Compliance is a bit of a buzzword, but it really covers the answer to any question that starts with the phrase “Is it legal for a nonprofit to do that?” or “Can my nonprofit do or say this?”. Today, I want to cover the three of the common compliance questions we hear, but of course, every situation is different, so if you’re looking for an attorney to weigh in, please reach out to us.
1. How do we keep our 501(c)(3) or 501(c)(4) nonprofit status active?
Tax exempt organizations are required to file a few different forms each year to keep their nonprofit status active with the IRS. Though some things, like charitable solicitation registration vary by state, most nonprofits need to file form 990. The chart below shows which form is right for your nonprofit based on the organization’s revenue.
2. What is our Board of Directors liable for?
How do we minimize risk? In terms of compliance, it’s important to understand what the board is legally obligated to do. There can be serious consequences for nonprofit boards who don’t perform these duties, including one case in which a board was held personally liable for $2.5 million. If you’re in need of some guidance on best practices for your nonprofit board, reach out. We aim to ensure that your board is running at its best so that your nonprofit can better pursue your mission.
3. How can my nonprofit legally bring in more revenue?
It’s common for nonprofits in certain categories to bring in program-related revenue, like a university charging tuition for education, or an animal shelter that charges a small adoption fee. But there are complex laws around what nonprofits can legally do to bring in revenue and what they cannot do. Each circumstance is different, but you can read about some of the basics around that on our website.
It’s important to keep in mind that each nonprofit is different, and that some states have different regulations in place for nonprofits. As usual, if you have questions about compliance, or you’re looking for more guidance on best practices, reach out to us and we’d be happy to see how we can help.