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Blog > Why Non-Profit Organizations Need Agility in their Compliance Program

Why Non-Profit Organizations Need Agility in their Compliance Program

VComply Editorial Team
June 16, 2022
3 minutes

In today’s modern world, it is becoming increasingly necessary for even non-profit organizations to stay on top of constant change and the ever-growing list of demanding regulations. Our current modern environment has grown into an increasingly complex and interconnected web of third-party relationships, distributed operations, global supply chains, compliance requirements etc. This puts a unique and intense pressure on compliance professionals within non-profit organizations world-wide as they must take responsibility to build controls and procedures that establish an authentically ethical organization that acts with integrity in such a dynamic environment. As non-profit organizations are exempt from federal and state taxes and have unique access to certain types of public funding, they consequently hold themselves accountable to the highest standards of ethical and compliance practices.

“It is not the strongest or the most intelligent who will survive but those who can best manage change.” ― Leon C. Megginson, author and professor of business.

 Non profits need to maintain their 501(c) status if they need to get exemption from federal tax. The 501(c) status enables them to receive grants from private foundations and from the government. These organizations can no longer just seek to manage and monitor regulatory requirements with manual processes and doing so could subject them to reputational, financial, and regulatory risk. Managing these requirements is no longer suitable under traditional methods i.e., documents and spreadsheets. The primary obstacles in building an effective and agile compliance and risk management system are these siloed structures and manual processes that run rampant in many non-profit organizations.

It is becoming increasingly necessary for non-profit organizations to consider building an integrated and agile risk and compliance management architecture to give the organization more vision and awareness into change, emerging compliance risks, and its full impact throughout the organization.

Why Even Non-Profits Must be Agile in Today’s Environment?

Today we live in a globalized world, and every country and/or state has their own guidelines and regulations pertaining to non-profits. The U.S. federal government alone has over 180,000 pages of federal regulation overall in existence and that number will only continue to grow, as will the burden for organizations of all types.

According to an annual survey compiled by Thomson Reuters Regulatory Intelligence in 2021, financial services within the U.S. alone faced an average of 257 changes and updates to regulations and procedures each day coming from 1,217 different regulators – which was an increase from the previous year. This survey, entitled The Cost of Compliance, also showed an increasing regulatory burden and the volume of regulatory change being the top challenge facing compliance functions in all sorts of organizations. Although most of these 257 regulatory changes may not pertain to non-profit organizations at all, the burden and growing volume of regulations and requirements still weigh down these organizations significantly, leaving them vulnerable to hefty fines, a revocation of non-profit status, reputational damage, or even a dissolution of the organization altogether.

This risk and volume of change within the regulatory world leads to an incredible amount of manpower and resources being consumed under manual processes in organizations of all kinds, and it can also lead to information slipping through the cracks, manipulation, and an overall lack of efficiency due to an absence of cooperation throughout the organization over these interconnected compliance risks.

The lack of a common, integrated, and agile compliance and information architecture can prove to be detrimental to the organization. In a quest for efficiency and agility, some of the potential, emerging problems in the absence of such a system are as follows:

  • Possible Duplication. Overlapping and interconnected regulations and compliance requirements throughout different operations in a non-profit can be commonplace depending on its purpose and activities. This creates a world of complexity for non-profits as they are forced to manually untangle any possible duplications and maintain manageability within their compliance program. This also creates a strain on resources and manpower as a result of the lack of cooperative and common information and compliance framework to streamline compliance processes and information.
  • Lack of Visibility. A manual process will simply not suffice in a dynamic, global environment. With different functions, employees, and projects distributed broadly, compliance within non-profit organizations can often struggle to deliver an accurate report to relevant regulators without a platform that facilitates consistent and accurate information throughout the entirety of the organization.
  • Unstructured Information. There are a number of different regulatory bodies that non-profit organization needs to adhere to. This creates a seemingly endless amount of information that needs to go into informed business and strategic decisions. A siloed process leaves non-profit organizations blind to the full reach of emerging risks and the overall impact of interconnected compliance risks on the organization.

Compliance officers within non-profit organizations face vast requirements spanning across multiple fields of data throughout the organization and its operations. These compliance requirements are constantly changing and evolving, which in turn means the organization’s risk landscape is also constantly changing. It is paramount for non-profit organizations to develop an integrated and agile compliance program built on a common information architecture and framework. This system allows for risk management and assessment activities to be coordinated across different departments of the organization, helping to break silos and assist non-profit organizations in making more informed business-decisions.  

There has never been a greater need for compliance automation with an agile technology and information architecture than now. The back-end management and oversight of compliance is crucial to the overall continuity of the organization, and an effective compliance architecture and framework will engage employees and all relevant stakeholders to keep them connected and in tune with compliance – specifically as it regards to their roles and responsibilities within the organization.

It is essential for non-profit organizations to develop an integrated, agile, and collaborative issue reporting and case management program and framework that is found in VComply. VComply’s system and compliance architecture allow for issue reporting and case management to be integrated into other compliance, risk management, and assessment activities coordinated across different departments and functions of the organization. This enables the organization to break down silos and make more informed business decisions. 

Explore what makes VComply a consistent G2 high performer in Compliance Management. Request your demo today and transform your approach.