As more nonprofits rely on digital tools and cloud-based platforms to serve out their missions, the need for strong data security practices has never been greater. Stakeholders such as donors, beneficiaries, board members, and industry partners expect transparency not just in how funds are used, but also in how sensitive information is handled.
For organizations aiming to demonstrate adherence to modern security best practices, a SOC 2 report is a smart, scalable option that shows your commitment to establishing sound risk management practices and building stakeholder trust.
Here’s everything you need to know about SOC 2 exams and why a SOC 2 report might be the right next step in your organization’s compliance journey:
What is a SOC 2 Report?
A System and Organization Controls (SOC) 2 report is an independent, third-party assessment of an organization’s operational controls based on one or more of the five trust services criteria (TSC) outlined by the American Institute of Certified Public Accountants (AICPA). These criteria include:
- Security (required): The system is protected against unauthorized access, both physical and logical.
- Availability: The system is available for operation and use as committed or agreed.
- Processing Integrity: System processing is complete, valid, accurate, timely, and authorized to meet the entity’s objectives.
- Confidentiality: Information designated as confidential is protected as committed or agreed.
- Privacy: Personal information is collected, used, retained, disclosed, and disposed of to meet the entity’s objectives.
A SOC 2 report provides a CPA’s opinion on the design and effectiveness of the controls your organization has in place to meet one or more of these criteria. While SOC 2 audits do not result in a formal certification, the resulting report provides a widely accepted avenue for organizations to demonstrate their commitment to data security best practices.
During a SOC 2 examination, your auditors will schedule a walkthrough—or series of meetings—to assess your organization’s controls either at a single point in time (for a SOC 2 Type 1) or over a period of time (for a SOC 2 Type 2). These walkthroughs allow auditors to evaluate how your controls are designed and how they operate in practice, giving them a comprehensive understanding of your security posture.
Once you receive your final SOC 2 report, it’s ready to share with prospective funders, existing partners, and other key stakeholders, demonstrating that your organization has taken meaningful, validated steps to protect the data it collects and manages.
Here are five other reasons why nonprofit organizations should consider undergoing a SOC 2 exam:
1. Build Trust and Credibility
SOC 2 reports are an excellent choice for nonprofits that want to build trust and transparency with internal and external stakeholders, including donors, grant issuers, beneficiaries, board members, and industry partners. This is especially relevant for organizations managing donor databases, cloud platforms, or third-party vendor relationships involving sensitive or personally identifiable information. A SOC 2 report offers third-party validation that your nonprofit has effective controls in place to protect this data. This not only strengthens your reputation, but also unlocks new funding opportunities with partners that require robust data security assurances.
2. Meet Increasing Compliance Expectations
Government agencies and corporate sponsors are becoming more vigilant about data security. Many now expect or require proof that the nonprofits they fund are following industry-standard security practices. A SOC 2 attestation demonstrates that your nonprofit is meeting these expectations and can give you a competitive edge when pursuing large grants or partnership opportunities.
3. Reduce Cybersecurity Risk
Nonprofits often operate with lean IT budgets and smaller governance, risk, and compliance (GRC) teams. By undergoing a SOC 2 examination, organizations can get a proactive review and documentation of security controls, which not only helps identify security gaps and potential areas of improvement, but also ensures you have clear processes for incident detection and response. By pursuing a SOC 2 report, your nonprofit can establish a baseline of security practices that help reduce risk organization-wide.
4. Strengthen Internal Governance
A SOC 2 audit encourages nonprofits to adopt consistent, documented processes across key areas of operations, including vendor management. In addition to improving your security posture, this helps foster transparency and streamlines decision-making within your organization. For nonprofits aiming to grow and mature their compliance programs, a SOC 2 report can also serve as a strong foundation for adopting more advanced compliance frameworks, such as ISO 27001 or HITRUST.
5. Gain a Competitive Advantage
Many nonprofits leverage third-party vendors, SaaS platforms, and data analytics tools to deliver services efficiently and at scale. If your organization is developing or using proprietary platforms, cloud services, or donor management systems, a SOC 2 report provides assurance to external stakeholders that your systems meet established security and privacy standards. This can be a key differentiator in the highly competitive nonprofit landscape.
The Bottom Line
Whether you’re a small local nonprofit or a global organization, a SOC 2 examination is a meaningful way to show that you take security seriously, and its adaptability makes SOC 2 a good fit for mission-driven nonprofit organizations of all sizes.
Completing a SOC 2 audit signals to donors and partners that your organization is proactive, trustworthy, and prepared to meet modern compliance expectations. It enhances credibility, reduces risk, and lays the groundwork for long-term growth, including the potential to pursue additional security frameworks like ISO 27001 and HITRUST.
Ultimately, achieving a SOC 2 report is more than a compliance milestone—it’s an investment in your mission’s integrity and future.
Ready to get started? Contact our experts today for a free consultation.