Due dilligence and compliance checklist of nonprofit organizations

When associating with a nonprofit organization an accountant, attorney, prospective board member, partner of major business associate should perform a due diligence check of the organization. Additionally, management should undertake a periodic review occasionally just to check to ensure that the organization’s records are up to date. This checklist is prepared to help make that process more efficient.


  • Spreadsheet or listing of directors’ contact information
    • clearly defined public and private information
  • ID of top officer(s)
  • Confirm EIN or SSN of signing officers
  • CP 575E EIN from IRS
  • 1023
    • Accuracy of attestations
    • Impact of mission creep
  • IRS exemption letter
  • Type of organization
  • Articles of formation
    • Execution
    • Provisions for functional governance
    • Provisions for change
    • Required provision for asset distribution
  • Bylaws
  • State corporation filing
  • State business registration
  • State sales tax exemption
  • State employment tax registration
  • State charities registration
  • IRS Annual filings
  • Match to bookkeeping records
  • State filings
  • Consistency of name, address and EIN
  • Bookkeeping
    • Primary administrator
    • Users
    • Report only users
    • Audit log
    • Customized reports
  • Cyber security
    • Primary and secondary set of records
  • Physical security
  • Insurance
    • Liability
    • Workers compensation
    • Directors and officers
    • Cybercrime
  • Licenses for specific lines of business
  • Employment contracts
  • Professional services contracts
  • Bank accounts
    • EIN
    • Title
    • Signing authority
    • Online access
    • Connected accounts and services
    • Trace to automated bookkeeping feed
  • Lines of credit
  • Credit cards
  • Taxes
    • Employment taxes
    • Sales taxes
    • UBI income taxes

My personal belief, discussed with and shared by many of my NJCPA peers, is that a CPA or other professional should not assume a position of management or directorship until due dilligence is completed and a reasonable basis of assurance of legal compliance and operational stability is available.

Over years of conducting this type of due dilligence work for nonprofit organizations, I can’t recall any that did not result in valuable information for management.