New type of retirement plan open to nonprofits: Join our CalSavers Webinar on November 1st and get your questions answered!

Starting next July, the state of California is launching CalSavers, a new retirement program that will enable employers (including nonprofits!) to provide their employees with a payroll deduction Individual Retirement Account (IRA) at no cost to the employer or taxpayer.

We already know that more than half of nonprofits offer some kind of retirement plan to their employees (a much higher percentage than for-profits). If you already have a plan, CalSavers isn't for you. But if you don't, CalSavers will become mandatory over the next three years.

To find out what CalSavers means for nonprofits and their employees, CalNonprofits is hosting a webinar with Katie Selenski, the executive director of CalSavers, on November 1st, at 11AM. You are invited to attend this free webinar and please bring your questions!


More background on CalSavers
CalSavers was created by legislation in 2016 (that CalNonprofits supported), to create a retirement plan for the 7.5 million employees in California whose employers do not offer a retirement program. The lack of a program like CalSavers has resulted in more than 75% of California’s low and moderate income retires relying exclusively on Social Security for their retirement income, creating significant economic hardships for them.

CalSavers is a voluntary workplace IRA program, designed to be simple and portable from job to job. Under state law, businesses with five or more employees will need to either offer a retirement savings vehicle, or register for CalSavers. This requirement will phase in over a three-year period, with larger employers having to meet it sooner.

CalSavers is a good option for nonprofit employers to consider (if they don’t already have a retirement plan). There are zero fees for employers; since CalSavers is not an employer sponsored plan, employers will have no fiduciary liability, and it will be administratively easy for employers to facilitate. For more information about the plan, visit: https://www.treasurer.ca.gov/scib/ or download this CalSavers fact sheet.

Collective nonprofit advocacy powered these bills to the finish line!

Now that Governor Brown’s deadline to sign or veto bills has passed, we’re writing to share our legislative wrap-up of bills we worked on. We’re proud to report California nonprofits racked up some impressive wins this year in the California Legislature.

As you know, it was not CalNonprofits alone that secured these wins. They could not have happened without the hundreds of nonprofits that championed the bills, signed on to official letters of support, educated their constituents and communicated with their elected officials. In short, it pays to advocate. If you want more detail on any of these bills visit our Legislative Tracker.

Six bills signed into law by the Governor!

1) Website portal centralizing state grants for nonprofits: Assembly Bill 2252 (CalNonprofits sponsored)
If you've ever thought about getting funding from the State of California, you know how difficult it is to find out what opportunities are available. And this isn’t just frustrating for individual nonprofits: it also plays a role in the funding disparities we see throughout the nonprofit community. AB 2252, authored by Assemblymember Monique Limón (Chair of the Assembly Select Committee on the Nonprofit Sector), and sponsored by CalNonprofits, addressed this problem by directing the creation of an online portal centralizing all state funding opportunities, and enabling nonprofits to apply for grants online. Thanks to dozens of nonprofits signing letters and calling their representatives, the bill passed with overwhelming bipartisan support (80 Aye votes and 0 No votes in the Senate), and was signed by Governor Brown.

Next steps: CalNonprofits will now be working with the State Library — where the website will be developed and housed  to ensure as quick a launch as possible. We’ll keep you posted.

2) Budget win: $90.3 million for Census outreach
Getting an accurate count in the 2020 Census is crucial for nonprofits and the communities we serve. But how do we accomplish that without the funds to reach out to people, especially those who may be fearful of participating or confused about the census? As a member of the Census Policy Advocacy Network (CPAN), CalNonprofits helped mobilize nonprofits in support of increasing the budget for Census outreach and planning by $50 million. This additional allocation will be essential in ensuring that all Californians get counted in 2020.

Next steps: We’re in discussions with the state to develop the process for how to get this money where it needs to go and our priorities are that funding is provided to nonprofits in a way that’s straight-forward (like grants), flexible, with adequate indirect costs, and that’s effective in reaching communities who would otherwise not get counted. We’ll keep you posted on the next steps as they emerge.

3) Protecting student loan borrowers: Assembly Bill 38
We supported AB 38 (Stone) because of what we’ve seen and heard from nonprofit employees who are encountering problems with their student loan servicers. AB 38 will ensure that borrowers are given reliable information, quality customer service, and meaningful access to repayment and forgiveness programs. Supporting nonprofit staff with student debt is an important part of CalNonprofits' work supporting the nonprofit workforce.

Next steps: CalNonprofits will help get the word out about AB 38 to student loan borrowers and we will continue our work to connect nonprofits with the PSLF program. If you haven’t yet, download our Student Debt Toolkit for Nonprofits!

