Subject to a limited set of exceptions, operating a charity in California that solicits and receives charitable contributions from California residents comes with a litany of somewhat onerous legal hurdles. The operation of charities in California is principally governed by two separate sets of laws: (1) the Supervision of Trustees for Charitable Purposes Act (the “Charitable Trusts Code”) and (2) Article 1.3 of the General Business Regulations of the Business and Professions Code (the “Charitable Solicitations Code”). The Charitable Solicitations Code primarily governs the receipt of charitable property as well as reporting and filing requirements for charities and charitable solicitations, while the Charitable Trusts Code provides additional oversight specifically over charitable solicitations.

Oddly, the charitable solicitation reporting requirements kick in upon receipt (rather than solicitation) of funds from a California resident. After receiving funds from a California resident, the charitable organization has 30 days to file with the California Attorney General a CT-1 Form, a copy of the organization’s tax exemption application and a $25.00 registration fee. Cal. Gov. Code §§ 12585 & 12586.

The most demanding reporting requirements come from the annual reporting forms. Each year a charitable organization has to file a RRF-1 Form. This form requires, among other things, audited financial statements to be filed as public records with the California Attorney General’s office.

Some organizations can find relief from these reporting requirements. These organizations include:

• Hospitals
• Educational institutions
• Religious organizations
• Some mutual benefit organizations if they do not hold assets in trust for charitable purposes

Additionally, some organizations that are not charities may find themselves subject to some reporting requirements for charitable solicitation. See Cal. Gov. Code § 12599. In particular, organizations that are considered “fundraising professionals” or “commercial coventurers” may be required to file several reports or forms with the California Attorney General’s office, such as the forms listed in the outline below. Fundraising professionals generally are individuals or organizations that are paid to solicit donations for a charity. Commercial coventurers generally are individuals or organizations engaged in commercial activity while representing to the public that the purchase of a product or the engagement of a service that they offer will be used for a charitable purpose.

Please see below for an outline of the general reporting requirements for charitable organizations and charitable solicitations.

Outline of Charitable Reporting Requirements

For Charitable Trusts

Initial Registration

• CT-1 Form
• A copy of the organization’s tax exemption application – Form 1023/1023-EZ
• Organization’s IRS determination letter
• Copies of organizational documents
  • Articles of incorporation or organization stamped with corporate number assigned by secretary of state
  • Current bylaws or other similar governing instruments
  • Any trust instruments

Annual Renewal

• RRF-1 Form
• Copy of annual IRS Form 990/990-EZ/990-PF informational return including all schedules
• If gross revenue is $2,000,000 or more, then must make audited financial statements available for inspection by the attorney general and, if requested, made available to the public.

For Charitable Solicitation Reporting Requirements

• CT-694 Form, if a charity that collects more than 50% of its annual income and more than $1,000,000 dollars from California residents
• CT-1CF Form initially and an annual CT-2CF Form if you are deemed a “commercial fundraiser”
  • And CT-10CF Form if you are also deemed a “fundraising professional”
• CT-3CF Form if you are deemed “fundraising counsel”
  • And CT-11CF Form if you are also deemed a “fundraising professional”

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**Martin is not admitted in California**