This is the second in a series of articles on nonprofit organizations and issues that we feature in our regular Updates. We have found this area to be one of ever-increasing interest to our clients and colleagues, and we hope you will find these articles helpful and insightful.
Every nonprofit organization should, on a regular basis, run through a simple checklist to confirm that the organization is attending to some of the basic aspects of its operation and governance. At its simplest level, that checklist would include:
- Checking your certificate of incorporation and bylaws to confirm that you have the proper number of trustees/directors, that you have elected all of the officers mandated in those documents, and that all elections have been for the terms specified in those documents
- Checking that your organization had an annual meeting or annual resolutions adopted by unanimous consent, in the past year
- Confirming with your state of incorporation and with any state that you are authorized to do business in that the organization is in good standing and current on all of its state filings and fees
- Checking your activities and their geographical reach to determine if your organization needs to be authorized to do business and/or registered to solicit donations in additional jurisdictions
- Checking your organization’s information that is posted at guidestar.com, and confirming that it is current and accurate
- Carefully reviewing your IRS Form 990 or 990-PF prepared by your tax preparer, and confirming that all organization activities (in particular, new activities) are disclosed and consistent with your organization’s stated purposes in your certificate of incorporation and bylaws
- Confirming that you have made the IRS aware of any change in your principal business address
- Confirming that you have adopted and are complying with the organization’s conflict of interest policy
- Reviewing employee compensation to determine and substantiate that it is reasonable
- Reviewing policy for reimbursement of trustee expenses to confirm legal compliance
These are just some of the most fundamental, but important, things that every nonprofit organization should “check off” on a regular basis. Missteps and errors with respect to any of the foregoing can have very embarrassing, and potentially costly, ramifications. And if you see that you do have compliance issues as you work through this list, you should contact your attorneys or other advisors without delay.