Ensuring Nonprofit Compliance in 2025: Key Deadlines and Best Practices

Nonprofit organizations face numerous and often complex compliance requirements essential for maintaining their tax-exempt status, fostering donor trust, and ensuring accountability. These requirements encompass a range of areas, including financial transparency, regulatory filings, and adherence to data security standards.

As 2025 approaches, nonprofits must stay vigilant to remain compliant with federal and state mandates while addressing emerging obligations like sustainability reporting. By taking proactive measures, organizations can avoid penalties, safeguard operational continuity, maintain public confidence, and demonstrate a strong commitment to ethical and effective governance. Investing in robust compliance frameworks and leveraging technology can greatly aid nonprofits in managing these challenges and staying ahead of evolving regulatory landscapes.

This whitepaper provides an in-depth overview of the key compliance deadlines and actionable strategies nonprofits must implement to meet these obligations effectively. It also highlights the potential risks associated with non-compliance, offering practical insights for organizations to build resilience and stay aligned with federal and state requirements.

1. Beneficial Ownership Information (BOI) Reporting under the Corporate Transparency Act (CTA)

The Corporate Transparency Act (CTA) introduces a new requirement for certain entities, including some nonprofits, to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN). While 501(c)(3) organizations are typically exempt, other nonprofits must comply. This requirement aims to enhance transparency and combat illicit financial activities, but it places additional responsibilities on nonprofits that may not be familiar with these reporting obligations.

Key Deadlines

  • Existing Organizations (formed before January 1, 2024): Must file an initial BOI report by January 1, 2025. Organizations should assess their internal record-keeping to ensure all required information, including names, addresses, and identification numbers of beneficial owners, is readily available.
  • Organizations Formed in 2024: Required to file within 90 days of formation. New organizations must prioritize compliance during their initial setup phase to avoid missing deadlines.
  • Organizations Formed on or after January 1, 2025: Must file within 30 days of formation. Streamlining reporting processes early on can reduce administrative burdens for these newly established nonprofits.

What to Report

Organizations that comply must submit detailed information about their beneficial owners, including full legal names, birth dates, current addresses, and a unique identifying number such as a passport or driver’s license. Ensuring accuracy and completeness is critical, as errors or omissions can lead to penalties.

Penalties for Non-Compliance

Failure to comply can result in significant financial penalties, starting at $500 per day, adjusted for inflation, with current fines approximating $591 daily. Repeated non-compliance could lead to further scrutiny from regulators, reputational damage, and potential loss of donor confidence. Organizations should also know the potential criminal penalties for willful misrepresentation or failure to report.

Steps to Prepare

  1. Assess Applicability: Confirm whether your organization falls under the reporting requirements. Consult with legal experts if there is uncertainty.
  2. Compile Necessary Information: Collect and verify the required details of all beneficial owners.
  3. Implement Reporting Systems: Use tools like FinCEN’s online reporting portal to streamline submissions and ensure timely compliance.
  4. Train Relevant Staff: Educate team members about the importance of BOI compliance and the steps involved in meeting these requirements.
  5. Regularly Update Records: Establish a process for keeping ownership information current to prevent lapses in compliance.

 

By following these steps, nonprofits can ensure adherence to BOI requirements, avoid penalties, and maintain their focus on mission-driven activities.

2. Annual IRS Form 990 Filing

Filing Form 990 annually is a cornerstone of nonprofit compliance, providing transparency and accountability to stakeholders. This comprehensive form reports financial details, operational activities, governance, and compensation structures—critical factors in maintaining tax-exempt status and public trust. It also allows nonprofits to demonstrate fiscal responsibility and commitment to their mission.

Key Deadlines

  • For organizations following a calendar year, Form 990 is due by the 15th day of the fifth month after the fiscal year ends. For example, nonprofits with a fiscal year ending December 31, 2024, must file by May 15, 2025. Organizations with different fiscal years should calculate their deadlines accordingly.
  • Extensions: Nonprofits can request a six-month extension by filing Form 8868 before the original deadline, providing additional time to prepare accurate submissions.

Types of Form 990

  • Form 990-N (e-Postcard): For small organizations with annual gross receipts of $50,000 or less.
  • Form 990-EZ: For organizations with gross receipts less than $200,000 and total assets under $500,000.
  • Form 990: Providing a detailed account of financial and operational activities for larger organisations exceeding these thresholds.

