5 Regulatory Risks Quality HR Can Help You Avoid

All businesses must manage their compliance with various regulations, such as data privacy regulations, health and safety regulations, employee rights and pay regulations, and so on. However, non-profits often have fewer resources to help with maintaining compliance than for-profit businesses.

The nature of non-profit work is that most of your earnings go towards your cause, rather than your business itself. This means that you may have a tighter budget for operations, compared to businesses with fully staffed HR and accounting departments. However, it is possible to stay on top of regulatory compliance, even as a non-profit, especially with the help of outsourced HR professionals.

In this post, we’ll discuss how non-profit organizations can stay on top of their HR compliance and where they can find help in doing so.

Regulatory Compliance for Non-Profit Businesses

Non-profits must comply with all the same business regulations that other businesses adhere to. However, they also have regulations unique to the non-profit world that they must comply with. Standard regulations applying to all businesses include:

• Occupational Health and Safety (OSHA)
• Data privacy and cyber security laws (if any part of your business is digital), often determined by region based on where your business operates and what customers you serve
• Employee rights and fair pay regulations
• Tax regulations
• Americans with Disabilities Act accessibility regulations

Non-profits also have their own set of tax regulations and qualify for several tax exemptions by virtue of being a non-profit. However, this means they have more forms to fill out and tax reporting to verify that your non-profit does what it says that it does.

There are also compliance concerns unique to non-profits, such as the following:

• State laws and registration: Your non-profit must meet your state's standards to be considered a non-profit. If at any point it falls outside of those standards, you may lose your non-profit status.
• Certificate of authority: If your non-profit is based in one state but operates out of another, you must obtain a Certificate of Authority from the other state. To do so, you must meet that state’s requirements for non-profits and the state where you are based.
• Annual reporting: To maintain tax-exempt status as a non-profit, you must also report your earnings and business practices annually. This report must be honest and show that your non-profit still operates within the guidelines required by both state and federal regulations.

The Risk of Noncompliance for Non-Profits

So what happens when you fall into noncompliance with any of these regulations? This may vary from state to state or regulation to regulation. However, the biggest concerns tend to be the following:

Fines

Non-compliance with federal or state regulations most commonly results in hefty fines on your business. Non-profits often rely on every penny they receive. For a small non-profit, noncompliance fines could be a death knell. Even if your non-profit has the funding to manage a fine, that’s money diverted away from the causes you seek to help.

Loss of Non-Profit Status

Especially when it comes to tax regulations and annual reporting, there’s also the concern of losing your non-profit status. Because non-profits operate based on donations and retain only the earnings for operational costs, they are often afforded a tax-exempt status. This makes it easier to keep the doors open and continue to do what they set out to do. However, non-compliance with specific regulations, especially when it comes to state standards for non-profits, could cause you to lose your non-profit status, and thus your tax-exempt status.

Erosion of Trust

Trust and transparency are key for non-profits. People want to know where their money is going. If your business risks losing its non-profit status or puts the data of your donors at risk, you could easily lose trust. Staying compliant with all business regulations and maintaining your non-profit status is a critical way to maintain the trust of your donors, employees, and volunteers.

People who opt to work for non-profits overwhelmingly do so out of a belief in your institution. Upholding trust improves your recruitment and retention efforts, making it easier to find talented people to help with your mission.

How Outsourcing HR Can Help Your Non-Profit Stay Compliant

Compliance is just as important, if not more important, to non-profits as it is to for-profit businesses. However, non-profits often work with more limited funds. They may not have the resources to manage their compliance optimally, and they almost certainly lack the funds to pay the penalties for non-compliance. This is where outsourced HR comes in.

Here are a few ways outsourcing your HR team can help:

Great HR Talent at Less Cost

A good HR team is crucial to staying compliant with all state and federal regulations your non-profit faces. This might include a compliance officer or multiple members of HR keeping up with any new regulations and your company’s compliance.

When you outsource HR, you get high-quality HR talent from a PEO that works with non-profits across the nation, giving you the benefit of a full HR team before you’ve developed the ability to establish a whole in-house staff. Your outsourced HR can also take care of benefits and payroll for you, streamlining many of your internal efforts and giving you more time to focus on strategic initiatives.

Compliance Experts Who Stay Up-to-Date

Your outsourced HR team is comprised of compliance experts who work with a variety of businesses across industries and unique needs and keep up with changing regulations as a part of their business needs. An HR professional who has experience working with non-profits will know exactly what you need to remain in good standing. They can ensure your business complies with current regulations and can help adapt to regulatory changes to uphold ongoing compliance.

Compliance Assistance

Outsourced HR can also provide your company with compliance training. This will help ensure that all your employees stay on the same page when it comes to compliance and the best practices for your non-profit business. With regular training, your risk of falling into noncompliance is greatly reduced.

Partner with TBM to Support Your Non-Profit’s HR

TBM is a New York State-based PEO with over 30 years of experience in helping businesses effectively manage their HR needs. With a deep understanding of the unique challenges that non-profit organizations face, TBM specializes in providing tailored solutions to support compliance, streamline operations, and protect your mission.

Our extensive experience with non-profits ensures that we understand your specific regulatory requirements and can offer the expert guidance and services needed so you can focus on driving meaningful change.

Want to learn more about how TBM can help you reduce your regulatory compliance risk? Contact us today.