How To Find Registered Non-profit Organizations

How to Commencement a California Nonprofit

A Stride-by-Footstep Guide & Additional Resources --->

planting-icon2 Congratulations. You lot've got an thought for making the earth a better identify, and yous want to start a nonprofit as the ways to practice so. The skillful news is that starting a California nonprofit isn't that hard to do if you have a sound plan, the correct team, and sufficient startup funds.

The bad news is that running a successful nonprofit is not like shooting fish in a barrel. You'll need to think through how you will bring value to the public, obtain funds, concenter staff and/or volunteers, build a board of directors, and comply with the various laws that regulate nonprofits. Your answers to these questions will determine whether you should start a nonprofit or consider alternatives. More on these points later in this article.

Check out the recorded webinar from February 2022 with CalNonprofits CEO Jan Masaoka, where she walks through the major steps and gives communication near boards, finding your first funding, and much more! FREE for Members / $15 for not-yet-members.

Questions to consider:

- Exercise you need to work with an attorney to first a nonprofit?
- Should you start a nonprofit? What are the alternatives?

x basic steps for starting a California nonprofit public benefit corporation:

1. Make up one's mind the name of the corporation
2. Draft and file the manufactures of incorporation
3. Appoint the board of directors
4. Draft the bylaws and conflict of involvement policy
5. Take the initial board actions
6. Obtain an employer identification number (EIN)
7. File the initial registration class with the California Attorney General's Registry of Charitable Trusts
8. File the Argument of Information with the California Secretary of State
9. Apply for federal tax exemption with the Internal Revenue Service (IRS)
ten. Utilize for California tax exemption with the California Franchise Tax Board (FTB)
Bonus: Additional Resources

Nautical chart of the steps with the agencies, forms, and links.

i. Determine the proper name of the corporation.

A nonprofit is typically formed equally a corporation and its name can be a valuable asset. A corporation'south legal proper name must be registered with the state where the corporation is formed. In California, a corporation name may be accepted by the California Secretary of Land if the name is not the same as or too similar to an existing proper name on the agency's records and if information technology's not misleading to the public.

You can check the current database of existing names on the business organisation search page on the Secretary of State website. You can also reserve a name for 60 days by mailing in a Proper noun Reservation Request, which prevents another person from registering that corporation name with the California Secretarial assistant of State while it is reserved. You must also brand sure the proper name does non infringe on another person'south trademark rights. This is not always easy to determine, but a proficient start includes running a trademark search on the U.S. Patent and Trademark Role database and a simple Google search. For some founders, it may as well be of import to confer with an intellectual property attorney to help ensure they are not infringing on another's rights and to protect their name from existence used by other parties.

Also, if you plan to operate the nonprofit in other states in improver to California, some founders may want to bank check that the corporation's proper noun is similarly available in those other states where the nonprofit plans to accept operations and therefore may demand to register every bit a strange corporation with the required land agencies in guild to conduct concern there.
[Back to Superlative]

2. Draft and file the articles of incorporation.

A corporation is legally created with the filing of the articles of incorporation. Articles of incorporation typically identify:

(a) The organisation's proper name;

(b) Its purpose or purposes of the nonprofit;

(c) The agent for service of process -- that is, a person who can receive lawsuits and other official correspondence and other matters, which can be an individual whose name and accost are identified or a corporate amanuensis registered with the California Secretary of Land for such purpose;

(d) Limitations on the corporation's operations, consequent with its taxation-exempt condition;

(e) The corporation'south street accost and mailing address, if different; and

(f) Advisable dedication and dissolution clauses.

For California, the articles volition also identify the type of nonprofit corporation beingness formed. There are three types of nonprofit corporations in California: public benefit, mutual benefit, and religious. A nonprofit public do good corporation (the focus of this pace-by-footstep guide) is the appropriate choice for a nonprofit formed for charitable or public purposes. The articles of incorporation are typically signed by an "incorporator," which can be simply 1 person but may also be signed past the initial board of directors if they are named in the Articles.

There is a template y'all can fill up in and print on the Secretary of Land's website. This is a good starting point but does not provide guidelines or communication on every important consideration. For example, in that location is no guidance on specific purpose statements (you'll want to be careful about restricting the corporation's activities in the futurity by a very limiting specific purpose statement) and no choice to select any 501(c)(3) purposes other than charitable, educational, and religious. It also does not accost other languages that may exist required in the manufactures if the nonprofit besides intends to seek exemption from property taxes in California.

