Organizational Best Practices: Corporate Compliance Plans

Nonprofits are required to adhere to state and federal regulation and legislation. While its philanthropic mission is the driving force behind an  organization, legal obligations must be taken into consideration. A Corporate Compliance Plan can be a valuable tool that can help facilitate a nonprofit’s accountability and transparency, aid in the discovery of illegal or unethical actions, and assist in ensuring that organizations comply with regulations and laws governing public charities. Nonprofits must focus on corporate compliance because certain compliance violations can lead to penalties as well as adverse publicity. Below are specific steps towards and essentials of a good corporate compliance plan that nonprofit leaders should consider when running an organization.

Evaluate Corporate Governance Documents

One of the most important steps a nonprofit can take to ensure corporate compliance is to review its organizational documents and create and strengthen those that are already in place. Documents such as a Document Retention Policy, a Code of Ethics, a Conflict of Interest Policy, and a Whistleblower Policy are integral to a nonprofit’s corporate compliance. Establishing standards and procedures and effectively communicating them to personnel will help to protect organizations from possible compliance infractions.

Manage Financial Documentation and Reporting

Nonprofits must file an annual informational tax return with the IRS on Form 990, Form 990-EZ, or Form 990-N; they are also obligated to adhere to IRS guidelines on acknowledging donations. By implementing financial review policies, such as Form 990 or Gift Acceptance, organizations protect themselves from penalties. Nonprofits also rely heavily on funding generated by grants and financial transparency is vital; financial audits and organizational monitoring can go a long way in detecting unethical activity that may put the organization at risk.

Assign a Corporate Compliance Officer

As nonprofits grow, they should consider designating a senior manager as the Corporate Compliance Officer to oversee compliance within the organization. As the title suggests, the Officer administers the Corporate Compliance Plan and communicates the Plan to the Board and staff, monitors the organization for potential compliance violations, and investigates reports of suspected violations.

As an organization grows and its regulatory and reporting obligations become more complex, creating a Corporate Compliance Plan that details standards and procedures based on state and federal regulations and legislation may be prudent.    Pro Bono Partnership and its team of experienced volunteers have helped organizations across the tri-state area review and draft policies and plans to assist with corporate compliance.  Our volunteers include compliance attorneys and compliance professionals.

Case Example:

peer-picture-on-capitol-hill 500 x 333Collaborative Support Programs of New Jersey, Inc. provides flexible community-based services that promote responsibility, recovery, and wellness through the provision of community wellness centers, supportive and respite housing, human rights advocacy, and educational and innovative programs. Pro Bono Partnership paired the organization with professionals from Johnson & Johnson to revise and review its Corporate Compliance Plan. The assistance provided by Thomas J. Stukane, Esq., Senior Counsel, Law Department, and Johnson & Johnson’s Compliance Officer for Supply Chain, Stacey Lallier, will provide Collaborative Support Programs with the security that it has a plan in place to help minimize the risk of illegal and unethical conduct.