California Charity Registration

Proposed changes to the California charity registration process.

For nonprofits filing an initial registration Form CT-1

Take a look at the Proposed Amended Registry Forms link at CA Attorney General Xavier Becerra’s Department of Justice website.  The primary changes are 9 additional questions in Part I, page 3, of the proposed form.  These additional questions are similar to questions asked by many other states for charitable solicitation registration.

For registered nonprofits filing the renewal Form RRF-1, the proposed changes include:

  • The Form asks a new question: “At the end of this reporting period, did the organization hold restricted net assets, while reporting negative unrestricted net assets?” This question simply facilitates the required disclosure under California Government Code Section 12599.8, which became effective on January 1, 2013. See part X Balance Sheet, items 27, 28, & 29, of the IRS Form 990 for the answer.
  • The Form no longer asks the question: “During this reporting period, did non-program expenditures exceed 50% of gross revenue?”
  •   The Form adds the one-page privacy statement as required under California Civil Code Section 1798.17.
  • The Instructions make clear that: “A signature of an authorized agent is required. An authorized agent may be the president or chief executive officer, treasurer or chief financial officer of a public benefit corporation; or a trustee if the organization is a trust; or other authorized agent of the organization. Signatures do not need to be original inked signature. Copies or electronic signatures are acceptable.” It will be helpful to allow an Executive Director not identified as the CEO in the Bylaws to sign the Form.

New Form CT-TR-1 for small charitie

Organizations whose revenue falls below the threshold for filing IRS Form 990-EZ (normally $50,000 or less), shall file Form RRF-1 with the Attorney General’s Registry of Charitable Trusts, together with new Form CT-TR-1, the Annual Treasurer’s Report. Currently, reporting charitable organizations with total gross revenue or assets of $25,000 or more must file the IRS Form 990, 990-EZ, or 990-PF with the Registry. But the California requirements do not match the federal filing requirements that permit public charities with annual gross receipts that are normally $50,000 or less to file the IRS Form 990-N (e-Postcard). The proposed changes to the California regulations and forms generally require from IRS e-Postcard filers Form CT-TR-1, which is essentially a simple balance sheet and statement of revenues and expenses.