Consequences of Non-Compliance

Failure to file for three consecutive years results in the automatic revocation of tax-exempt status. This can lead to:

  • Loss of Public Trust: Donors and stakeholders may question the organization’s integrity and financial accountability.
  • Costly Reinstatement Processes: Organizations must reapply for tax-exempt status by filing Form 1023 or Form 1024 and paying associated fees, which can delay operations.
  • Potential Penalties: Late filings can incur penalties ranging from $20 to $100 per day, depending on the organization’s size, with maximum penalties reaching $50,000 annually.

Steps to Ensure Compliance

  1. Maintain Accurate Records: Ensure all financial transactions, contributions, and operational details are well-documented throughout the year.
  2. Understand Filing Requirements: Determine which version of Form 990 applies to your organization based on its size and scope.
  3. Prepare in Advance: Begin compiling data early, including financial statements, donor records, and program service accomplishments.
  4. Engage Professional Assistance: Consider hiring a tax professional or CPA familiar with nonprofit accounting to review and submit the form.
  5. Use Digital Tools: Utilize nonprofit management software such as QuickBooks or Bloomerang to organize records and streamline the filing process.
  6. Educate Board Members: Ensure board members understand their roles in approving and reviewing Form 990 submissions to uphold governance standards.

By adhering to these practices, nonprofits can confidently meet their Form 990 filing obligations, avoid penalties, and continue focusing on their mission-driven goals.

3. State-Level Charitable Solicitation Registrations

Nonprofits soliciting donations across state lines must comply with individual state registration and renewal requirements. These requirements are designed to ensure transparency and protect donors, but they vary significantly by jurisdiction, adding complexity to the compliance process. Most states require annual renewals, which often involve submitting financial reports, lists of directors or officers, and other key documentation.

Key Details

  • Who Must Register: Any nonprofit soliciting funds from residents in a state may need to register, even if they do not have a physical presence there. Depending on the jurisdiction, certain exemptions may apply, such as for religious organizations or those below specific revenue thresholds.
  • Required Documentation: Common requirements include copies of the nonprofit’s IRS Form 990, audited financial statements, organizational bylaws, and contracts with professional fundraisers. States may also require a disclosure statement to be included in solicitation materials.
  • Fees: Registration fees vary widely by state, ranging from nominal to several hundred dollars, often based on the nonprofit’s revenue.

Key Actions

  • Monitor Renewal Deadlines: Each state has specific annual renewal periods. Develop a compliance calendar to track these deadlines, ensuring ample time for preparation.
  • Submit Timely Documentation: Ensure all required information is accurate and submitted before deadlines to avoid penalties or suspension of solicitation privileges.
  • Leverage Technology: Utilize tools like Harbor Compliance or Labyrinth to streamline multi-state registration processes and maintain a centralized record of compliance statuses.
  • Understand State-Specific Rules: Review each state’s requirements regularly, as rules may change annually.

Consequences of Non-Compliance

  • Penalties: Noncompliance can result in fines, revoked solicitation privileges, and potential legal action. States may impose penalties for late filings or failure to register.
  • Reputational Damage: Public awareness of noncompliance can harm donor trust and deter future contributions.
  • Operational Challenges: Loss of fundraising privileges in key states could significantly impact a nonprofit’s revenue streams and mission effectiveness.

It’s important to note that while 41 states and the District of Columbia require charitable solicitation registration, the specific requirements and exemptions can vary. For example, some states may exempt certain types of organizations, such as religious institutions or educational organizations, from registration. Additionally, failing to register can be severe, including fines, loss of tax-exempt status, and damage to the organization’s reputation. Given the complexity and variability of state requirements, many nonprofits work with specialized service providers or legal experts to manage the registration process and ensure compliance across multiple jurisdictions.

By proactively managing state-level charitable solicitation registrations, nonprofits can maintain donor trust, avoid legal complications, and focus on their mission-driven activities.

4. Compliance with the Corporate Sustainability Reporting Directive (CSRD)

For nonprofits operating in the European Union or with significant EU interactions, the Corporate Sustainability Reporting Directive (CSRD) introduces new reporting requirements to enhance transparency and sustainability accountability. While primarily targeting corporations, certain large nonprofits—particularly those meeting specific employee, revenue, or asset thresholds—may also need to comply.

