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Compliance Challenges for Not-for-Profit Organizations

July 1, 2024 by Nicole Seaholm
Client Accounting & Advisory Services

Navigating the challenges that not-for-profit organizations face in their day-to-day operations can lead to unnecessary frustrations for staff, board members, and volunteers. Below are three of the biggest challenges not-for-profit organizations face.

  1. Tracking and Fulfilling Donor Restrictions: When a donor sends a donation to a not-for-profit organization, they can restrict its use for a specific purpose. It falls on the Organization to track the restriction and ensure the donation is used for the intended purpose.
  2. Following Compliance Requirements:
    1. Minnesota 501(c)3 organizations are required to have an audit performed on their financial statements if their revenue is more than $750,000 and include a copy of the audited financial statements with the Minnesota Attorney General’s report.
    2. The Organization is required to file a form 990 by the 15th of the fifth month after year-end. For example, if the Organization’s year-end is December 31, then the Form 990 is due by May 15. A six-month filing extension can be completed to delay the due date.
    3. Not-for-profit organizations must make copies of their financial statements and Form 990 available for board, volunteer, and donor review upon request. Availability ranges between posting them on the Organization’s website to printing hard copies that users can only view at the Organization’s office.
  3. Ensuring Segregation of Duties: To maximize their mission, Organizations will use most monetary resources to fulfill program activities. This leaves less money available to hire employees at competitive rates, leading to not-for-profits being understaffed and unable to segregate job duties opening them up to fraud risk.

While these challenges may seem difficult to navigate, there are solutions that can remove the burden on staff, board members, and volunteers. If you are experiencing any of these challenges, we would be happy to help you develop a plan to eliminate them.  Please contact Nicole Seaholm via email at nicole_seaholm@copelandbuhl.com or call 952-476-7151 to start the conversation today on how outsourcing the accounting function can benefit you!