A word on specific purpose statements: A broad specific purpose argument provides room for the organization's mission to evolve without requiring an amendment to the articles of incorporation. Information technology and may also brand it easier to comply with charitable trust laws that require charitable funds to be used consequent with the specific purpose of the organization at the fourth dimension such funds were originally acquired. If, instead, you adopt a narrow purpose statement such as "to restore and maintain Pomponio State Embankment," you would not be able to use funds acquired while the articles of incorporation independent this purpose statement to restore any other beaches, but the statement would provide a stronger mission anchor to assist ensure that your organization stays on a specific course later the founders accept left. In this example, the organisation could amend its articles with the Secretary of State to broaden its purposes to include other beaches, though only the funds acquired afterwards that change is in effect could exist used for those broader activities. A better choice might be for the nonprofit to adopt a purpose statement "to restore and maintain California beaches and adjoining habitats."

For boosted information on this issue, read Starting a Nonprofit: Manufactures of Incorporation and Specific Purpose Statements.

More than about the amanuensis for service of process : It is also important to empathise that the amanuensis is responsible for receiving lawsuits and mayhap other important legal documents on behalf of the organization and making sure those documents reach the President or other authorized officer or director in a timely manner. If the agent fails to do and then (due east.g., fails to have his or her postal service checked regularly while abroad for an extended menses), the arrangement could face negative consequences such as losing a default judgment for not showing up to defend a lawsuit. An organization can identify an individual who resides in California who is willing to serve as an agent or may elect to pay for a registered corporate agent, which may be preferred if there is no person willing to accept this responsibleness or if privacy concerns are an outcome (an individual amanuensis'southward name and street address volition exist a thing of public tape).
[Dorsum to Elevation]

iii. Appoint the board of directors.

If the initial directors are not named in the manufactures of incorporation, the incorporator can and should engage the lath through a written activeness.

Under California law, a nonprofit board may exist composed of as few every bit one managing director, but the IRS may take outcome with granting recognition of 501(c)(iii) condition to a nonprofit with only one managing director. It is commonly recommended that nonprofits have betwixt three and 25 directors.

These directors – lath members – should understand their legal duties and responsibilities to act with reasonable care and in the best interests of the organization while providing direction and oversight over the organization's activities, finances, officers, and legal compliance. Bridgespan offers valuable resource on nonprofit corporate governance, including BoardSource's Ten Basic Responsibilities of Nonprofit Boards ($29). Nosotros recommend besides looking at the Board Source website and for more data and resources well-nigh boards, many of which are free.
[Back to Top]

4. Draft the bylaws and conflict of interest policy.

A corporation's bylaws provide the primal provisions for the governance of the corporation's activities and affairs. Bylaws should provide guidance to the board and reassurance of audio governance practices to government authorities, funders, and other interested stakeholders.

Bylaws typically contain specific provisions detailing:

(a) The powers of the lath and duties of the directors;

(b) How directors are elected or otherwise selected (e.yard., by a majority vote of directors at the annual board meeting);

(c) How the board may take an action (eastward.g., past a majority vote of directors at a board coming together or by unanimous written consent);

(d) How board meetings are called, noticed, and held (e.g., iv times per year with 14 days advance notice past email);

(e) How board meetings are conducted (e.g., the chair of the board presides or pursuant to Robert's Rules, which we more often than not discourage for most nonprofits);

(f) The officers of the corporation (California law requires three officers: a president or chair of the board, secretary, and treasurer or chief financial officer);

(g) The duties and responsibilities of each officer;

(h) Whether the corporation has voting members or is a non-membership corporation, either of which should exist clearly stated in the bylaws;

(i) The authorization of lath and non-board committees (e.g., committees tasked to act with the potency of the lath versus advisory committees that can only brand recommendations);

(j) The level of indemnification provided by the corporation to protect its directors, officers, employees, and other agents; and

(k) The reports due to directors and members, if any (east.1000., financial reports).

Bylaws may also include the corporation's specific purpose or mission argument (which might replicate or make more specific the purpose statement in the articles of incorporation) and the corporation'southward core values if they would be viewed as helpful in guiding the board on its leadership and decision-making – though the corporation should also be mindful to avoid inconsistencies between the articles and bylaws if mentioning the purposes or mission statement in both places (for which the articles will control).

If the nonprofit has voting members, the bylaws volition also need to comprise additional provisions regarding member rights and processes. Nonprofits considering a voting membership structure may desire to outset discuss such structure with a lawyer, particularly if they practise non wait their members to actively participate in meetings and regularly exercise their rights to vote for members of the board of directors.

Public Counsel provides an Annotated Form of Bylaws for a California Nonprofit Public Benefit Corporation.

