If you are starting a 501(c)(3) nonprofit in California, you have come to the right place. After following the easy steps for California nonprofit formation, follow this guide to help keep your California nonprofit compliant and protected.
In this guide we cover:
How to Protect Your California Nonprofit
Get Business Insurance
As with any other business, there may be risks involved in running the nonprofit. Getting insurance for your nonprofit allows you to focus on your passion while minimizing your liability.
Here are some of the common types of insurance you may want to consider for your organization:
- General Liability Coverage
- Directors and Officers Coverage
- Social Service Professional Coverage
Your coverage needs will vary based on your organization and the work you do.
Properly Sign Legal Documents
There will be times when you will be signing a document on behalf of your nonprofit. It is important that these times are easily distinguishable from when you are signing a document as an individual. If a document isn’t properly signed, you might suddenly find yourself personally responsible for something the organization should have been liable for.
To avoid such confusion we recommend you and all the members of your organization follow the following format:
- The official name of your nonprofit
- Your signature
- Your full legal name
- Your position in the organization
How to Keep Your California Nonprofit Compliant
Maintain A California Registered Agent
Nonprofits that have incorporated are required to maintain a registered agent with an office address in California.
If the agent or the office address changes, you must report this change to the Secretary of State via the Statement of Information form (SI-100).
File Required Periodic Reports
Every nonprofit registered in California must submit a Statement of Information (SI-100 form) within 90 days of registering with the Secretary of State. In addition, nonprofits must file an SI-100 every two years.
Finally, nonprofits can file an ad-hoc SI-100 form outside of the required schedule if they need to inform the Secretary of State of changes to their organization.
Determine California Business Permits and Licenses
As a nonprofit in the state of California, your organization may need to obtain specific permits and/or licenses depending on the nature of your business.
Access CalGOLD, through the Governor’s Office of Business and Economic Development, to learn more about which permits and licenses apply to your business.
There are three things you need to keep in mind if your organization will be receiving donations:
- If your nonprofit will be receiving charitable donations, it must register with the Attorney General’s Registry of Charitable Trusts within 30 days of receiving your first donation. You can use Form CT-1 to register, and the fee is $25.
- In addition, volunteer solicitors do not need to register with the Attorney General, but professional solicitors must register.
- Finally, if your nonprofit will be engaging in any type of fundraising activity, including raffles, bingo, and telemarketing, you must follow strict guidelines set forth by the Attorney General. Read the Attorney General’s Guidance for Charities and be sure to register a raffle in advance if you are eligible to do so.
Mail Form CT-1 to the address below:
State of California
Office of the Attorney General
Registry of Charitable Trusts
P.O. Box 903447
Sacramento, CA 94203-4470
For more information, you can call the Office of the Attorney General at (916) 445-2021, fax them at (916) 444-3651, or visit them at their website.
If your organization will have employees you must register with the California Employment Development Department.
You can easily register online or find the contact information for your local workforce commission on the State of California Employment Development Department website.
Public Inspection Rules for all 501(c)(3) Organizations
Organizations that have been granted the 501(c)(3) status are required to disclose the following documents to the public when requested:
- Annual returns for 3 years after the due date (this includes returns like Form 990, 990-EZ, 990-PF, and any Forms 990-T)
- All Form 990 Schedules (except portions of Schedule B), attachments and supporting documents.
- Application of exemption and all supporting documents such as Form 1023
- The official paperwork from the IRS that shows that your organization has tax-exempt status.
The following do NOT need to be shared with the public
- Portions of schedule B of Form 990/990-EZ that identify the contributors. (You only need to disclose the amount contributed and the nature of the contributions)
- Any unfavorable rulings such as an earlier denial of tax-exempt status.
- Any information the IRS has said you can withhold. This may include things like sensitive patents and trade secrets.
How long do I have to produce these documents if requested?
Ideally within the same day. If your organization doesn’t have an office or maintains limited hours during parts of the year, the information should be made available within two weeks.
Do I need to provide copies of the documents?
If someone asks for copies in person or in writing you must provide them with copies.
Can I charge for copies?
You can charge a reasonable amount for making copies of the documents requested.
NOTE: It may be easiest to have the documents available on your website so that anyone who requests copies can be sent to the site. This allows you to stay compliant without having to spend a lot of time dealing with document requests.
Annual Returns for Tax-Exempt Organizations
Most tax-exempt nonprofit organizations are required to file an annual return with the IRS (Check the list of exceptions).
Which form you should use to file the annual returns depends on the annual gross receipt amounts for your organization.
"Gross receipt" is defined by the IRS as “the total amounts the organization received from all sources during its annual accounting period, without subtracting any costs or expenses”
- For gross receipts ≤$50,000 --- File 990-N
- Gross receipts <$200,000 and total assets <$500,000 --- File 990- EZ
- Gross receipts >$200,000 or Total assets >$500,000 --- File 990
For any questions, you can call the IRS at
- (800) 829-3676 (Form-related questions)
- (800) 829-1040 (General information)
When is form 990 due?
You have a little over 4 months after your taxable year comes to an end to file Form 990. It is due on the 15th day of the 5th month. So if your taxable year ends on Dec 31st, your form 990 is due on May 15th.
NOTE: If your organization fails to file form 990 for 3 consecutive years, it will automatically lose its tax-exempt status.
Report Unrelated Business Income
If your Texas organization has a gross income of ≥$1000 from a trade or business that is not related to the stated purpose of the organization, then it must file Form 990-T to pay tax on that income.
If you expect to pay $500 or more for the year in taxes on unrelated business income, your organization must pay a quarterly estimated tax on the unrelated business income using Form 990-W.
State of California Nonprofit Quicklinks
IRS - Information for Charities & Nonprofits
IRS - Required Provisions for Organizing Documents
IRS - 990 Series for Tax-Exempt Organizations
IRS - Applying for Tax-Exempt Status
IRS - 501(c)(3) Compliance Guide
Small Business Administration - License and Permits