Key takeaways
When it comes to nonprofit compliance, many board members feel uncertain about their legal responsibilities. Couple this with dubious conflict of interest reporting and a reliance on manual processes, and you have a recipe for disaster.
In this blog, we explain why compliance is crucial for the success of your nonprofit and provide 7 tips for boosting board compliance.
How many laws and regulations is your nonprofit subject to? If you operate in multiple locations, the chances are this number is substantial.
Beyond abiding by your governing document, producing multiple annual reports a year, and following strict conflict of interest policies, you also have to juggle wider data protection acts, labor laws, ESG reporting… and the list goes on.
The burden of all of this rests upon your board members’ shoulders. They have a fiduciary duty to comply with applicable frameworks and guide your organization through every legal twist and turn.
Yet, according to data from the UK government, many nonprofit board members have glaring gaps in their legal knowledge.
This isn’t promising news. So long as these gaps remain, your organization is at risk of noncompliance — and every sticky situation that may arise from it.
The question is: how do plug these knowledge gaps?
The importance of nonprofit compliance
Board members already have a great number of responsibilities to see to. Between totaling up budgets and directing the course of your nonprofit’s future, governance and compliance can often fall to the bottom of the task list.
But compliance should never become an afterthought. It’s as crucial to the success of your organization as your community engagement and fundraising efforts. Why? Because, at its core, compliance is a way to instill trust with your beneficiaries, employees, and donors. It can positively or negatively impact the support you receive.
All it takes is one undeclared conflict of interest, one incomplete financial report, or one mishandling of beneficiary data. One mistake, and the future of your nonprofit may veer off course.
This is exactly what we’re going to help you avoid today.
In this article, we’ll provide 7 helpful tips to help you improve nonprofit compliance across your board.
How to bolster compliance across your board of trustees
1. Provide easy access to policies and governing documents
Your charity’s governing document is your board’s guiding light. It outlines everything you stand for and the rules by which you operate. Alignment with this document — as well as your company’s policies and regulatory frameworks — is fundamental to achieving compliance.
But alignment hinges on accessibility. It’s impossible for your board members to read and adhere to these documents if they live in disparate, outdated systems or dusty office cabinets.
This is why it’s essential to modernize your approach. By storing these assets in a central, version controlled software, you can provide easy access, increase transparency, and, by extension, improve board compliance.
2. Use AI to improve understanding
Policies and regulatory frameworks tend to be full of complex legal jargon, making them difficult to grasp. It’s no wonder then that many of us choose to skim-read these documents.
But skim-reading won’t help your board members fully understand their legal responsibilities. And if they don’t fully understand their responsibilities, how can you expect them to uphold compliance?
This is where an AI-powered nonprofit management software can come to your aid.
Take Claromentis as an example. Our solution boasts a version controlled document management system, as well as a policy management application with built-in acceptance and acknowledgement tracking. Both of these applications include intelligent AI chatbots that ingest the information, provide helpful content summaries, and answer any questions. It’s a smarter way to improve your board members’ knowledge and plug any compliance gaps.
3. Streamline compliance procedures
Paper-based compliance procedures, such as capturing board and committee meeting minutes, are time-consuming and prone to human error. All it takes is one gust of wind to blow your notes off the table and out of the window. And, without this record to hand, you’ve already crossed the line of noncompliance.
You can’t put your trust in paper. Nor can you rely on haphazard digital processes, like emailing notes or storing them in a physical hard drive.
It’s far better to automate wherever possible.
With a business process automation tool, you can transform any flimsy manual procedure into a standardized e-form or automated workflow. This leaves little room for error or forgetfulness. Notifications and service-level agreements (SLAs) ensure every process is given the attention it deserves. Forms capture and store logged information (such as meeting minutes or incident details) in a centralized location, ready for your next audit. And built-in analytics unearth key compliance insights to keep your board members informed.
4. Share news and announcements
Laws and regulations change more regularly than you may think. To help your board members keep track of these updates — as well as any new frameworks that may enter the scene — create and publish frequent announcements on your intranet.
If you’re short on time, platforms like Claromentis can AI-generate these posts for you. All you need is a clear and succinct prompt, and the AI handles the rest.
Alternatively, you could embed a helpful RSS feed of blogs and news articles from relevant industry experts, government bodies, or regulators into your intranet. This encourages board members to keep up to date with relevant news, without having to search for the information themselves.
5. Create board-specific compliance training
Policies and targeted communications help to transfer compliance knowledge, but training makes it stick.
By training, we don’t mean in-person sessions with varying attendance rates and easily misplaced paper pamphlets. We mean structured, interactive e-learning courses and pathways that new and existing board members can self-service at any time.
With the right learning management system (LMS), you can notify members of compulsory courses, track test results and completions, and provide additional support with course tutors.
This enables you to deliver standardized compliance training that you can actually measure. There’s no more guessing whether board members understand their obligations; your LMS will tell you everything you need to know.
6. Organize your compliance procedures
In its most basic form, compliance is a series of processes and practices. It requires a methodological approach and keen project management — especially before and during an audit.
This is difficult to achieve when your board members rely on unstandardized and untracked processes. When written down, meeting actions can get lost. When instructed to complete a task verbally, members may mishear dates and deadlines.
To ensure your compliance efforts run smoothly and transparently, you need a smarter alternative.
A project management application will help your trustees keep on top of upcoming responsibilities, such as annual reports and returns. Simply build out your project, assign tasks and deadlines, and keep track of progress. With built-in comment threads and document sharing, you can collaborate in real time and make compliance a true team effort.
7. Create annual surveys for capturing conflicts of interest
Reporting conflicts of interests, whether they’re loyalty conflicts or financial conflicts, is one of the most pressing aspects of board compliance.
But it’s easier said than done. Especially when you consider that 44% of board members in the UK are only ‘somewhat confident’ in identifying and dealing with conflicts of interest. This means there’s a strong chance many conflicts remain undeclared.
While trustees should always log conflicts as soon as they arise, an annual or bi-annual survey will help to capture any that have fallen through the cracks.
For posterity, we’d recommend distributing these digitally. That way, you can track which board members have and haven’t completed the survey, as well as glean patterns from the answers you do receive.
To kill two birds with one stone, you can also harness digital surveys and polls capabilities to periodically capture compliance concerns or confidence levels.
Bring clarity and consistency to your compliance efforts
Nonprofit compliance is fundamental to the operation of your organization, the trust of your beneficiaries, and the support of your donors. As such, it should never be treated as a perfunctory exercise.
That said, there’s no denying its complexity. With so many laws to juggle on top of everyday duties, it can be difficult to give compliance the attention it deserves.
Fortunately, this is where technology can give your board members some welcome support.
With a comprehensive and secure nonprofit management software like Claromentis, you can:
- Share centralized regulatory updates and announcements
- Distribute clear policies and legal documents, supported by AI assistants
- Build trackable e-learning courses that test board knowledge
- Eradicate paper-based meeting minutes and streamline regulatory procedures
- Better prepare for audits and annual reports with project management spaces
- Track location-by-location policy acceptance rates with our Organizations dashboard
This holistic approach doesn’t just enhance board compliance — it strengthens their role, increases their investment, and realigns them with the core mission of your organization. All of which will help you stay your course and deliver better services to your beneficiaries.
If compliance is a common sticking point in your charity or nonprofit, we’re here to help. Schedule a discussion call with one of our experts and discover how Claromentis can bring clarity, control, and consistency to your compliance efforts.
