Yes, nonprofit organizations must follow the same federal and state laws when conducting background-checks on employees, volunteers and independent contractors as for-profit companies. The federal standards for background checks are outlined in the Fair Credit Reporting Act (FCRA), which is enforced by the Federal Trade Commission (FTC). In addition, nearly all states have fair credit reporting statutes that apply to not-for-profit organization as well as other employers. Often, the employment-screening laws states have in place may be more stringent than the requirements of the FCRA.

Although nonprofit entities may have predominantly volunteers working for and representing their organization, there are minimal differences between volunteers and employees when it comes to the law, especially in the eyes of the general public. Nonprofit companies work with some of the most vulnerable people in our society, such as the children, disabled and the elderly. Therefore, not-for-profits organizations must apply extra caution when selecting the employees, volunteers and contractors who work closely with the more vulnerable populace. The required due diligence is enhanced by utilizing background-screening reports before making decisions on the people who work for their organizations.

Increasingly, more not-for-profits are initiating background check polices to meet the standards of “reasonable care” when screening their employees, contractors and volunteers. This step mitigates the possibility of theft, violence or other inappropriate actions. Conducting background checks shield nonprofit companies from possible lawsuits and damages. Like their for-profit counterparts, non-profit companies that conduct background checks using their own in-house staff are not subjected to FCRA, but the organizations are responsible for following state laws that apply.