How To Register A Non Profit Ministries

How to Start a California Nonprofit

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

planting-icon2 Congratulations. You've got an idea for making the world a better place, and you want to starting time a nonprofit every bit the means to do then. The good news is that starting a California nonprofit isn't that difficult to practice if you have a sound plan, the correct squad, and sufficient startup funds.

The bad news is that running a successful nonprofit is not easy. You'll demand to think through how yous will bring value to the public, obtain funds, attract 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 afterward in this article.

Cheque out the recorded webinar from February 2022 with CalNonprofits CEO Jan Masaoka, where she walks through the major steps and gives advice about boards, finding your first funding, and much more! Complimentary for Members / $15 for non-yet-members.

Questions to consider:

- Exercise you demand to work with an attorney to get-go a nonprofit?
- Should yous first a nonprofit? What are the alternatives?

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

one. Decide the name of the corporation
two. Draft and file the articles of incorporation
3. Engage the board of directors
iv. Typhoon the bylaws and conflict of interest policy
5. Take the initial lath actions
6. Obtain an employer identification number (EIN)
seven. File the initial registration class with the California Chaser Full general'south Registry of Charitable Trusts
viii. File the Statement of Information with the California Secretary of State
9. Utilise for federal tax exemption with the Internal Revenue Service (IRS)
10. Employ for California tax exemption with the California Franchise Tax Board (FTB)
Bonus: Additional Resources

Chart of the steps with the agencies, forms, and links.

one. Make up one's mind the name of the corporation.

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

You can check the current database of existing names on the business search page on the Secretary of State website. You can also reserve a proper name for sixty days by mailing in a Proper noun Reservation Asking, which prevents another person from registering that corporation name with the California Secretary of State while it is reserved. You must likewise make certain the name does not borrow on another person'due south trademark rights. This is not always easy to make up one's mind, but a expert get-go includes running a trademark search on the U.S. Patent and Trademark Office database and a uncomplicated Google search. For some founders, it may also be important to confer with an intellectual property attorney to help ensure they are non infringing on another's rights and to protect their proper noun from being used by other parties.

Also, if you plan to operate the nonprofit in other states in addition to California, some founders may want to check that the corporation'south proper noun is similarly available in those other states where the nonprofit plans to have operations and therefore may need to register as a foreign corporation with the required state agencies in order to conduct business there.
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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 organization's name;

(b) Its purpose or purposes of the nonprofit;

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

(d) Limitations on the corporation's operations, consistent with its tax-exempt status;

(e) The corporation's street accost and mailing address, if dissimilar; and

(f) Appropriate dedication and dissolution clauses.

For California, the articles volition also identify the type of nonprofit corporation beingness formed. In that location are iii types of nonprofit corporations in California: public benefit, common benefit, and religious. A nonprofit public benefit corporation (the focus of this stride-past-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 tin can exist just one person but may too be signed by the initial lath of directors if they are named in the Manufactures.

There is a template you tin fill in and print on the Secretary of State's website. This is a expert starting point but does non provide guidelines or advice on every important consideration. For example, at that place is no guidance on specific purpose statements (y'all'll want to be careful about restricting the corporation's activities in the future by a very limiting specific purpose statement) and no option to select whatsoever 501(c)(3) purposes other than charitable, educational, and religious. It likewise does non address other languages that may be required in the manufactures if the nonprofit besides intends to seek exemption from belongings taxes in California.

A word on specific purpose statements: A wide specific purpose statement provides room for the organization's mission to evolve without requiring an subpoena to the articles of incorporation. It and may also get in easier to comply with charitable trust laws that require charitable funds to be used consistent with the specific purpose of the arrangement at the fourth dimension such funds were originally caused. If, instead, you lot prefer a narrow purpose statement such as "to restore and maintain Pomponio State Embankment," you would not be able to employ funds caused while the articles of incorporation contained this purpose statement to restore any other beaches, but the statement would provide a stronger mission anchor to help ensure that your system stays on a specific course after the founders accept left. In this instance, the organization could improve its manufactures with the Secretary of State to broaden its purposes to include other beaches, though only the funds acquired subsequently that change is in effect could be used for those broader activities. A better option might be for the nonprofit to prefer a purpose statement "to restore and maintain California beaches and adjoining habitats."

For additional information on this effect, read Starting a Nonprofit: Articles of Incorporation and Specific Purpose Statements.