Because voting ought to be easy - CalNonprofits supported two bills that make it easier to vote.
California has already removed some barriers to voting with online voter registration, same-day voter registration, and automatic registration at the DMV. We supported two more bills to continue this progress.

4) Prepaid postage for mail ballots: Assembly Bill 216
While many states are moving backwards and making it harder to vote, we were proud to support AB 216 (Gonzalez Fletcher) that makes it easier to vote by requiring county election officials to include prepaid postage on vote-by-mail ballot return envelopes. While this law goes into effect in 2019, the LA Times  reports that 10 counties will begin providing prepaid postage envelopes in the November election (just 6 weeks away!), including Los Angeles County.

5) Enabling vote-by-mail voters to track their ballots: Assembly Bill 2218
More people than ever are voting by mail (57% in the 2016 general elections). That’s why we supported AB 2218 (Berman) that will establish a system to allow vote-by-mail voters to track and receive information about their vote-by-mail ballots via email or text message from the county elections official about the status of his or her vote-by-mail ballot. Now voters can be assured that their ballot was received and counted, increasing confidence in the electoral process and encouraging more individuals to vote.

Next steps: Through our Vote with Your Mission campaign, we’ll help get the word out about AB 2218 and AB 216.

6) Protecting nonprofits’ access to the internet: Senate Bill 822
The idea behind “net neutrality” is that all of us — whether businesses, nonprofits, or individuals, should have equal access to the internet at the same speed. This access is essential for nonprofits and the work we do (much of it online) to connect our communities to programs, whether its’s locating housing, identifying legal help, free arts programs for kids, or connecting a family with health care. Without net neutrality, nonprofits could be forced to pay more for internet service, hindering our ability to provide crucial services to Californians. SB 822 will prohibit service providers from blocking websites or speeding up or slowing down websites or whole classes of applications such as video.

Next steps: The US Department of Justice filed a lawsuit yesterday to block SB 822, and the fight over “net neutrality” continues at the federal level. This could impact California nonprofits, so we will continue to advocate.

Crowdfunding regulations on the horizon? CalNonprofits expressed concerns about AB 2556 (sponsored by PayPal), which failed in this legislative session. We will continue to meet with PayPal, Assemblymember Irwin and other stakeholders on the issue before the next legislative session is convened. Let us know if you’ve got expertise and insights to offer.

You can't win 'em all: Assembly Bill 888 We were not able to defeat AB 888 (Low) which extends a problematic raffle carve-out for nonprofit affiliates of major league sports teams, enabling them to distribute 50% of their proceeds to a winner, whereas all other nonprofits give 10% to the winner and 90% to charitable causes.

In 2015, legislators promised that the legislature would also receive a report about if and how communities had benefited from this carve-out. But in fact, there has been no audit or review to see if this program is working or where the money is going. The first draft of AB 888 would have allowed these raffles to continue indefinitely with no further oversight. The final bill includes a sunset on these large-scale raffles in 2024, and directs more funds to DOJ for auditing and compliance of these large-scale raffles.

Next steps: CalNonprofits will be working with the Attorney General to ensure that meaningful oversight occurs, while continuing our efforts to make raffles rules simpler for smaller authentic charitable raffles.


Just as a chamber of commerce speaks for businesses, the California Association of Nonprofits (CalNonprofits) is a collective voice for nonprofits. These "low profile/high impact" bills represent not only important victories in themselves, but reflect a growing power of nonprofits to change the narrative in Sacramento.

At CalNonprofits, more than one-third of our income comes from membership dues— unrestricted funds that allow us to be nimble and passionate. And three-thirds of our impact comes from CalNonprofits’ 10,000 members and allies responding to policy alerts and calls to action. Let's take a moment to celebrate our collective victories this year, and then start getting ready for next session's issues.

(photo credit: bill becoming a law: State Dept./D. Thompson)

Breaking news: The US Supreme Court ruled earlier this week that politically active nonprofit groups will have to disclose the identity of certain donors (those giving more than $200) when these organizations advertise for or against a political candidate.

In this article, we explain why a nonprofit may want to form a separate C4, and we look at the growing and controversial role C4s are playing in our elections.

"C4s" -- short for 501(c)(4) nonprofits -- “are going to play a very large role in electoral politics," commented nonprofit attorney Rosemary Fei in an interview for this article. There are frequently valid and compelling reasons for 501(c)(3) nonprofits to start their own C4s, but at the same time, C4 organizations are also vulnerable to abuse in elections, so having a C4 affiliate can raise concerns for some.

What the heck is a C4 anyway?

C3s . . . C4s . . . sounds like we're talking in code? We are: the Internal Revenue Code. For most people, the term "nonprofit" refers to a corporation described in the Internal Revenue Code Section 501(c)(3). These are the tax-exempt "charities" and donations to them are tax-deductible to individuals. For short sometimes people say "C3s."

