How Nonprofits Can Educate Board Members About Compliance

Your board members play critical roles in the many aspects of running a nonprofit, making important backend decisions and publicly representing your mission to the community.

However, between their professional and personal pursuits, your board members are busy people. Plus, for many organizations, board members also have minimal prior nonprofit experience.

While important day-to-day operations and decisions are likely to stay on board members’ radar, what about the more unfamiliar (yet critically important) responsibilities that come up less frequently?

Perhaps the most important consideration in this category is compliance, which can’t be forgotten or put off. Your board members must have the context and resources they need to lead your organization’s compliance efforts proactively and responsibly.

How? Let’s take a look at four key tips for training board members on nonprofit compliance and then ensuring uninterrupted adoption over time.

1. Provide general education on nonprofit compliance.

Begin by laying the groundwork so that everyone will be able to speak the same language when it comes to compliance. Give your board members a general orientation to the key areas of nonprofit compliance, including:

• Financial. The board should understand the ways in which your nonprofit must interact with the IRS to maintain its status as an active 501(c)(3) in good standing. File 990’s guide to filing nonprofit taxes provides a helpful overview of the most important processes, but remember that you’ll need to dig deeper for more specific situations, such as filing Form 8230 to report noncash gifts over $500 in value.
• Legal. Maintaining financial compliance allows you to keep legally operating as a nonprofit, but your organization’s legal necessities go further than that. Teach your board members about charitable solicitation registration, registered agents, fiduciary responsibilities, standardized governance procedures, classification of employees, event-specific regulations, and more.
• Ethical. Explain ethical considerations for maintaining compliance and your reputation in the community. Cover topics like conflicts of interest, gift acceptance policies, restrictions on nonprofit political activities, gift substantiation requirements, your internal controls, and other policies established in your bylaws. While some nonprofit ethics practices are very clearly defined and required by law, others are hazier, so a shared understanding of what is and isn’t acceptable (and why) is particularly critical in this area.

If you’re seeking to revamp your organization’s approach to compliance or are a very young organization, take the time to teach everyone—all board members and members of the executive staff—about these building blocks of nonprofit compliance.

A special seminar series or day-long deep dive can get the job done, but don’t overlook documentation. Board members should be able to easily revisit your educational materials whenever needed. You can also easily add these materials to onboarding or training packets for new board members who join your nonprofit in the future.

2. Build compliance into your board’s normal work.

After establishing a shared working knowledge of nonprofit compliance, make it an ongoing priority. Here are a few ideas for building compliance knowledge into your board’s ongoing activities:

• Add a curriculum aspect to your board meetings. Each time your board meets, devote a few minutes to covering a specific compliance or governance topic in greater depth. This rotating, recurring agenda item is a sustainable way to keep compliance on everyone’s minds while helping them brush up on their know-how throughout the year.
• Standardize your board member onboarding process. As mentioned above, add educational materials about compliance to your board member onboarding or orientation process. If you don’t have a standardized onboarding process, create one now—this simple addition can go a long way to align everyone’s understanding of their responsibilities and expectations over the long run.
• Require board members to renew a compliance credential. Consider creating your own compliance test based on the training materials you gather, and then require board members to renew this unofficial “credential” each year. While it takes extra work on your end, this process very concretely reinforces your compliance training and workflows. It also gives you clear records of who’s taking compliance seriously and who needs extra nudging or support to serve your organization to their fullest potential.

Whichever combination of adoption techniques you choose, it’s a good idea to regularly gauge your board’s understanding of their compliance responsibilities regardless of whether you tie it to a credentialing process. Double the Donation’s board self-assessment guide outlines a self-guided process you can adapt for your organization’s needs.

Remember, even beyond compliance specifically, it’s a good idea to regularly check in with board members to ensure you’re all working with shared expectations, priorities, and knowledge. A high-powered, unified board can unlock significant growth and dynamism for nonprofits!

3. Reinforce board compliance training with professional help.

Don’t hesitate to bring in the experts to support your organization’s compliance needs and goals. Many different resources can provide services and resources to help your board stay on top of compliance. They include:

• Training services. For straightforward training on nonprofit compliance, you have many options. Curriculums and seminars led by nonprofit legal professionals, classes through higher-ed nonprofit management programs,  e-learning options, and more can all give your training efforts immediate structure and accountability.
• Consultants and outsourced services. If needed, you can outsource many aspects of your compliance management to third parties. Consultants can also help, either by helping you build more sophisticated governance and internal structures or in more specialized ways. For example, if you hire a fundraising consultant to help with a major campaign, ask them about their experience with fundraising compliance and if they can provide guidance on that front as it relates to your campaign.
• Dedicated software. For some of the more cut-and-dry aspects of compliance, like tax filing, your likely best bet is to rely on software designed specifically for the purpose, like tools for quickly populating and filing your Form 990 each year. This will take the guesswork out of the process and minimize the risk of compliance lapses.

You should also make an effort to stay tuned into the world of nonprofit compliance. You might sign up for newsletters, follow reputable industry figures on LinkedIn, and ask for regular updates from any compliance experts or services you contract.

Remember, the world of compliance regulations changes fast, and overlapping deadlines can get confusing. For example, do your board members know that Form 990 deadlines depend on the specifics of your organization’s fiscal year? Do you have reminders in place leading up to your deadline that will keep requirements on your mind?

Keeping an ear to the ground is free and easy! Frequent reminders popping up in your feeds and inbox make it simple to stay on top of the necessities as they arrive or evolve over time.

4. Try interpersonal learning to support compliance training.

Finally, consider a few tactics for making compliance training and reinforcement more engaging for board members. By getting them more directly involved in guiding the growth of your organization’s compliance culture, you’ll create more buy-in and personal investment.

For example, you might:

• Set up roleplaying scenarios. If you cover compliance topics on a rolling basis in your board meetings, try mixing in a few roleplaying exercises for board members to test their knowledge and learn from one another. For example, ask a board member to talk you through the process of securing an extension for a missed filing deadline, or ask two members to act out how to handle turning down a gift that conflicts with your gift acceptance policies. (Remember, board members should take active roles in fundraising, where compliance is just as important as it is in the back office!)
• Encourage discussion. More generally, you should encourage board members to discuss compliance and ask questions. Again, regularly including compliance in your meeting agenda will create natural opportunities for this, but look beyond the boardroom. Infuse compliance mindfulness and proactivity into all aspects of your culture, and let your board members know that you need their help by leading by example.
• Allow board members to take the reins. If you’re confident in one or more board members’ compliance knowledge and willingness to ask questions as needed, consider having them lead the way by developing the training curriculum, setting recurring agenda items, and generally serving as the organization’s “compliance czar.” When your board helps organize fundraising campaigns or any other strategic initiatives, ask someone on that committee to take ownership of all related compliance and due diligence tasks.

Your nonprofit’s culture should be dynamic. While many aspects of compliance can feel dry, how you think about and approach them doesn’t have to be.

After all, compliance underpins your whole mission. By encouraging more active involvement and ownership, you help your board members make this connection and see how all your organization’s workflows and responsibilities contribute to the whole.

Compliance and board engagement are two common pain points for nonprofit organizations. Together, they can become a recipe for frustration and risk.

But don’t forget that your organization has an active role to play. Empower board members to think about compliance and understand their responsibilities, then create accountability mechanisms. Create opportunities to make compliance a bit more interesting, and treat it as a key component of your mission. In no time, your board will be helping you run your organization more smoothly than ever.