Is Your Non-Profit In Compliance?

by Robert I. Evans and Avrum D. Lapin

irsWe have frequently addressed the importance of being transparent to donors and making sure that each non-profit organization raising funds in the United States is prepared to start 2010 strong. One important topic we feel compelled to raise (again) in greater detail is compliance. As you strive to strategically plan for the coming year, it is important to make sure that your organization is in full compliance with a number of governing bodies and local, state, and national laws and therefore meet important standards designed to protect donors as well as non-profits. Being in cooperation with appropriate statutes will position each non-profit to experience continued growth.

Is your IRS 990 form filed correctly? Are you meeting the set of expectations of the IRS as a charitable body?

The Internal Revenue Service introduced a more complex Form 990 and it is imperative that each non-profit provide the requested data. Our unofficial review shows that many non-profits have been slow to complete the required forms and to provide the data requested. Almost every non-profit raising funds in the U.S. today is required to submit the form in a timely manner. As these are public documents, donors may review 990’s when making decisions about supporting any organization. In fact, we encourage donors to request copies of the form!

A non-profit demonstrates that it respects organizational transparency, and more importantly strictly adheres to all laws. You would be surprised to find out how many organizations, some very prominent, are neglecting to file their 990’s completely and correctly. We stress the importance of this especially as we take the appropriate steps to close out 2009 and position properly for success in 2010.

Use the 990, though, as a good fundraising tool. Consider posting the Form 990 on your website to demonstrate financial stability and good reporting measures. It is a document that appears on important sites like Charity Navigator and may ultimately determine whether a gift comes through to your organization.

Another important question to address: are you meeting the standards of the Better Business Bureau? Is your organization acting with accountability?

The national and regional Better Business Bureaus list accountability standards they expect non-profit organizations to follow. They also provide reports on charities and allow for complaints to be filed by donors or volunteers who are unhappy with the business practices of particular charities. Again, adhering to these principles facilitate more appropriate and effective day-to-day activities, as well as happier “consumers”.

In conjunction, we offer this important advice to non-profit executives as well as top volunteer leadership: review state government non-profit expectations to ensure that your non-profit is, in fact, meeting these compliance expectations and reporting standards as well.

It is important to put a “checks and balance system” into place within your organization to ensure that all best practices are satisfied. Every organization will run more smoothly and donors will be much happier as a result! In addition, if your agency is listed on sites like Charity Navigator or Guidestar, it is important to review listings. This might help to identify what areas require improvement and how to better meet needs of current and prospective donors.

Robert I. Evans, Managing Director, and Avrum D. Lapin, Director, are principals of The EHL Consulting Group, of suburban Philadelphia, and are frequent contributors to EHL Consulting is one of 35 firms belonging to The Giving Institute, the organization that oversees the preparation and distribution of Giving USA. EHL Consulting works with dozens of non-profits on fundraising, strategic planning, and non-profit business practices. Become a fan of The EHL Consulting Group on Facebook.