Annual Checklist for Nonprofit Compliance
The turning of a new calendar year brings a chance to take stock of our organization’s standing and set the stage for a successful year ahead. For nonprofits, there are a few important annual tasks that need attention. Though some of these tasks may be anchored in another time of year, take the time now to review this annual checklist for nonprofit compliance and schedule the tasks into your upcoming year.
Verify information
In the course of running an organization, key pieces of information can change over time. It is all too easy to miss updating information with important governmental agencies when things change. January is a great time to check your records with federal and state governments, as well as with any stakeholders who may be preparing or submitting paperwork on your behalf.
Update contact information with the IRS and state, including your mailing address and your primary contact’s name, phone, and email.
If your designated contact person left the organization or changed positions in the last year and you have a new registered agent, be sure this information has been updated with the Secretary of State office in the state where your nonprofit is registered.
Review governance practices and board health
While there is nothing pressing about doing this in January, every organization should review its practices regularly. It is a good time to look at your board of directors. Is anyone coming up on their term and needs to step away? Are they all active and attending meetings as required by your board policies? If not, it may be time to take action in order to be in compliance with your policies.
“When you operate outside of policy and bylaws, it creates extra liability for the current board if anything goes wrong.”
Take some time to review your policies as well. If the way the board operates has changed, be sure official policies are updated to reflect your new practices. Or, adjust the practices to align with the existing policies. When you operate outside of policy and bylaws, it creates extra liability for the current board if anything goes wrong. In the event of legal trouble, there will be more responsibility placed on a board not following their own governance practices.
Check your mission statement. It should be consistent between your organizing documents, your annual tax filings, and the statements you give to your donors. Additionally, review your operations. Are you operating within your stated tax-exempt purpose? If not, you need to either correct your stated purpose or align the organization’s activities with the original statement.
Be sure you can locate all policies and bylaws. As practical as it seems to say, sometimes copies of policies and bylaws can be misplaced or lost over time, especially if they are not being used. Locate them so they are easily accessible for everyone and be sure your current board members have read them.
Paperwork and reports
Once the calendar turns to a new year, tax season isn’t far away, which comes with various responsibilities for nonprofits. Make sure you have a plan in place for the following items.
Tax returns such as 990s with the federal government and your state return (512E for the State of Oklahoma) are due each year.
A charitable registration in each state where you are raising money is due each year.
Donation acknowledgement letters must be sent to document gifts from the previous calendar year, if they have not been already.
Employees need their W-2s and independent contractors need 1099s sent to them.
Ensure any retirement plan filings are completed.
The period when you are preparing other tax documents is an ideal time to clean up old records. Whatever your system for keeping paperwork, check to see if any old records are ready to be purged or moved into long-term storage for eventual purging.
When paperwork or policy compliance starts to slip, it can create significant risk for nonprofit organizations and the individuals serving on the board. Set your organization up for success both now and in the future by having an annual checklist for nonprofit compliance. Take the time to review policy, fine-tune your paperwork, and keep all information up to date to ensure compliance and reduce risk.
If you need help with compliance practices or policy review, reach out to the Nonprofit Solutions team.
