Great Nonprofits Are Compliant
Why Compliance Matters
Nonprofit organizations are held to a higher standard because they are exempt from federal and state income taxes and they have access to funding from public sources. As a result, compliance laws are put in place to ensure that nonprofits do not abuse their financial advantages. And, although many nonprofit leaders are new to their role and may not realize their obligations, it’s important to know that ignorance of the law, (ignorantia juris non excusat), is not a defense.
As a nonprofit organization, you are legally required to comply with federal and state laws. As an example, you may be required to do the following:
- Submit an IRS 990, 990-EZ, or 990-N
- File an annual registration with your state
- Adhere to charitable registration requirements
Legal compliance for nonprofits also includes good record keeping, monitoring and paying taxes on unrelated business activities as well as developing a conflict of interest policies––especially pertaining to paying directors and officers.
This Lesson covers nonprofit compliance fundamentals. T0 ensure that you are abreast of and following the latest legal guidance for nonprofit organizations, we recommend that you:
- Visit the IRS main website for charitable organizations found here: https://www.irs.gov/charities-non-profits/charitable-organizations
- Visit your state’s website – usually the Secretary of State or Department of State. You will find guidance for charitable organizations there.
- Contact an attorney pro bono partnership for free or reduced cost legal guidance.