But to lawyers and regulators, "nonprofit" can mean one of many different types of corporations. For instance, labor unions are C5s; chambers of commerce are C6s; cemeteries are C13s. All of these other 501(c) corporations are exempt from corporate income tax, but donations to C3s are the only ones that are tax deductible.

Okay so what is a 501(c)(4) and why are we hearing so much about them lately?

A 501(c)(4) is a "social welfare" organization, and "it's a mushy term," says Rosemary, "a catch-all for many types of organizations that serve the public yet don’t quite qualify as 501(c)(3) charities." Traditional examples of C4s are volunteer fire departments and service clubs such as Rotary, while C4s formed recently are more likely to be politically involved. An important distinction is that donations to C4s are not tax deductible (whereas donations to C3s are).

We're hearing more about them in an election year for two key reasons:

• C4s can endorse candidates (which C3s can't)
• C4s may not have to disclose their donors (which C3s do -- although only to the federal and state government) (note: this requirement is changing in some circumstances as we noted earlier).

As a result of these two attributes, unfortunately C4s have become a favored conduit for "dark money" -- vehicles for which large sums of money can be used to support or oppose candidates.

How will this affect the 2018 election?

We don't know yet. But we do know that election funds through C4s are substantial: in the 2012 election, just over $80 million was spent; $48.5 million was spent in 2016, and $43.9 million has been spent thus far in 2018. (Center for Responsive Politics).

From a public policy standpoint, the non-transparency of 501(c)(4) organizations goes in the opposite direction of campaign contribution limits and disclosure laws. While it's clear that such laws have not prevented dark money, there are still limits such as those in California, where individuals cannot give more than $4,400 to an election campaign for a state senate seat and their contributions must be disclosed. But there are no limits to what an individual can spend to support or oppose a candidate if it goes through a C4.

Should our nonprofit start a C4?

Despite the abuses, the C4 framework also has a valuable role to play for many nonprofits. Many nonprofits exist as two (or more) corporations: one is a 501(c)(3) and one is a 501(c)(4). For example, the Sierra Club endorses candidates through its C4 incorporation, and raises tax-deductible funds for research and education through its C3 incorporation.

We asked Maricela Morales, executive director of CAUSE in Ventura County, why they created a C4:

By 2012 we had been doing organizing for ten years -- on immigrant rights, environmental justice, education. And naturally people would ask us: "Who's good in this race for school board?" And we were silent, limited in what we could say.

But that led us to asking ourselves: if we had a C4 we could add to our toolbox [for example, endorsing a candidate for the school board], be able to engage and educate our base on questions they were asking anyway.

Since 2013 (when we got the C4) for example, in Oxnard through our C4 work we actively worked for district elections. Through our C3 we proposed maps, and the city unanimously chose our map. And now it's time for us to follow-up through our C4 to find candidates to run in those districts who will be leaders and advocates.

We don't just want a say in what policies are in place. We want a voice in who is going to implement those policies!

Like CAUSE, the key reasons for nonprofits creating C4s are because you want to be able to do more lobbying, to endorse candidates, and "and to raise money for the person-to-person work of engaging voters, particularly voters that no one else is speaking to."

"While having a C4 affiliate can significantly expand how a 501(c)(3) nonprofit can accomplish its objectives, if it’s not done properly, the C4 can get the C3 in trouble," Rosemary cautions. Board and staff will need to take into account the additional, sometimes complex bookkeeping and accounting that will be required to ensure that C3 and C4 activities are being tracked and paid for separately. Working with an attorney experienced in advising C3/C4 nonprofits is of course a good idea, as is working with your auditor to set up the right controls and charts of accounts.

"There are legitimate ways to make good use of both," Rosemary says. "And if you're part of a social movement and see your role as influencing policy in an ongoing way -- not just around an election -- it could very well be the right next step for you."

Note: Regulations affecting C4s are constantly being examined, challenged, and changed. Not only do individual nonprofits need to be informed about how new rulings may affect them, but the nonprofit community must also participate in how C4 law is changed.

Further resources and reading:

Attorney Gene Takagi has an excellent Step-By-Step guide to forming a C4

IRS: Social Welfare Organizations

Photo credit:illustration at top of article is by Dale Glasgow for HR Magazine

PS: The election is in 46 days!

Is your nonprofit "Voting with Its Mission?" Join us next Tuesday, Sept. 25th at 11AM for a fast-paced (free) webinar where we'll talk about easy-to-implement strategies for nonprofits who want to engage their communities, colleagues, board, and volunteers in voting in the upcoming election.