The most common reason for nonprofits to lose their good standing with the State of California is a failure to submit required forms. The Attorney General's office has recently updated several of them. Attorney Gene Takagi of Neo Law Group has written a smart guide to the new forms and allowed us to share information from it with you below. We've also updated our online Nonprofit Compliance Checklist – a detailed guide to the forms nonprofits are required to complete for the state of California and the federal government – to reflect the recent changes.

Effective February 1, 2020, the California Attorney General’s Registry of Charitable Trusts requires charities and professional fundraisers to use new and amended forms. These new forms are now available on the Attorney General Registry Forms webpage.

Significant changes to the forms include:

• The RRF-1 annual registration renewal form now requires that charities report noncash donations;
• Charities with annual revenue under $50,000 now must file the CT-TR-1 treasurer’s report annually; and
• The CT-1 initial registration form now requires additional information such as dbas ("doing-business-as") and prior enforcement actions.

Changes were also made to the professional fundraisers forms and the charitable raffles forms, but the specifics of those are beyond the scope of this article. 

How important is government funding to nonprofits?

We learned from the recently released Causes Count: the Economic Power of California’s Nonprofit Sector – New Findings that government funding represents 30% of nonprofit revenue in California, more than foundation funding and individual giving combined! We also learned that nonprofits struggle to find and secure government grants – particularly their first one.

In total, government provides more than ten times the funding to nonprofits as foundations, especially in human services, health and education, but also in the arts, environment, animal welfare, consumer protection, and elsewhere. But there are lots of workshops and resources on getting foundation grants compared to very few on getting government grants. We hope our new A Nonprofit’s Guide to Getting Your First Government Grant helps community nonprofits access government funding.

The spending bill passed and signed on December 20, 2019 included some great news for nonprofits: the tax on nonprofit employee transportation benefits, written into federal law in 2017, was repealed. This is a major victory for the nonprofit sector and a testament to what we can accomplish when the nonprofit community works together and reaches out to allies.

This illogical and harmful tax forced nonprofits to pay a 21% tax on employee benefits: yes, a tax on expenses. If a nonprofit paid for transit passes or employee parking – even on property they owned – they had to pay 21% of that amount in taxes. CalNonprofits members told us that some were forced to discontinue transportation benefits, and others paid tens of thousands of dollars in unnecessary taxes, and in additional accounting and audit costs.