Separately articulated policies commonly supplement the bylaws in addressing key governance and management issues. For example, although not required by federal revenue enhancement law, it is considered by many to be a best practice for any nonprofit to have an adopted conflict of interest policy. Additionally, if a nonprofit does not have a conflict of interest policy, it must describe its policy regarding conflicts of interest in the IRS Form 1023. Accordingly, information technology would exist advantageous for most nonprofits to adopt a policy. The IRS provides a sample policy in Appendix A of the Instructions to Form 1023, which can be a helpful starting point though annotation that this sample policy does not necessarily account for state constabulary requirements such equally the procedural requirements under California police for approving certain self-dealing transactions involving directors.
[Back to Height]

5. Take the initial board deportment at a lath meeting or past unanimous written consent of the directors.

The board should accept the following actions:

(a) Prefer the bylaws and conflict of interest policy;

(b) Gear up the exact authorized number of directors if the bylaws provide for a range for the size of the lath;

(d) Approve establishing a depository financial institution account;

(e) Approve applying for federal and state tax-exempt status;

(f) Approve reimbursement of startup expenses (if applicable); and

(g) Approve the compensation of the president (CEO) or the treasurer (CFO) and anyone performing the functions of such officers, like an executive director (if applicable).

The incorporator may have already taken some of these actions at the fourth dimension that he or she appointed the initial board, in which instance the lath tin review and confirm those prior deportment if desired.

At this step, the directors may likewise complete some initial forms for the system's records (which may too be required of the corporation'due south officers) such as their completed annual disclosure of whatever potential or actual conflicts of interests, which is unremarkably required by whatsoever well-drafted conflict of interest policy, and also providing a signed written consent to receiving electronic transmissions from the corporation as required by California police force in order to deport official business organisation electronically (eastward.g., receiving meeting notices by due east-mail).
[Back to Elevation]

6. Obtain an employer identification number (EIN).

An officer or authorized 3rd-party designee may apply for and obtain an EIN online.
[Dorsum to Top]

7. File the initial registration form (Course CT-1) with the California Attorney General'south Registry of Charitable Trusts.

The initial registration must be renewed annually, is required for the majority of nonprofit public benefit corporations, and must be filed inside thirty days after receipt of assets. The CT-1 Form and Instructions are bachelor online. The corporation's articles of incorporation and bylaws should be included in the initial filing. For corporations that are in the process of applying for 501(c)(3) taxation-exempt condition, you can submit copies of the Grade 1023 application and federal conclusion letter of the alphabet (Step 9) after receiving the determination letter to complete your filing with the Registry.
[Dorsum to Acme]

eight. File the Statement of Data (Form SI-100) with the Secretary of State.

The Statement must initially exist filed within ninety days of the appointment of incorporation. This biennial filing requirement, which identifies the system'south address, principal officers, and agent for service of process, can be filed online or by mail. (You tin find information and instructions on completing the Statement of Information here.)
[Dorsum to Top]

9. Use for federal revenue enhancement exemption with the Internal Acquirement Service (IRS) and receive a determination letter from the IRS.

Completing the Form 1023 application for exempt status under Internal Acquirement Lawmaking (IRC) Department 501(c)(3) may be the most challenging part of the startup process. It is a legally-driven and comprehensive inquiry covering 10 Parts and 8 Schedules.

As of January 31, 2020, the IRS revised Grade 1023 to be an online backup form that must be filed electronically at Pay.gov. While substantively the new electronic Grade 1023 is mostly similar to its paper version predecessor, there are some new changes with the electronic form and e-filing process and some wrinkles that may be addressed in the hereafter. Luckily, the IRS has added new tools and instructional videos to their website to help you empathize the e-filing process. You will be required to create an account at Pay.gov in which yous will be able to preview and download the form, save your progress, and return to the form at a later time. Please note that although you volition be able to save your progress, the application will not permit you to advance to the next page until y'all have completed all of the questions on the current folio, including inbound required descriptions or explanations or completing required schedules.

A critical section for careful completion is Function IV, Narrative Description of Your Activities, which asks: for each past, present, or planned activity, include information that answers the post-obit questions.

What is the activity?
Who conducts the action?
Where is the activity conducted?
What percentage of your total fourth dimension is allocated to the activeness? (Combined fourth dimension percentages should add upward to 100%.)
How is the activity funded and what percent of your overall expenses is allocable to this activity?
How does the activity further your exempt purposes?

