What if managing your nonprofit’s compliance, risk, contracts, insurance coverage, etc. were as simple as a traffic light?
We believe it should be.
We created the Legal Health Check to take out the guesswork so you know where your nonprofit stands and where to go next. Our attorneys dive into the documents and operations of your nonprofit to confirm where things are in good standing and identify areas your nonprofit can reduce risk and fill in gaps.
The Nonprofit Legal Health Check involves an attorney doing a deep dive into a nonprofit: how it operates, what its policies are, where it’s facing risk unknowingly and where it’s out of compliance. The result is a custom report that shows the Executive Director and the board exactly what areas need the most immediate attention, what could be improved, and what areas are good to go. We categorize this as red, yellow, green, just like a stoplight.
In this article, we’re diving into the Legal Health Check process and providing an example report so you know what to expect. Pricing is based on the size and complexity of your organization. To get a free quote, schedule an initial consultation with a member of our legal team.
How Does the Legal Health Check Work?: The Process
First, you’ll meet with a member of our team in an initial consultation. In your consultation, we’ll get to know a little about you and your nonprofit so we can provide you with an estimate of the timeline and cost. We know the process looks different depending on the size of your organization and what type of charitable work you do, so we take those details into account so you don’t pay for more than you really need.
Next, you’ll be matched with an attorney who works exclusively with nonprofits. Your attorney will send over a form, asking about the documents and policies you already have in place. You won’t have to submit copies of those documents yet. It’s a simple yes-or-no checkbox to give us a quick lay of the land.
Your kickoff call comes next. You’ll sit down with your nonprofit lawyer over Zoom to discuss your goals and concerns. Your attorney will ask questions about how your nonprofit currently operates and any areas of concern you already know about. A few common reasons we see people asking for a Legal Health Check are:
- The “We Don’t Know What We Don’t Know” phenomenon: You’re unsure of what you really need to operate well and with less risk, or you’re not sure about the requirements for nonprofits of your type in your state.
- Leadership Changes: For organizations that have had a longtime leader or founder retire, a board chair change, or a volunteer leader move on, a Legal Health Check can show new leadership the areas of improvement and provide peace of mind in the next season.
- Turnover: Frequent staff or board turnover can lead to organizational processes, policies, etc. getting lost or falling out of date quickly. Clear guidance can get your team back on the same page after change.
- Growth: Nonprofits outgrow their old procedures and policies as they mature. An attorney can help identify where the organization needs protections to ensure it can grow responsibly and sustainably.
- Major Grant Opportunity: Similarly, if your nonprofit is applying for or accepting a major grant, having the reassurance to provide potential funders that you’re ready for responsible, sustainable growth can be powerful. Funders want to know nonprofits are handling their resources appropriately without undue risk.
- Mergers, Reinstatements and Other Structural Changes: Moments of change often call for updates in the way things are done and what documents you have in place. Getting a clear picture of where the organization is now and where to go next can be helpful in navigating a new chapter gracefully.
After your kickoff call, you’ll send over documents to your attorney. Your lawyer will do a deep dive into your documents, comparing them with federal law, state law and best practices. With your permission, they can also speak with key stakeholders like your board, Executive Director and others to learn what happens beyond the documents. We aim to develop a deep understanding, not just of what your policies say, but how they play out in the real world.
Your nonprofit attorney will identify the most pressing needs, areas that could be improved later and items that are working well as-is. They summarize these findings in a custom Legal Compliance Report (which we’ll preview below), then write a full letter in more detail so their recommendations are clear.
Last, your Legal Health Check is wrapped up with another Zoom call to talk through their findings in more detail. You’re welcome to invite anyone you’d like to this call, including board members and leadership of the organization. We’ll answer questions, provide recommendations and make sure your leadership understands how to best protect your nonprofit.
What’s included in the cost?
Legal Health Check pricing includes:
- Kickoff Zoom call with your attorney
- Analysis of current documents, policies, procedures etc. for risk and compliance
- Information gathering calls with applicable board members and leadership
- Custom legal compliance summary report
- Full legal compliance explanation letter
- Findings Zoom call with your attorney
Much like a doctor’s appointment after running medical tests, in your Legal Health Check, your nonprofit attorney will walk you through what they found and what they would suggest to strengthen and protect your organization.
