When you're starting a non-profit, there are several documents that you need to file to
achieve your tax-exempt non-profit status but your work's not over after that each year you
also need to file a series of documents or take care of some other compliance issues in order to
maintain your non-profit status so in this video we're going to go through a checklist of what some
of those compliance items are so that you can make sure to keep your non-profit status okay
Welcome or welcome back! If we haven't met before my name is Amber Melanie
Smith. I'm a non-profit founder and also social impact YouTuber who makes
these videos to help others who want to start a non-profit or social enterprise organization
make an impact through a socially conscious or socially responsible business and more I hope
that you find this useful and helpful don't forget to give it a like And subscribe to my channel for
more content like this also if you are trying to start a non-profit and figure some things out such
as developing a sustainable fundraising plan check out my website FounderToFulltime.com or have some
online trainings that maybe will help you out oh and I also have a super cool newsletter that you
can subscribe to at the link below this video where I share tips and resources and sometimes
funding opportunities that might help out your special cause so check that out and of course
you can opt out anytime all right so as you know non-profit organizations must comply with various
um regulations and legal requirements in order to protect their non-profit
status and avoid penalties in this video I'm going to first talk through or at least recap
um three of the compliance items that you need to take care of while you're in the process of
starting a non-profit and then I'm going to follow that up with six things that you need to be on the
lookout for each year to file and take care of to make sure you maintain your non-profit status
I do want to offer a quick disclaimer before I jump into this checklist and that is that these
rules and regulations might vary depending on the specific state or region that you're in especially
if you're in the United States or outside of the United States so what you're going to want to do
is note these different compliance items and then make sure that you're just checking the
research to see if there's a correlating policy or rule specific to your region or state all
right let's get into the three that you need to make sure that you are taken care of when
you're starting a non-profit the first is going to be registration and incorporation especially
in the United States you have to incorporate as a non-profit organization in your specific state
that is often one of the first steps to starting or filing to become an official non-profit some of
the things involved with this include filling out your Articles of Incorporation document developing
your bylaws typically with your newly recruited board of directors and then filing the specific
registration paperwork for your state a lot of people have the misconception that once you've
taken care of this incorporation step you are now a non-profit officially in the United States but
that is not entirely true because the step after that is Step number two compliance item number two
is filing for your actual tax exempt status with the federal government so first you took care of
your State registration incorporation now you want to to get recognized as an official non-profit on
a federal level to the IRS so this is usually form 1023 or some variation of that depending on your
situation assuming that you are filing to become a 501c3 public charity there are a couple things
that you need to make sure align in order to be able to get this compliance item taken care of
to get your tax exempt status you need to have an organization that is organized for public serving
charitable purpose so this is not for where you file to be a business or a for-profit entity this
is for the non-profit entity you will need to have certain items developed at least to some basic
degree in order to complete the forms required like a basic budget for your organization even if
it changes later you just have to have a basic one you need to be able to comply with the lobbying
rules that are applicable to 501c3 nonprofits and more you'll see a lot of these things laid out on
form 1023 if you just go to the IRS website assuming you're in the United States you can
just download the latest version of The Forum and get a sense of all the different questions it's
going to ask you the third item you need to take care of while you're in the process of starting a
non-profit is your fundraising licensing this is going to be relevant to Most states in the United
States but basically you can't just start asking for money as soon as you become a non-profit if
you have to according to your state be able to have this license so it's a license to basically
ask for money or solicit money so check out your secretary of state's website for your specific
State and it should give you instructions on how to file for this special license to be able to
fundraise and solicit money from potential donors all right so those are three key things you need
to think through when you're starting a non-profit but what about after that let's talk through some
of those ongoing or yearly compliance items that you're going to need to be on the lookout for and
make sure that you are set up to take care of the first item on this list is financial reporting
and transparency as a non-profit you have to be transparent about how you're spending the
money that comes in and where you're getting the money that's coming in so each year you're going
to need to make sure that you have regularly kept up with your financial records that you're
tracking all of your income that you're tracking all of your expenses you're producing Financial
reports this is something that you really should be going through and analyzing with your board
on a regular basis anyway to see how you're doing financially but you do also have to submit annual
tax forms as a non-profit to the IRS so make sure that you're keeping all those things up to date
and some some regions also go so far as to ask for an audit which is a lot more in-depth but that's
another reason that you want to basically hang on to every receipt and have a solid
accounting system in place to be able to produce these reliable Financial reports the second is
