What a Nonprofit HR Audit Delivers
The nonprofit audit reviews personnel records, policy, supervision, decision authority, pay and leave workflows, and how employees, contractors, volunteers, and grant-funded roles are handled. Full-audit tiers add a board-ready summary, a monitoring-file record, a repair roadmap, and award-term mapping where the client supplies an HR-relevant requirement.
Faulkner HR Solutions maps the requirement, the evidence reviewed, and any operating gap. It does not issue a grant-compliance or legal opinion. Explore HR consulting for Texas nonprofits, compare the general HR audit method, or route policy repair to employee handbook consulting.
Reviewed August 30, 2026 by Dr. Thomas W. Faulkner, DBA, SPHR.
Who This Is For: Texas Nonprofits With 25–100 Employees
At this size, the Executive Director is often carrying HR alongside fundraising, programs, and board management. When an active award, contract, or monitoring protocol contains an HR-relevant condition, the organization needs to show how that condition is reflected in policy, assigned responsibility, and retained evidence. Requirements vary by funder and award, so the engagement begins with the client's actual documents rather than a universal nonprofit checklist.
What Gets Mapped—and What Does Not
The audit can map an HR-relevant award term to the policy, responsible role, workflow, approval, and retained evidence that support it. It can also flag where the operating record does not match the stated process.
It does not decide whether a cost is allowable, promise a funding outcome, or replace the program officer, grants accountant, attorney, auditor, or awarding agency. Those decisions remain award-specific.
Compare the review, full audit, and stabilization project
Choose the amount of work you need. Each engagement stands on its own; the entry review does not include the full-audit deliverables.
| Engagement | What you receive | Who implements |
|---|---|---|
| File and policy review $3,500 | Sampled records and policy review, gap and priority lists, written summary, and a 60-minute findings meeting. No interviews or priced repair roadmap. | Your team. Additional work is scoped separately. |
| Full nonprofit audit $9,500 | Six-domain review and interviews, board summary and monitoring-file record, and a prioritized 90-day repair roadmap with cost estimates. | Your team or a separately commissioned repair engagement. |
| Stabilization project $16,500 | The full audit plus the priority repairs defined in the engagement letter, implementation meetings, supervisor tools, and 90 days of post-delivery support. | Faulkner builds the agreed repairs; the executive director approves and adopts them. |
Timing: Full-audit findings are due within 20 business days of document receipt. The entry review deadline and stabilization implementation schedule are stated separately in your scope. The findings deadline is not a promise that implementation is complete.
The Six Domains We Audit
The full audit examines six domains of People Systems Design. Where the client supplies an applicable HR-related award term within scope, the report connects that requirement to the policy, workflow, and evidence reviewed. Findings without an applicable award term remain operating findings.
Job descriptions, the handbook, and whether authority between the ED and the board is actually written down.
Personnel files, documentation quality, and the specific policies your grant agreements require you to have.
Hiring, onboarding, and separation, including the volunteer and grant-funded position complications nonprofits carry.
Whether program managers who were promoted for mission skill have ever been trained to supervise.
Turnover data, complaint history, and what you could show a funder or an attorney tomorrow.
Evaluations, pay practices, and the burnout patterns that show up in your exit data.
Three Fixed-Fee Engagements: Look, Diagnose, Repair
The $3,500 review identifies document and policy gaps. The $9,500 full audit investigates the wider pattern. The $16,500 stabilization project includes that audit and builds the agreed priority repairs.
- $3,500 Look What is missing from the sampled files and current policy? A bounded review with a written gap list.
- $9,500 Diagnose What is driving the pattern, which repairs come first, and what are their estimated costs?
- $16,500 Repair Full audit plus the priority repairs defined in your signed implementation scope.
Policy & File Review
Choose this to understand gaps in the sampled records and current policy. It provides a findings summary and discussion; grant-term mapping and board-ready reporting belong to the full audit.
Start with a Scoping Call- Sample review of personnel files
- Handbook and policy review
- Documentation and recordkeeping gap list
- Priority risk list
- Written findings summary
- 60-minute findings meeting
- Not included: Staff interviews
- Not included: Six-domain diagnosis
- Not included: Findings mapped to your grant agreements
- Not included: Board-ready summary and monitoring-file record
- Not included: Priced repair roadmap
Nonprofit People Systems Audit
Choose this when repeated people issues need interviews, a wider operating review, and a board-ready explanation of priorities and repair costs.
