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How costly is compliance for nonprofits?

 
How are nonprofit agencies doing with adhering to the new federal compliance laws and regulations, like; HIPPA, Red flag, E H R implementation, form 5500 for 403B retirement plans, new form 990s...? What are some of your best practices? How are you dealing with the cost associated with designing a good whistle blower policy? Is nonprofit compliance with the growing number of new federal regulations even possible in our current economy?
 
Nonprofits are being asked to have a deeper accountability by funders for every dollar donated and fee for service income streams are not as plentiful as in past years. 
 
When it comes to nonprofits and compliance new fiscal concerns are surfacing. The new federal compliance regulations are no longer isolated and centralized to privately owned and publicly traded corporations.  Nonprofits in past years have been less scrutinized as corporations but are now being held to standards similar to publicly traded companies. Nonprofits are now being held responsible for greater internal controls and the consequences for not having these controls in place can be significant. Noncompliance can result in program shut down during investigation periods, loss of revenue, financial penalties and in some cases criminal investigations and charges. The federal department of Labor (DOL) investigations have begun to target nonprofit boards,CEOs, COOs and CFOs for not complying with newly created federal regulations.
 
The nonprofit health care industry has good examples of increased cost associated with new compliance regulations. Expensive E H R(electronic health record) systems for compliance purposes are required for community health centers with implementation dates as early as 2015, “Starting in 2015, hospitals and doctors will be subject to financial penalties under Medicare if they are not using electronic healthrecords” http://www.nytimes.com/2010/07/14/health/policy/14health.htmlWhile some funding for E H R systems for nonprofit health care centers was identified by the Obama administration, it is not enough.  Where are the additional funds to pay for EHR? Who will fund productivity loss while the medical staff is learning the new EHR software and hardware systems? Who takes care of the patients during the learning phase and if you hire temporary staff, who pays for their time?  Government grants were made available to a select group of nonprofit health care centers. The health centers that did not fit the criterion for the above funding applied for available low interest loans to be paid back from their dwindling revenue sources over time. E H R is closely tied to new HIPPA and Red Flag patient privacy regulations.
 
Nonprofit compliance cost are escalating - It cost to keep up with the new laws, it cost to create policies consistent with new regulations, it cost to enforce the new regulations and it cost to educate staff and the board of directors on their changing fiduciary roles. It is impossible to ignore the possibility of severe consequences for noncompliance; fiscal consequences in terms of penalties assessed and possible criminal consequences for not putting in safeguards to protect against and prevent fraudulent activity from occurring.
 

1 Comment to How costly is compliance for nonprofits?:

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Equity Tips Today on Friday, March 04, 2016 3:14 AM
How are nonprofit agencies doing with adhering to the new federal compliance laws and regulations, like; HIPPA, Red flag, E H R implementation, form 5500 for 403B retirement plans, new form 990s...?....Wow! I am really impressed by the way you detailed out everything. It is really going to help me a lot. Thanks for sharing your thoughts so clearly.....
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