How can Nonprofits best prepare for a successful New Year? We explore eight compliance tips here.

8 Governance and Compliance tips for Nonprofits in the New Year

1. Review your by-laws - It is an excellent practice to review the by-laws annually to ensure that the Organization is in compliance with its governing documents. A couple of governance matters to consider: Should the Organization add or update term limits? Does the board of directors need to change the frequency of its meetings? Does the Organization need to increase or decrease the size of the Board of Directors?
2. Schedule your board and annual meetings: The annual meeting serves multiple purposes, including the board of director elections, evaluating and assessing progress towards achieving its mission, reviewing financials, setting the budget, and setting goals for the upcoming year. Scheduling your board meetings in advance is a good best practice to get optimal attendance as consistent attendance increases director engagement.
3. Review term limits and new or elect new officers and directors- Your officers' and directors' terms may be up for renewal, and you might want to elect new leaders. Here are a few questions to consider: Has the Organization considered diversity in recruiting new members? Are there specific skill sets or advisors that would assist the Organization to achieve its upcoming goals for 2023 Does the board represent or have representation for the community that it serves?
4. Create or review the operations calendar. – If your organization does not have an operations calendar, I strongly recommend that you create one. The operations calendar should include all filing deadlines (federal, state, local, etc.), reporting deadlines, banking and contract deadlines, insurance renewals (property and casualty, workers’ compensation, benefits, etc.), staff evaluations, annual alarm inspections, budget planning, major program and special events, etc.
5. Renew your charitable solicitation license- Are you hosting a drive or charity auction? If you use a professional fundraiser or a professional auctioneer, you will need to make sure they are registered with your state's attorney general's office before the auction or event.
6. Prepare for Form 990 and state filings- Form 990 informs the public about crucial aspects of your Nonprofit. Most of the pages and tables are available for public inspection, including those describing executive compensation and program expenditures. In addition, Form 990 provides the IRS with information about your Non-profit’s activities and financial status to demonstrate that your organization still meets the qualifications for tax exemption. Form 990 for a December year-end is due May 15th every year for calendar organizations. Check out our 990 blog series here.
7. Review donor receipts and solicitations- Donors are required to obtain a letter or receipt for any contribution of $250 or more. However, many organizations provide thank you letters to donors at all levels. Donors must have substantiation of donations to include those donations on their itemized federal tax returns. A letter from the non-profit organization is the clearest document they can have to prove their donation. Your donor receipts should include the following items:
   1. The full legal name of the Organization,
   2. Donor name,
   3. Amount of a cash donation,
   4. Description of any non-cash donations (but not the value), and
   5. Statement of whether or not benefits (goods or services) were provided, and if so, a good faith estimate of the value.
8. Review the upcoming year's budget- The annual budget is the financial summary of significant planned policy decisions. It sets the Organization's programmatic, personnel, and other priorities into motion. The budget is the plan that provides the bridge between the mission objectives and the programs and activities designed to achieve those objectives. The board must ensure that the Organization updates and maintains the budget and financial projections throughout the year as circumstances develop and change. Check out https://kahnlitwin.com/blogs/mission-matters-blog/board-member-responsibility-3-providing-proper-financial-oversight for more information on proper budgeting.
   
   Part of the financial oversight responsibility is to monitor the actual financial results and compare them to the budgeted goals. Analysis of the differences will help you learn what happened and determine how best to react to these variances. When budget vs. actual differences are significant and impact future actions, it is time to revise the budget. Some people mistakenly believe that the annual budget is cast in stone and should never be modified.
   
   The COVID-19 pandemic was a great lesson that changed how many organizations operated and interacted with the community, causing a significant shift in the Organization's financial results, which required several budget revisions. When the original budget no longer functions as the road map for operations, it is time to adjust the map to have an appropriate tool to monitor progress.

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