Running a nonprofit is about more than delivering impact — it’s also about staying legally compliant every step of the way. Whether you’re launching a new 501(c)(3) or managing a well-established organization, compliance isn’t optional. It’s the foundation that allows you to operate, fundraise, and grow with confidence.
To help simplify what can often feel overwhelming, we’ve created a practical nonprofit compliance checklist that covers key state and federal requirements. Use it to ensure your organization stays in good standing — and link back here as your go-to reference.
💡 Need a trusted partner to manage your nonprofit compliance? Learn more about our compliance services.
Nonprofit Compliance Checklist
✅ 1. Maintain 501(c)(3) Federal Tax-Exempt Status
Once you’ve received 501(c)(3) status from the IRS, you must actively maintain it by fulfilling annual reporting and recordkeeping obligations.
Key Requirements:
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File IRS Form 990, 990-EZ, or 990-N annually depending on your revenue.
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Keep your organization’s mission and programs aligned with your original tax-exempt purpose.
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Avoid excessive unrelated business income, which can trigger IRS scrutiny.
📌 Missing an IRS filing for three consecutive years can result in automatic revocation of your tax-exempt status.
👉 Need help with IRS Form 990 filings? Our compliance team can handle it for you.
✅ 2. Register and Renew State Charity Registrations
If your nonprofit solicits donations — even online — you may be required to register with the state’s charity office. Many states also require annual renewals and financial disclosures.
Key Requirements:
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Complete initial charitable solicitation registration in the states where you raise funds.
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File annual renewal documents, which may include financial reports or IRS Form 990.
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Be aware of differing requirements for online fundraising platforms.
📌 Over 40 states regulate charitable solicitation — and failing to register can result in fines or public listing as noncompliant.
✅ 3. Stay in Good Standing with State Corporate Filings
To legally operate in your home state, you must maintain corporate good standing. This includes regular filings and fees.
Key Requirements:
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File annual reports with your Secretary of State or equivalent agency.
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Maintain a registered agent with a physical address in your state.
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Update corporate information (like board members or address) as needed.
📌 Neglecting state corporate filings can lead to administrative dissolution of your nonprofit.
✅ 4. Uphold Governance and Board Responsibilities
Strong governance practices aren’t just best practice — they’re part of staying compliant.
Key Requirements:
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Adopt and regularly review your bylaws.
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Hold regular board meetings with recorded meeting minutes.
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Maintain and enforce a conflict-of-interest policy.
📌 Many states and funders require documentation of active board governance.
💡 Bonus: Consider providing your board with a compliance overview annually.
✅ 5. Ensure Financial Transparency and Internal Controls
Transparent, well-organized finances are essential for audits, grant applications, and IRS compliance.
Key Requirements:
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Maintain accurate books using nonprofit-specific software (e.g., QuickBooks for Nonprofits).
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Reconcile bank statements monthly.
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Track restricted vs. unrestricted funds.
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Implement segregation of duties for financial tasks.
👉 Need help setting up compliant financial systems? Our nonprofit bookkeeping team is here to help.
✅ 6. Understand Fundraising and Donation Rules
Fundraising is highly regulated, especially when it comes to raffles, auctions, and digital campaigns.
Key Requirements:
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Ensure compliance with charitable solicitation laws before launching campaigns.
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Provide donors with required gift acknowledgment letters.
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Comply with raffle and gaming laws in your state.
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Follow state-specific rules when using online giving platforms (e.g., Givebutter, Classy).
📌 Accepting donations online often triggers registration requirements in multiple states.
✅ 7. Comply with Employment and Payroll Laws
Hiring staff or contractors introduces additional legal obligations.
Key Requirements:
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Classify workers correctly (employee vs. independent contractor).
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Withhold and remit payroll taxes.
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Provide necessary insurance (unemployment, workers’ comp).
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Follow Department of Labor and IRS employment regulations.
📌 Noncompliance with payroll laws can lead to IRS penalties and loss of trust.
✅ 8. Protect Donor Data and Confidential Information
In the digital age, data privacy and cybersecurity are essential components of compliance.
Key Requirements:
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Collect and store donor data securely.
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Use reputable platforms for donation processing and email marketing.
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Be transparent in your privacy policy about how you handle data.
💡 Consider implementing a simple data security policy and training staff on best practices.