Key Reporting Requirements

  • Scope: Nonprofits subject to the CSRD must provide detailed reports on sustainability metrics, including environmental impact, governance structures, and social contributions.
  • Double Materiality: Reporting must cover how sustainability issues affect the organization and how the organization’s activities impact society and the environment.
  • Alignment with Standards: Reports must adhere to the European Sustainability Reporting Standards (ESRS), ensuring consistency and comparability.

Key Deadlines

  1. January 1, 2025: Reporting for financial year 2024 (entities under the Non-Financial Reporting Directive).
  2. January 1, 2026: Reporting for financial year 2025 (other large entities).

Steps to Prepare for CSRD Compliance

  1. Assess Applicability: Determine if your nonprofit meets the criteria for CSRD reporting, such as the number of employees (250+), annual revenue (€40 million+), or total assets (€20 million+).
  2. Develop Reporting Mechanisms: Establish systems to gather and analyze data on sustainability metrics, ensuring accuracy and comprehensiveness.
  3. Engage Stakeholders: Collaborate with board members, donors, and community partners to align sustainability objectives with reporting requirements.
  4. Seek Expertise: Consult sustainability experts or external consultants to navigate the complexities of CSRD compliance and implement best practices.
  5. Invest in Technology: Leverage digital tools to automate data collection and streamline the creation of sustainability reports.

Benefits of Compliance

  • Enhanced Transparency: Demonstrating commitment to sustainability can strengthen donor trust and stakeholder relationships.
  • Access to Funding: Many EU-based grants and funding opportunities now prioritize organizations with robust sustainability practices.
  • Reputational Gains: Being a leader in sustainability reporting can enhance your nonprofit’s image and attract environmentally-conscious donors.

 

By understanding the requirements and proactively preparing for CSRD compliance, nonprofits can position themselves as responsible and forward-thinking organizations, capable of driving meaningful change while meeting regulatory obligations.

5. Payment Card Industry Data Security Standard (PCI DSS) Compliance

Nonprofits accepting credit card donations must adhere to PCI DSS requirements to protect sensitive donor information. These standards are designed to safeguard cardholder data by establishing secure processes for handling, transmitting, and storing credit card information. Failure to comply can lead to severe penalties, including fines, reputational damage, and increased vulnerability to data breaches.

Key Components of PCI DSS

  1. Secure Network: Nonprofits must implement and maintain firewalls and encryption methods to protect payment data during transmission.
  2. Cardholder Data Protection: Sensitive cardholder data, such as account numbers and verification codes, must be securely stored or masked where storage is necessary.
  3. Vulnerability Management: Regularly update and patch all software to address known vulnerabilities, including antivirus software.
  4. Access Control Measures: Limit access to payment information on a need-to-know basis and use unique IDs for each user with access.
  5. Regular Monitoring and Testing: Conduct system testin

Key Steps

  • Determine Your SAQ Type: Nonprofits should assess payment processing methods to identify the applicable Self-Assessment Questionnaire (SAQ). Most nonprofits use SAQ A, applicable for organizations outsourcing all cardholder data processing to third-party vendors. Those handling payments directly may require SAQ D, which involves more rigorous compliance requirements.
  • Establish a Secure Environment: Ensure all credit card data systems comply with PCI DSS security protocols. Use encrypted payment gateways and secure servers for processing transactions.
  • Conduct Regular Security Audits: Schedule regular audits to evaluate your cybersecurity measures. This includes penetration testing and vulnerability scans to identify and address weaknesses.
  • Train Staff: Provide comprehensive training to employees who handle payment information. Ensure they understand the importance of secure handling and reporting of suspicious activity.
  • Engage a Qualified Security Assessor (QSA): Consider hiring a QSA to help guide the compliance process and validate your organization’s adherence to PCI DSS standards.

Consequences of Non-Compliance

  • Financial Penalties: Noncompliance can result in fines ranging from $5,000 to $100,000 per month, depending on the level of violation.
  • Reputational Harm: A data breach caused by noncompliance can erode donor trust and deter future contributions.
  • Operational Disruptions: Noncompliance may lead to increased scrutiny from payment processors and higher transaction fees.