Form 1023 also requires information regarding (a) organizational structure; (b) compensation and other financial arrangements with officers and directors, and certain highly paid employees and independent contractors; (c) members and other individuals and organizations that receive benefits from the organization; (d) organizational history (eastward.one thousand., an organization that was spun off or previously fiscally sponsored past another organisation may need to complete an boosted schedule every bit a successor arrangement); (e) specific activities; and (f) actual and/or projected statement of revenues and expenses (which should exist consequent with any identified activities).

Part Eight is designed to determine the organization's classification every bit either a private foundation or a public clemency. Public charity status is mostly the more than favorable tax condition but requires an system to meet sure requirements. For about organizations, this ways passing a public back up test over an ongoing five-twelvemonth measuring period. For organizations that volition receive a big majority of their back up from few sources over their first 5 years, monitoring and managing of the public support ratio may be critically of import. Public Clemency Condition Simplified (a little) is a helpful online resource from Insight Heart for Community Economic Development.

If you think that your nonprofit volition non bring in gross receipts of more $50,000 per year during the next 3 years, and has non had gross receipts of more than $50,000 in any of the by three years, you may exist eligible to file Grade 1023-EZ. The full criteria are explained here. Like Form 1023, the 1023-EZ must be filed electronically. You tin find instructions on this site.

The filing fee for Form 1023 is currently $600. The filing fee for Form 1023-EZ is $275. Fees are paid online here.
[Back to Top]

10. Utilise for California revenue enhancement exemption with the California Franchise Tax Board (FTB) and receive an affidavit of exemption letter of the alphabet from the FTB.

Organizations with a 501(c)(three) federal determination alphabetic character tin can request California recognition of revenue enhancement exemption under California Revenue & Taxation Code section 23701d from the FTB past filing Class 3500A along with a re-create of the IRS conclusion letter of the alphabet. You lot tin can observe instructions here. The FTB will generally recognize the organisation's exemption from state income taxes equally of the federal effective date. An organization that does not take a 501(c)(3) federal determination letter is otherwise required to file the more complicated Course 3500 for land income taxation exemption. There is no fee for either Class 3500A or Form 3500.
[Dorsum to Acme]

Bonus: Additional Resources

IRS "StayExempt.org" particularly for 501(c)3s
Nolo Printing: How to Form a Nonprofit Corporation in California
California Attorney General'south "Guide for Charities"
Nonprofit Kit for Dummies
Why Join the California Clan of Nonprofits

[Back to Top]

Do you demand to work with an attorney to start a nonprofit?

Although the majority of nonprofits are fix without the help of lawyers, it'south easy to make mistakes that become plush to correct later on (such every bit unwisely creating voting membership structures, adding unlawful provisions to template bylaws, violating the commerciality doctrine, etc.). We recommend having experienced professionals involved -- such equally attorneys, lath members with nonprofit incorporation experience, and experienced consultants. Don't disbelieve the value of a knowledgeable attorney. Y'all can discover a list of firms and consultants who are CalNonprofits members in the Professional person Directory online. (Search for "Starting a Nonprofit and Staying Compliant.")
[Back to Acme]

What are some alternatives to starting a nonprofit?

Now that you lot know how to kickoff a California nonprofit, you should thoughtfully consider whether this is the right choice for your ideas and for the public benefit. There may be other ways to carry out your dreams, including working nether the umbrella of an existing nonprofit. Ane often-overlooked alternative is fiscal sponsorship, a human relationship that may allow a group to firm a charitable project within an existing nonprofit with the ability to spin it off at a later date. For more information on fiscal sponsorship, see Fiscal Sponsorship Basics from the Bar Association of San Francisco. Very small operations may consider forming themselves as an unincorporated clan. You may also discover that starting a for-profit company will serve your purposes better than a nonprofit structure.

Once you have started your nonprofit, be sure to expect at CalNonprofits' Nonprofit Compliance Checklist, a regularly updated listing of all the federal and state forms required from nonprofits, including links to all the forms.
[Dorsum to Summit]

ABOUT THE AUTHORS: Emily Chan and Gene Takagi

Attorneys Emily Chan and Gene Takagi wrote this guide for the California Association of Nonprofits as function of their commitment to pro bono work and community service.

Emily Chan is of counsel with Adler & Colvin and a former recipient of the Outstanding Nonprofit Lawyer – Young Attorney honour recognized by the Nonprofit Organizations Committee of the American Bar Association. Gene Takagi is a principal attorney of NEO Constabulary Group, a part-time lecturer at Columbia University, and a contributing editor of the Nonprofit Law Blog.

Y'all tin can achieve Emily at world wide web.adlercolvin.com or 415-421-7555
You can reach Gene at www.neolawgroup.com or 415-977-0558
[Dorsum to Pinnacle]