewing your financials and preparing for the next year, there's also some really important regulatory requirements that I want to encourage you to prioritize this time of year. So, as you start to think about wrapping up this year and moving into the next, this is an incredible opportunity to prepare your nonprofit for success by revisiting governance and compliance matters. 

Review Your Nonprofit's Governing Documents

     The first thing I want to invite you to look at is your governing documents. This includes your bylaws, and your Articles of Incorporation. (InTexas, this is called the Certificate of Formation.)  This also includes any other documents that dictate how your organization is governed. 

Here are some items to look for:

•   Term limits: Do you need to ensure a rotation of board members based on specific term limits?
•   Annual Duties: Are there some annual duties outlined that the board should be covering?
•  Elections:  What is the process for electing officers? 
•  Attendance:  Are there any stipulations regarding the attendance of board members? Does a board member who is not able to attend need to be encouraged to transition off and be replaced? 
•  Committee Functions: Does your board have committees that are defined? What are the functions of those committees? Are the committees  required to report to the full board? Have those reporting requirements been fulfilled? 

Review Your Nonprofit Policies and Procedures

     The next step is to review your organization's policies and procedures. Why? Because, every organization should have certain practices that safeguard the assets and the resources of the nonprofit.

These policies and procedures also ensure healthy checks and balances throughout the organization. Keep in mind, there may be specific requirements in your state that further dictate your own nonprofit’s operations. And of course, there are federal guidelines regarding nonprofit matters such as conflict of interest and private inurement rules. The point is to make sure that you know exactly which rules, policies, and procedures apply specifically to your nonprofit in your state. I strongly recommend developing a checklist so that you don't miss any of these particular requirements. Then review those policies and procedures, and confirm in writing that they have been done in each year. My FREE Checklist of Key Financial Tasks will give you a great starting point to help you automate those monthly, quarterly, and yearly financial tasks!

Review Your Nonprofit Tax Filings

     Finally, you need to review your nonprofit tax filings and make sure that they're also on schedule. Nonprofits are required to do some tax filings, which vary widely depending on the status of your nonprofit. These filings may include a 990, but there's also many states that will require state returns. So know your federal and state filing requirments. Of course, as we get near the end of the calendar year, there are many payroll related filings such as 940, 941, W2s, and1099s, just to name a few. There are potentially many more depending on your specific situation. 

     Although year end can be a very stressful time for nonprofit leaders, it is also an ideal time to start thinking about and reviewing each of these critical areas of nonprofit operation. 

     If you found this helpful, you can subscribe to my blog here or my Youtube channel here to get more weekly tips just like this. If you’re still overwhelmed by the thought of year end compliance and would like a more personalized game plan, you can book a strategic consult with me here.