Best Practices for Ongoing Compliance

  1. Automate Compliance Processes: Use tools like Trustwave or Qualys to automate security monitoring and compliance checks.
  2. Encrypt All Data: Ensure all cardholder data is encrypted during storage and transmission.
  3. Document Security Policies: Maintain clear documentation of your security measures and PCI DSS compliance processes to streamline audits and reviews.
  4. Regularly Update Systems: Keep all software and hardware up-to-date with the latest security patches.
  5. Conduct Internal Reviews: Schedule periodic internal reviews to ensure continued adherence to PCI DSS requirements.

By adhering to PCI DSS compliance standards, nonprofits can significantly reduce the risk of data breaches, protect donor information, and maintain the trust of their stakeholders.

Best Practices for Nonprofit Compliance

To ensure smooth compliance with the above requirements, nonprofits should consider the following strategies:

Develop a Compliance Calendar

Centralize all relevant federal, state, and international deadlines into a shared compliance calendar accessible to key stakeholders. Integrate reminders and task assignments to ensure that crucial dates are not missed, streamlining the preparation of documentation and filings.

Implement Real-Time Tracking Systems

Leverage advanced software tools like Blackbaud Compliance Tracker or CyberGrants that can provide automated alerts for changes in beneficial ownership, notify about approaching compliance deadlines, and monitor donor data security requirements. Examples include using Workiva for financial reporting automation or integrating platforms like TrustLayer to streamline risk management, reduce administrative efforts, and enhance accuracy.

Regularly Review Governance Policies

Schedule periodic reviews of governance policies and organizational practices to align with the latest regulatory requirements. Include board members and compliance officers in these reviews to ensure comprehensive updates and strategic oversight.

Engage Compliance Experts

Partner with legal and financial advisors specializing in nonprofit compliance to gain insights into emerging regulatory trends. Conduct workshops or training sessions for staff to build internal capacity in understanding and implementing compliance measures effectively.

Conclusion

Nonprofit compliance in 2025 involves addressing existing and new regulations across various domains, including financial reporting, donor data security, and state-level registrations. The increasing complexity of these requirements necessitates proactive planning,the adoption of advanced compliance tools, and collaboration with legal and financial experts. By aligning operations with these best practices, nonprofits can:

  1. Maintain Tax-Exempt Status: Timely and accurate filings such as Form 990 and BOI reports ensure continued recognition as a tax-exempt entity.
  2. Strengthen Donor Trust: Transparent operations and adherence to regulations foster confidence among stakeholders and supporters.
  3. Mitigate Risks: Proactive compliance minimizes risks of financial penalties, reputational damage, and operational disruptions.
  4. Enhance Operational Efficiency: Leveraging tools like compliance trackers and automating reporting processes reduces administrative burdens and enables nonprofits to focus on mission-driven activities.

 

Adherence to these guidelines will ensure legal compliance and build resilience, allowing organizations to navigate a dynamic regulatory landscape while achieving their goals effectively. With the right strategies and resources, nonprofits can thrive as responsible, transparent, and impactful entities in 2025 and beyond.

FAQs

What is BOI reporting under the Corporate Transparency Act?

Beneficial Ownership Information (BOI) reporting requires certain nonprofits to disclose detailed ownership information to FinCEN for transparency and combating illicit activities. Exemptions exist for most 501(c)(3) organizations.

When is the IRS Form 990 filing deadline for nonprofits in 2025?

For organizations following a calendar year, the deadline is May 15, 2025. Extensions are available by filing Form 8868 before the original deadline.

What are the consequences of non-compliance with state-level charitable solicitation registrations?

Penalties may include fines, revoked solicitation privileges, and reputational damage. Some states also impose additional legal action for repeated violations.

Do all nonprofits need to comply with PCI DSS standards?

Nonprofits accepting credit card payments must adhere to PCI DSS to secure donor information, reduce the risk of data breaches, and avoid financial penalties.

How does the Corporate Sustainability Reporting Directive (CSRD) impact nonprofits?

Nonprofits operating in or interacting with the EU may need to comply if they meet thresholds for employees, revenue, or assets. Compliance involves reporting on sustainability metrics and aligning with ESRS standards.

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