governance and board of directors responsibilities so it's the board's job to be responsible for the
organization to uphold the legal and fiduciary duties that the organization needs them to so as
part of that compliance includes having regular board meetings keeping board meeting minutes
which the IRS can request during an audit so you want to be sure that you're at least keeping some
basic meeting minutes that are recording who is in attendance and anything that was voted on by the
board and who voted for what items like that you also have to uphold your board's structure so for
example if you said in your organization bylaws we're going to have at least seven board members
and no more than 15 board members at all times you can't dip below seven board members or you
will be in violation of your own bylaws which the IRS does not like another thing the Board needs to
be responsible for developing and updating regular regularly based on the needs of the organization
is policy documents things like a code of ethics and a conflict of interest policy so what does
your board do when there's a potential conflict of interest such as a board member has a separate
private business entity and your non-profit is thinking of hiring a business that provides that
same service does that board member get to have their business provide the service and
receive payment for that that would be considered a potential conflict of interest so you just need
to have what you do in that situation written out and your organization and Board needs to be able
to adhere to it at all times the third compliance area that your nonprofit needs to be aware of is
employment and labor laws so if your organization has staff or is thinking of bringing on staff it's
a really good idea for you to familiarize yourself with the basics of this your organization just
like any organization or any business would be responsible for upholding some basic employment
laws such as making sure you're meeting or exceeding minimum wage making sure you're
adhering to workplace safety rules and of course anti-discrimination laws some of this is going
to require you to develop and continuously update documents related to hiring people such as having
written and up-to-date job descriptions employment contracts making sure that you are up to date on
all the latest laws related to hiring whether your state has specific rules around how you're able to
terminate employees and any employee benefits that they might be required by law to receive
the fourth area of compliance is related to fundraising so something you really need to think
about is that you're responsible for preparing and providing donors to your organization with
a record of their donations usually before the end of January so that they can account for these
things in their own personal taxes you need to be making sure that all of your documents your web
pages Etc are also transparent about what types of donations are tax exempt for example let's say
um a business wants to sponsor an event but as part of the sponsorship they're going to get
two tickets to the event valued at a hundred dollars each well you need to transparently
disclose on your documentation to them that that 200 worth of tickets is not counted as
part of the tax deductible donation it needs to be subtracted from the total donation they gave and
that remaining amount is what is tax deductible so transparency is a big theme here but another
thing to remember is that solicitation license that I told you had to get towards the beginning
of your non-profit Journey me well you have to renew that each year also you have to show your
secretary of state that you are still an active non-profit and to be able to continue fundraising
you have to get that uh charitable solicitation license again each year there's a small fee for
it as well I think Most states or many states are allowing you to renew that online um sometimes it
requires uh you to mail stuff in so just know what your State's rules are fifth area of compliance on
this list is privacy and data protection you are responsible for keeping your contacts and your
donors contact information private and safe and secure not only are you supposed to do this uh for
compliance but it's also just a really good idea so that you can maintain the trust of your donors
and supporters and not just donors you also want to make sure that you're protecting the private
information related to the clients that you're serving especially those who may be part of a
vulnerable population depending on your area you want to make sure that you are in compliance with
things like the general data protection regulation and anti-spam laws making sure that people have
a way to opt out of receiving newsletters and communication from you too sixth is you
need to consider whether your specific Mission has additional compliance or regulation things
to be concerned with if you are for example in a non-profit that has an a mission related to health
care or education or environmental organizations there may be other laws or regulations that your
organization needs to be aware of and be able to comply with so be sure to do your research related
to your specific Mission as well so I know it can feel like a lot I will tell you as someone who
has started a non-profit and has had to keep up with some of these compliance items every
every single year once you get into a rhythm of it it can feel a bit more manageable I'd
love to hear your thoughts in the comments some of these items if you have questions or if you
have concerns about specific ones or maybe you're just a compliance rock star and you want to share
all about that too drop that in the comments below as I mentioned before if you are in the process of
starting a non-profit or developing a sustainable fundraising plan be sure to check out my website
FounderToFulltime.com where I have those online trainings and support resources for you and
my newsletter you can subscribe using the link below this video like I said I send out tips and
resources and sometimes funding opportunities that I come across be sure to check that out subscribe
and you can opt out any time last thing I have a group on Facebook called Change the World or Bust
we have several thousand folks from around the world hanging out in there sharing what
they're working on to make an impact in the world would love for you to join us to come on by over
there that's all I have for you today I'm Amber Melanie Smith, and I'll see you next time bye!