Understanding and Addressing Compliance Challenges in the Nonprofit Sector

When Shannon McCracken, founding President and CEO of The Nonprofit Alliance (TNPA), refers to Senate Judiciary Committee scrutiny of major foundations as a “flashing red signal,” it serves as an important call to attention for organizations like Production Solutions. TNPA has played a critical role in guiding our approach to supporting the compliance needs of our nonprofit clients.

Established in 2018, TNPA was created to serve as a unified voice for the nonprofit sector, with a mission to promote, protect, and strengthen organizations through advocacy and thought leadership. As an engaged and active member, Production Solutions has benefited from the essential knowledge and resources TNPA provides, helping us and our clients navigate today’s increasingly complex regulatory environment for 501(c)(3) organizations.

In her recent analysis, McCracken examines the Senate Judiciary Committee’s formal inquiries into the Gates Foundation, Rockefeller Brothers Fund, and Ford Foundation. She draws a crucial conclusion: even highly established nonprofits are subject to regulatory scrutiny. More significantly, McCracken points out that threats to tax-exempt status most often originate from governance shortcomings rather than mission-driven activities.

TNPA outlines a clear framework for achieving organizational compliance excellence within the nonprofit sector, emphasizing five fundamental areas:

• Governance and authorization controls
• Tax and filing obligations
• Registration and reporting requirements
• Financial oversight procedures
• Board compliance

These key insights, highlighted in TNPA’s recent blog on nonprofit operational foundations, offer practical strategies for strengthening compliance frameworks and safeguarding organizational missions in the long term. We strongly encourage all nonprofit leaders to read The Nonprofit Alliance’s full blog post for detailed guidance on maintaining tax-exempt status and public trust during this era of increased scrutiny.