Start with a Scoping Call- Full six-domain audit
- Personnel-file sampling
- Handbook and policy review
- Staff and leadership interviews
- Applicable HR-related award terms supplied by the client mapped to relevant findings
- Policy-practice gap analysis
- Workflow and accountability review
- Compliance findings
- Risk prioritization
- Board-ready summary, written for direct presentation
- Compliance record formatted for your monitoring files
- 90-day prioritized repair roadmap
- Cost estimate for each recommended repair
- Board one-pager with motion language
- Not included: Implementation of the repairs
Nonprofit HR Stabilization Project
Choose this when the executive director needs the agreed priority repairs built, with responsibilities and approvals established before work starts.
Start with a Scoping Call- Everything in the Nonprofit People Systems Audit
- Handbook and policy remediation, including applicable HR-related award terms in scope
- Personnel-file restructuring
- Core HR forms and documentation set
- Complaint and grievance intake process
- Supervisor documentation tools for program managers
- Hiring and onboarding controls, including grant-funded roles
- Performance management structure
- Leave and accommodation workflow
- Job description and role-clarity repair
- HR calendar tied to your reporting and monitoring cycle
- FACTS documentation session for supervisors
- Implementation meetings with the ED and board leadership
- 90 days of post-delivery support
- Scope note: implementation covers the priority repairs identified in the audit roadmap, at the depth defined in your engagement letter before work begins. This is a defined project with a fixed fee, not open-ended consulting.
Paying for It: Spending Authority and Grant Funds
Spending authority is set by your bylaws, delegation policy, grant conditions, and board practice. Confirm approval requirements before contracting. If work crosses fiscal years, each phase must have an independent business purpose, scope, deliverable, and authorization.
For a federal award, cost allowability depends on necessity, reasonableness, allocability, consistent treatment, award terms, and any required prior approval. Describing work as capacity building does not make it automatically chargeable. Confirm the treatment with your program officer or grants accountant using the OMB Uniform Guidance and the specific award documents.
An Audit Organized for Board Decisions and Award-Specific Review.
The final 25% of the fee is waived on the Nonprofit People Systems Audit and Stabilization Project if a delivery standard below is missed. This guarantee covers the findings engagement on those two tiers; it does not apply to the entry file and policy review or promise a legal, funding, or workforce outcome.
- The findings report is not delivered within 20 business days of document receipt
- An applicable HR-related policy requirement in the grant agreements supplied for the agreed scope is missed
- The board summary needs editing before it can be presented
How delivery works and when each stage ends
The list arrives the day you sign, including copies of your active grant agreements.
Full-audit work includes file review, applicable award-term mapping, and the agreed interview sample. We confirm document requests, estimated staff involvement, and executive or board decisions during scoping. The entry review excludes interviews and award-term mapping.
Full-audit findings, board summary, and the agreed monitoring-file record are delivered within 20 business days of document receipt. The entry review has its own written summary, 60-minute findings meeting, and agreed deadline.
Faulkner builds the priority repairs in the signed stabilization scope; the executive director supplies decisions, approves the tools, and assigns day-to-day owners. The implementation schedule is agreed in writing. Included support runs for 90 days after handoff.
What Happens After
The $3,500 review ends with a written findings summary and priority list. The $9,500 full audit adds the board summary and monitoring-file record and a prioritized repair roadmap with cost estimates. Your team can use those outputs internally; commissioning additional work is optional.
Take the stabilization project and the priority repairs are built when the engagement closes. What is left is keeping them current as your grant requirements change, which some organizations handle internally and others put on a monthly retainer.
Questions Texas Nonprofits Ask
The Nonprofit Workforce Position, in Numbers
| Indicator | Figure | Source |
|---|---|---|
| Nonprofit annual voluntary turnover | ~19% | Johnson Center for Philanthropy, 2025 |
| Comparable figure across all U.S. industries | ~12% | Same, 2025 |
| Nonprofits with a written succession plan | 34% | BoardSource, Leading with Intent, 2024 |
| Chief executives who have not identified an internal successor | A majority | BoardSource, 2024 |
| Median executive director tenure | 5–7 years | Multi-study aggregate |
| Texas share of all EEOC charges filed nationally | ~10%, largest of any state | EEOC charge statistics by state |
Related: Succession Planning · Leave & Accommodation · Workforce Stabilization.
Get nonprofit HR findings your executive team can use
Bring the people issue, employee count, and any relevant board or monitoring deadline to a no-cost 30-minute scoping call. We will compare the review, full audit, and stabilization scopes and explain the next step.