Nonprofit Compliance Guide
Forming your nonprofit is just the beginning. Staying compliant — with federal filings, state requirements, and governance obligations — is what keeps your mission alive and your organization in good standing.
Key Compliance Areas
Nonprofit compliance spans federal, state, and local requirements. Here are the major areas every organization needs to manage.
Federal IRS Filings
Every 501(c)(3) must file annually with the IRS — Form 990-N, 990-EZ, or 990 depending on your organization's size. Miss three consecutive years and the IRS automatically revokes your tax-exempt status.
- Form 990-N (e-Postcard): Annual gross receipts under $50,000
- Form 990-EZ: Gross receipts under $200,000 and assets under $500,000
- Form 990: Gross receipts of $200,000+ or assets of $500,000+
- Due: 15th day of the 5th month after your fiscal year ends
State Annual Reports
Most states require nonprofits to file an annual (or biennial) report with the Secretary of State. Deadlines, fees, and consequences vary widely by state — from free online filings to $100+ with administrative dissolution for non-compliance.
- Check your state's filing deadline and fee
- Most states allow (or require) online filing
- Non-compliance can result in administrative dissolution
- Some states have grace periods; others don't
Charitable Solicitation Registration
Over 40 states require nonprofits to register before soliciting donations. If you fundraise in multiple states — including online fundraising — you may need to register in each state where donors are located.
- Register before you start soliciting contributions
- Annual renewals required in most states
- Online fundraising may trigger multi-state registration
- Penalties range from fines to cease-and-desist orders
Board Governance
Good governance isn't just best practice — it's a compliance requirement. The IRS reviews your governance practices as part of your Form 990, and poor governance can trigger audits or jeopardize your exempt status.
- Hold regular board meetings and document with minutes
- Maintain and enforce a conflict of interest policy
- Review and update bylaws periodically
- Ensure proper financial oversight and segregation of duties
State Tax Exemptions
Federal 501(c)(3) status doesn't automatically exempt you from state taxes. Many states require a separate application for income tax, sales tax, or property tax exemption — and the process varies significantly.
- Some states grant automatic exemption with federal 501(c)(3)
- Others require a separate state application
- Sales tax exemption varies: some states exempt at point of sale, others use a refund process
- Property tax exemption is often handled at the county level
Employment & Financial Compliance
If your nonprofit has employees, you must comply with federal and state employment laws — payroll taxes, workers' compensation, unemployment insurance, and wage requirements. Financial compliance includes maintaining accurate books and proper fund accounting.
- Withhold and remit payroll taxes (federal and state)
- Properly classify workers (employee vs. contractor)
- Maintain separate tracking of restricted vs. unrestricted funds
- Prepare for potential audits with clean financial records
Annual Compliance Calendar
Key deadlines for calendar-year nonprofits. If your fiscal year differs, adjust accordingly.
January
- W-2s and 1099s due to recipients (Jan 31)
- Property tax exemption renewals (varies by county)
March
- Q1 board meeting
- Review annual fundraising plan
- Begin Form 990 preparation
May
- Form 990 due (May 15 for calendar-year orgs)
- Charitable solicitation renewals (many states)
- State annual report deadlines (varies)
November
- Annual report deadlines (NC and others)
- Year-end fundraising campaign
- Board elections and governance review
State-by-State Compliance Guides
Every state has its own compliance requirements — income tax, sales tax, franchise tax, annual filings, and charitable solicitation rules. Select your state for a detailed breakdown.
Frequently Asked Questions
What happens if my nonprofit loses its tax-exempt status?
If the IRS revokes your 501(c)(3) status — usually for failure to file Form 990 for three consecutive years — your organization becomes subject to federal income tax on all revenue. Donations to your organization are no longer tax-deductible for donors. You'll need to reapply for exemption, which means filing a new Form 1023 or 1023-EZ and paying the filing fee again.
How often do I need to file Form 990?
Annually. Form 990 (or 990-EZ or 990-N) is due on the 15th day of the 5th month after your fiscal year ends. For calendar-year organizations, that's May 15. You can request one automatic 6-month extension using Form 8868.
Do I need to register in every state where I have donors?
Potentially. Over 40 states require charitable solicitation registration, and online fundraising can trigger registration requirements in states where your donors are located. The rules vary by state — some have exemptions for small organizations, and a few states don't require registration at all.
What is a compliance audit vs. a financial audit?
A financial audit examines your financial statements and is conducted by a CPA. A compliance audit (or review) assesses whether your organization is meeting its legal obligations — state filings, governance requirements, tax exemptions, and regulatory registrations. Wylie Advisory's Governance Review is a strategic governance and compliance review, not a financial audit.
Can my nonprofit be dissolved involuntarily?
Yes. Most states will administratively dissolve a nonprofit that fails to file required annual reports. The timeline varies — some states give 60 days after the deadline, others may wait longer. Dissolution means your organization loses its legal status, liability protection, and ability to conduct business. Reinstatement is possible but often complicated.
How do I know if my nonprofit is in good standing?
Check with your state's Secretary of State office — most have an online business entity search where you can verify your organization's status. Also confirm your IRS tax-exempt status is active using the IRS Tax Exempt Organization Search tool. If anything looks off, a Governance Review can identify and help prioritize what needs attention.
Not sure where you stand?
A Governance Review gives you a clear picture of your organization's governance and operational health — what's in order, what needs attention, and what to prioritize. Written report with findings, a health score, and an actionable plan.
Compliance tips delivered
Get reminders about key filing deadlines, governance best practices, and compliance updates for your nonprofit.