Understanding California AB488 and How It Affects Your Nonprofit

What is California AB 488?

California AB 488, also known as the Charitable Solicitation Registration Act, is a California law that primarily regulates online charitable fundraising platforms (like GoFundMe and Classy) that facilitate donations to nonprofits.  The law officially took effect on January 1, 2023, but its full implementation was delayed until the final regulations were approved on March 24, 2024. The law is designed to provide oversight, transparency, and accountability for digital philanthropy, ensuring that donations reach the intended causes in an ethical and timely manner.

The law requires online fundraising platforms to ensure that recipient nonprofits are in good standing with the California Attorney General, Franchise Tax Board, and IRS before allowing them to fundraise. Nonprofits must proactively ensure they maintain their good standing to fundraise in California.  This blog is meant to be a resource to nonprofit leaders navigating this law.

“Good Standing” Requirements Under AB 488

Under AB 488, nonprofits that receive donations online from California donors are considered to be raising funds under state law, regardless of where they are based.

You can verify your nonprofit’s status by checking the following government databases:

• California Attorney General (AG): Maintains a monthly “May Not Operate List.”
• California Franchise Tax Board (FTB): Publishes a list of revoked exempt organizations.
• IRS: Maintains a Revocation List for nonprofits that have lost their exempt status.

If your nonprofit appears on any one of these lists, it is considered out of good standing and non-compliant with AB 488.

How to Remain in Good Standing under AB 488

To stay compliant and avoid interruptions in fundraising, nonprofits must meet key filing and registration requirements with both state and federal agencies. Here’s a step-by-step guide:

1. California Attorney General: Charitable Solicitation Compliance

If your nonprofit receives funds from California donors, you must register and file annual reports with the Attorney General’s Registry of Charitable Trusts.

• Initial Registration:
  • File Form CT-1 with your Articles of Incorporation, bylaws, and IRS determination letter.
  • More details: https://oag.ca.gov/charities
• Annual Renewal (Form RRF-1):
  • Required for all registered charities.
  • If revenue exceeds $50,000, financial statements or IRS Form 990 may be required.
  • More details: https://oag.ca.gov/charities/renewals
• Fundraising Compliance:
  • If using commercial fundraisers or fundraising counsel, additional reports may be required.
  • More details: https://oag.ca.gov/charities/fundraising

2. California Franchise Tax Board (FTB): State Tax Filings

To maintain tax-exempt status, nonprofits must file tax returns annually with the FTB.

• Annual Filing Requirements:
  • Form 199N – For gross receipts of $50,000 or less.
  • Form 199 – For gross receipts over $50,000.
• Applying for California Tax-Exempt Status:
  • Form 3500 – Standard application for tax-exempt status.
  • Form 3500A – Streamlined version for nonprofits already recognized by the IRS.
• More Information: https://www.ftb.ca.gov/file/business/types/nonprofits

3. IRS: Federal Tax Filings & Tax-Exempt Status

Nonprofits must file annual tax returns with the IRS to maintain their 501(c)(3) status.

• Annual IRS Form 990 Filings:
  • Form 990-N – For gross receipts of $50,000 or less.
  • Form 990-EZ – For gross receipts between $50,000 and $200,000.
  • Form 990 – For gross receipts over $200,000.
• Reinstating Tax-Exempt Status:
  • Check the IRS Revocation List
  • File Form 1023 or Form 1023-EZ for reinstatement.
  • More information: https://www.irs.gov

4. California Secretary of State: Business Filings

Lastly, nonprofits registered in California are required to file every two years with the Secretary of State to remain active and maintain good standing status.

While the Secretary of State (SoS) does not publish a “May Not Operate” list for the purposes of AB 488, failure to maintain good standing with the SoS could still result in your nonprofit being listed on the Attorney General’s (AG) “May Not Operate” list. This could impact your ability to fundraise and receive donations through online fundraising platforms.

• Statement of Information (SI-100 or SI-550):
  • File every two years.
  • Initial filing due within 90 days of registration.
  • Filing fee: $20.
• Check Registration Status: Use the Bizfile Online portal to confirm your registration is current.
• More Information: https://www.sos.ca.gov/business-programs/business-entities