Nonprofit Compliance Checklist

Your organization must operate exclusively for exempt purposes and comply with IRS rules to retain its tax-exempt status.

All 501(c)(3) organizations must file an annual information return (Form 990, 990-EZ, or 990-N) with the IRS. Failure to file for three consecutive years results in automatic revocation of tax-exempt status.

Provide written acknowledgment for any single donation of $250 or more. Receipts must include the date, amount, and a statement that no goods or services were provided in exchange (or their value if they were).

Your organization must have an active EIN on file with the IRS for all tax-related filings and bank accounts.

No part of a 501(c)(3)'s net earnings may benefit any private shareholder or individual. Compensation must be reasonable.

501(c)(3) organizations cannot participate in political campaigns and must limit lobbying activities. Violation can result in loss of tax-exempt status.

Most states require nonprofits soliciting donations to register with the state attorney general or secretary of state. Requirements vary by state.

Many states require annual reports or renewals of charitable solicitation registration. Deadlines and fees vary.

If your organization is independently incorporated, you must file annual reports with your state's Secretary of State and pay any required fees.

If you have employees, comply with state labor laws including minimum wage, workers' compensation, and unemployment insurance.

Keep detailed financial records including income, expenses, assets, and liabilities. Use proper fund accounting to track restricted and unrestricted funds separately.

Donations restricted by donors for specific purposes must be tracked separately and used only for their intended purpose. Misuse of restricted funds is a serious compliance violation.

Send year-end giving summaries to all donors by January 31. Statements must include total contributions and the organization's 501(c)(3) status.

Keep receipts, invoices, bank statements, and documentation for all financial transactions. The IRS can request records at any time.

If you pay independent contractors $600 or more in a year, you must file Form 1099-NEC with the IRS and provide a copy to the contractor.

Most states require a minimum number of board members (typically 1-3). Board members must exercise fiduciary responsibility.

Document board meetings with written minutes. Key decisions — budgets, policies, leadership changes — should be recorded.

Board members and officers must disclose potential conflicts and recuse themselves from related decisions.

Your organization should have written bylaws that govern operations, board structure, officer roles, and amendment procedures.

Establish how long different types of records are kept. The IRS recommends keeping tax records for at least 7 years.

Protects against third-party claims for bodily injury or property damage. Essential for any organization that interacts with the public.

Protects board members and officers from personal liability for decisions made on behalf of the organization.

Required in most states if you have employees. Covers medical costs and lost wages for work-related injuries.

If your ministry uses vehicles for operations, appropriate auto insurance is required.