Best Nonprofit & Charitable Organizations Lawyers in California

About Nonprofit & Charitable Organizations Law in California, United States

Nonprofit and charitable organizations play a vital role in California's society by providing public benefits through educational, religious, scientific, and humanitarian programs. The laws that govern nonprofits in California are designed to ensure these organizations operate transparently, manage funds responsibly, and strictly pursue their stated mission. Creating and maintaining a nonprofit in California requires compliance with both federal and state legal standards, including things like articles of incorporation, tax exemption applications, and registration with relevant government agencies.

Why You May Need a Lawyer

Legal assistance is often crucial for anyone involved in forming, running, or dissolving a nonprofit or charitable organization in California. Common reasons for needing a lawyer include:

• Setting up a new nonprofit and ensuring all legal filings are correct
• Applying for federal and state tax-exempt status
• Drafting or reviewing bylaws, conflict-of-interest policies, and board resolutions
• Navigating compliance with state fundraising requirements and annual reporting obligations
• Addressing employment issues and proper classification of staff and volunteers
• Managing real estate, contracts, or intellectual property matters
• Resolving disputes within the organization or with outside parties
• Advising on mergers, asset transfers, or nonprofit dissolution
• Handling investigations or enforcement actions by regulatory agencies

Local Laws Overview

California has some of the most robust nonprofit and charity laws in the United States. Key aspects include:

• Formation Requirements: Nonprofits must file Articles of Incorporation with the California Secretary of State and disclose whether they will solicit charitable contributions. Bylaws are required, though not filed with the state.
• State Registration: Most nonprofits intending to operate as charities must register with the California Attorney General’s Registry of Charitable Trusts before soliciting funds.
• Tax Exemption: Organizations can apply for federal tax-exempt status from the IRS (501(c)(3)), and then must separately apply for California tax-exempt status from the Franchise Tax Board.
• Annual Filings: Reporting requirements include registration renewals and financial disclosures to the Attorney General, statements of information with the Secretary of State, and tax returns to the IRS and Franchise Tax Board.
• Governance: California law sets standards on director duties, conflict of interest policies, and how assets must be managed and distributed.
• Fundraising: There are specific rules for charitable solicitations, use of professional fundraisers, gaming for fundraising, and compliance with donor intent.
• Employment: Nonprofits must adhere to California labor laws, just like for-profits, particularly relating to wages, classification, and workplace safety.

Frequently Asked Questions

What is the difference between a nonprofit and a charity in California?

In California, all charities are nonprofits, but not all nonprofits are charities. A nonprofit is any organization established for a purpose other than generating profit for owners. A charity is a nonprofit with a mission that benefits the public and is eligible for certain tax exemptions.

Do I need to incorporate my nonprofit in California?

While incorporation is not required, incorporating your nonprofit provides legal protections for board members and helps fulfill requirements for obtaining federal and state tax-exempt status.

How do I obtain tax-exempt status for my nonprofit in California?

First, file for federal tax exemption with the IRS using Form 1023 or 1023-EZ. Once approved, you then must apply separately with the California Franchise Tax Board using Form 3500 or 3500A to be recognized as tax-exempt in the state.

What are the ongoing requirements for maintaining nonprofit status in California?

Nonprofits must file annual reports with the Attorney General’s Registry of Charitable Trusts and the Secretary of State, renew tax exemption with the state, and submit required tax filings to both the IRS and California Franchise Tax Board.

Can a California nonprofit pay its board members?

Generally, California nonprofits do not pay board members except for reimbursement of reasonable expenses or, in some cases, modest stipends. Directors must always act in the organization’s best interest and follow strict conflict-of-interest rules.

Are donations to all California nonprofits tax-deductible?

Only donations to organizations that have received federal 501(c)(3) status and California state tax-exempt recognition are tax-deductible.

Is my nonprofit required to register before fundraising in California?

Yes, most charities must register with the Attorney General’s Registry of Charitable Trusts before engaging in charitable solicitations, including online fundraising.

What are the penalties for failing to comply with California nonprofit laws?

Penalties can include fines, revocation of state tax exemption, inability to operate, or even dissolution of the organization. Non-compliance can also result in individual board member liability.

How do I dissolve a nonprofit organization in California?

Dissolution requires a board resolution, notice to the state and Attorney General, settlement of debts, and proper distribution of remaining assets to another charitable organization. Legal requirements must be strictly followed to avoid future liability.

What should I do if my nonprofit is facing an investigation by the Attorney General?

It is important to cooperate fully and consult with a qualified attorney immediately. Investigations can arise from complaints, non-compliance, or alleged misuse of charitable assets.

Additional Resources

Here are helpful resources and organizations for those seeking help or information about nonprofits and charities in California:

• California Secretary of State - Business Programs Division
• California Attorney General’s Registry of Charitable Trusts
• California Franchise Tax Board - Exempt Organizations Unit
• Internal Revenue Service - Exempt Organizations
• CalNonprofits (California Association of Nonprofits)
• Public Counsel (Legal services for Nonprofits)
• LawHelpCA.org (Legal aid referrals and information)

Next Steps

If you are seeking legal advice or assistance with a nonprofit or charitable organization in California, consider taking these steps:

• Assess your organization’s needs and identify specific areas where legal guidance is required, such as formation, compliance, fundraising, or employment matters.
• Gather relevant documents, including your articles of incorporation, bylaws, tax filings, and correspondence with state or federal agencies.
• Consult with a qualified attorney who specializes in nonprofit law in California to review your situation and provide tailored advice.
• Make use of local nonprofit resource organizations and government agencies for informational materials and referrals.
• If you cannot afford private counsel, seek assistance from nonprofit legal aid organizations that serve California’s nonprofit sector.

Staying informed and seeking qualified legal help can help your organization fulfill its mission while maintaining compliance with all necessary laws and regulations.