US Nonprofit Charity Compliance Checklist

Who is this article for?

This checklist is designed to ensure a nonprofit, tax-exempt charitable organization established in the United States complies with the required regulations.

About This Checklist

For non-profits and tax-exempt charities, two types of filings and compliance activities need to be done. There are annual federal filings and state-specific filings. Outside of federal and state-specific filing, there are certain records you must keep.

Topics Covered

Federal Compliance

According to the IRS, to maintain 501(c) nonprofit status, organizations must:

Maintain a Registered Agent

File the appropriate document from the Form 990 series , often done by an accountant or CPA.
- Return is due on the 15th day of the 5th month after the end of the organization's fiscal year. It may be extended for six months by filing Form 8868
- If your annual receipts amount to less than $50,000, you may use Form 990-N to submit an annual report
- If your gross receipts are less than $20,000 and total assets are less than $500,000, you may use Form 990-EZ or Form 990
- All private foundations should use Form 990-PF.
- If you earn income from a trade or business that is not related to the charitable purpose of your organization worth $1,000 or more, you have to file Form 990-T.
- Note that failing to file Form 990 for three years in a row will cause the forfeiture of the charity 501(c) status. The organization may then need to re-apply for charity status.

Submit annual financial statements

If you have employees, you have to pay employment taxes. File Form 941, Employer's Quarterly Federal Tax. Use your employee's Form W-4 to figure out how much to withhold.
- Federal income tax withholding (FITW)
- Social Security and Medicare taxes (FICA)
- Note: Nonprofits are exempt from paying Federal unemployment taxes (FUTA)
- If you are a small employer, you may be eligible to file the annual Form 994 instead.
- Ensure that your employees are classified as employees and are not considered independent contractors. See our article on independent contractors for more guidance.

Pay unrelated Business Income Tax as advised by an accountant or CPA.

State-Specific Compliance

Depending on the state that you’re operating in, you need to file certain documents, which include:

State tax reporting
Licensing and permit for charitable solicitation or fundraising

State-Specific Compliance Guides:

Record Keeping

Record keeping is essential for any organization, but even more so for a nonprofit or charity, as you are exempt from taxes, and donations are often accepted. You must ensure you are accurate and transparent with your records to build donors' trust and protect the organization's mission.

According to the IRS compliance guide for charities, these are the documents that you should keep permanently in your files.

IRS Form 1023
IRS Determination letter
Articles of incorporation
Bylaws
Corporate resolutions or amendments
Minutes of board meetings
IRS Form 990 tax returns
Annual reports

It is also recommended to keep records of the following:

Audit reports
Year-end financial statements
Insurance policies
Real estate deeds, mortgages, bills of sale
State sales tax exemption letter
State unemployment tax records
Payroll records
Employment and termination agreements
Retirement and pension plan documents

Additional Record Keep Recommendations
Keep non-tax records until they are no longer needed for non-tax purposes. You can also keep records within the statute of limitations for a return that runs three years after the date the return is due or filed, whichever is later.

Other documents are also dependent on your nonprofit’s document retention policy. Remember that this applies to both physical and digital documents.

7 years

Contracts
General ledgers
Business expense records
IRS Form 1099
Donor records and acknowledgment letters
Grant applications and contracts

3 years

General correspondence

Employment tax records need to be kept for four years after filing the fourth quarter of each year.

Always check with your accountant or advisor on what other documents may be needed should an IRS audit be conducted.

Organizational Requirements

Outside of federal and state-specific filing, there are basic requirements as a nonprofit charity to keep your charity status.

Is your organization registered as a corporation? If you can answer the questions below, it is likely you are incorporated.
- Do you know who your registered agent is?
- Do you have articles of association or an organizational consent document (sometimes called a constitution)?
- Do you have an Employer Identification Number (EIN)?
- Do you have a copy of your Determination Letter from the IRS (a letter from the IRS stating the tax-exempt status was accepted)? You can obtain a copy from the IRS here.
- Do you have Bylaws and are they up-to-date?

If you accept donations, are you following your state requirements for charitable solicitation or fundraising registration?

Did you hold your required annual board meeting(s), and do you have a copy of the meeting minutes? The bylaws set the number of annual meetings; legally, it must be at least one.

Recommended Compliance

Are you staying politically impartial? If you do not know, see here.
Do you have compliant email practices? Check here
Do you need or have insurance?
- For example, employment, D&O, and general liability insurance
Do you have a Power of Attorney if an attorney or an individual represents your nonprofit?
Do you have employees? (requirement details coming soon)
- If you use independent contractors, you may want to look here to ensure you are classifying workers correctly.

Reference - IRS Tax Forms

Form 990
Form 990-EZ
- Gross receipts of less than $200,000
- Total assets less than $500,000
Form 990-N
- Gross receipts of $50,000 or less
Form 990-PF (For private foundations)
Form 990-T
- Unrelated gross business income of $1,000
Form 941 (Employer's Federal Quarterly Withholding Returns)
Form W-2 (Annual Federal Wage and Tax Statement)