In some cases, your attorney’s recommendations are things that you and your leadership can carry out yourselves like obtaining a new form of insurance or doing a quick update of an existing practice. Other times, they may have recommendations that require legal assistance.
Going back to the doctor comparison, if the doctor suggests a new prescription, the cost of the prescription is not included in the cost of the doctor’s visit. Similarly, if there’s legal work suggested in your Legal Health Check, the cost of performing that new work is not included in the Health Check pricing.
What gets reviewed?
Included in your Legal Health Check is a review of all of the following (if applicable, each nonprofit is unique). Your organization may have additional relevant documents. Let your attorney know if you’d like those reviewed as well. Here are examples of some of the documents and policies we review to assess the health of your nonprofit’s legal and compliance:
Risk
- Child Protection Policy
- Client Waivers, Releases Or Participation Agreements
- Incident Reports (Last 3 Years)
- Insurance Policies
- Other Waivers, Releases Or Participation Agreements
- Risk Management Policy
- Safety Policy
- Volunteer Waivers, Releases Or Participation Agreements
Legal
- Administrative Claims (Last 3 Years)
- Contracts or MOUs between Entities within your Organization
- Housing Partnership Contracts
- Insurance Claims (Last 3 Years)
- Lawsuits (Last 3 Years)
Employment & Operations
- Background check policy and records of checks run
- Employee handbook
- Independent contractor agreements
- Job descriptions
- Payroll Tax Filings (Last 3 Years)
- Volunteer Handbook & Policies
Intellectual Property
- Copyright Use & Protection (Including Program Materials)
- Licensing Agreements
- Photo & Media Release Forms
- Trademark Use & Protection (Including Logo & Website)
- Use of Third-Party Materials
Governance & Structure
- Articles of Incorporation
- Board Agendas (Last 3 Years)
- Board Minutes (Last 3 Years)
- Board or Advisory Committees
- Bylaws & Amendments
- Conflict of Interest Policy
- Document Retention Policy
- Executive Compensation
- Expense Reimbursement Policy
- Gift Acceptance Policy
- Membership Records
- Operating Agreements
- Organizational or Partner Actions
- Partnership Agreements
- Trust Instruments and Agreements
- Whistleblower Policy
State & Federal Compliance
- Annual Filings with State
- Charitable Solicitation Registration (in any states required)
- Foreign Entity Registration
- State Tax Filings
Financial & Tax
- Audited or Reviewed Financial Statements (Last 3 Years), including management letter from the auditor
- Financial statements or budgets (Last 3 Years)
- Form 1023 application as filed
- Form 5768 lobbying election
- Form 990-T, if you have ever filed one
- Grant Agreements For Restricted or Major Gifts
- Investment Policy
- IRS Determination Letter
- Three most recent annual returns (990, 990-EZ, or 990-N)
- Written accounting or financial control procedures
What is a Legal Compliance Report? What does it look like?
Near the end of your Legal Health Check, you’ll get a custom report that shows you where your nonprofit can manage risk and compliance better, including any immediate needs. We categorize those as green, yellow and red.
You can see below what that page of the report typically looks like in this mini example:
Green items have no changes recommended. Yellow items could use some improvement (and we’ll let you know what we’d suggest). Red items are the most urgent needs to get compliant and prevent risk for your nonprofit. We’ll explain your specific exposure on red items so you know both what needs to change and why. We want to empower nonprofit leaders to understand risk and compliance management so you can solve problems now and prevent them in the future.
You’ll also get a summary of everything your attorney reviewed for you so you know what was included in your specific Legal Health Check.
Your full explanation is included in the letter at the end of your Legal Health Check. This report serves as a visual summary so you can get an idea of what’s urgent, what needs improvement, and where you can breathe easy.
Do you know where your nonprofit stands?
Do you know where your nonprofit stands with legal, risk and compliance? Would you like to? Sign up for a free consultation with a member of our legal team to learn more and get pricing for your nonprofit.
Charitable Allies is a law firm that provides comprehensive legal services exclusively for nonprofit organizations. Our team has helped thousands of nonprofits nationwide.
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