More about the agent for service of process : Information technology is likewise important to understand that the amanuensis is responsible for receiving lawsuits and possibly other important legal documents on behalf of the organization and making sure those documents achieve the President or other authorized officer or director in a timely manner. If the amanuensis fails to do so (e.thou., fails to have his or her mail service checked regularly while away for an extended period), the organization could face negative consequences such as losing a default judgment for not showing upwardly 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 at that place is no person willing to have this responsibility or if privacy concerns are an issue (an individual amanuensis's proper name and street address will be a affair of public record).
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three. Engage the lath of directors.

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

Under California police, a nonprofit lath may be composed of as few as one director, but the IRS may take issue with granting recognition of 501(c)(3) condition to a nonprofit with simply one director. It is normally recommended that nonprofits accept between iii and 25 directors.

These directors – board members – should sympathise their legal duties and responsibilities to act with reasonable care and in the best interests of the arrangement while providing management and oversight over the organization'south activities, finances, officers, and legal compliance. Bridgespan offers valuable resource on nonprofit corporate governance, including BoardSource'due south Ten Bones Responsibilities of Nonprofit Boards ($29). We recommend also looking at the Lath Source website and for more information and resources about boards, many of which are complimentary.
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4. Draft the bylaws and disharmonize of interest policy.

A corporation's bylaws provide the key provisions for the governance of the corporation'due south activities and diplomacy. Bylaws should provide guidance to the lath and reassurance of audio governance practices to government regime, funders, and other interested stakeholders.

Bylaws typically comprise specific provisions detailing:

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

(b) How directors are elected or otherwise selected (e.g., by a majority vote of directors at the annual lath coming together);

(c) How the lath may have an action (e.1000., by a majority vote of directors at a board meeting or by unanimous written consent);

(d) How board meetings are chosen, noticed, and held (e.k., iv times per yr with xiv days accelerate observe by email);

(e) How board meetings are conducted (e.grand., the chair of the board presides or pursuant to Robert'southward Rules, which we mostly discourage for virtually nonprofits);

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

(k) The duties and responsibilities of each officer;

(h) Whether the corporation has voting members or is a not-membership corporation, either of which should exist clearly stated in the bylaws;

(i) The say-so of board and non-lath committees (e.one thousand., committees tasked to human activity with the authority of the lath versus informational committees that can but make 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 whatever (east.g., financial reports).

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

If the nonprofit has voting members, the bylaws will also need to contain additional provisions regarding fellow member rights and processes. Nonprofits considering a voting membership construction may want to first discuss such structure with a lawyer, particularly if they do not expect their members to actively participate in meetings and regularly do 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 direction bug. For instance, although not required past federal tax constabulary, it is considered by many to be a best exercise for any nonprofit to have an adopted conflict of involvement policy. Additionally, if a nonprofit does not have a disharmonize of involvement policy, it must describe its policy regarding conflicts of interest in the IRS Form 1023. Accordingly, it would be advantageous for near nonprofits to adopt a policy. The IRS provides a sample policy in Appendix A of the Instructions to Class 1023, which tin can be a helpful starting betoken though note that this sample policy does not necessarily business relationship for land police force requirements such as the procedural requirements under California police for approving certain self-dealing transactions involving directors.
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5. Accept the initial board actions at a board meeting or by unanimous written consent of the directors.

The board should take the following actions:

(a) Adopt the bylaws and conflict of involvement policy;

(b) Set the verbal authorized number of directors if the bylaws provide for a range for the size of the lath;

(d) Approve establishing a bank account;

(e) Corroborate applying for federal and state taxation-exempt status;

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

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

The incorporator may accept already taken some of these actions at the time that he or she appointed the initial lath, in which case the board can review and ostend those prior actions if desired.

At this step, the directors may besides complete some initial forms for the organization'due south records (which may also be required of the corporation's officers) such as their completed almanac disclosure of any potential or bodily conflicts of interests, which is normally required by whatever well-drafted conflict of interest policy, and too providing a signed written consent to receiving electronic transmissions from the corporation as required by California police in society to conduct official business electronically (eastward.g., receiving coming together notices by e-post).
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six. Obtain an employer identification number (EIN).

An officer or authorized tertiary-party designee may apply for and obtain an EIN online.
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7. File the initial registration form (Form CT-ane) with the California Chaser General's Registry of Charitable Trusts.

The initial registration must exist renewed annually, is required for the majority of nonprofit public do good corporations, and must be filed within 30 days after receipt of assets. The CT-one Form and Instructions are bachelor online. The corporation's articles of incorporation and bylaws should exist included in the initial filing. For corporations that are in the process of applying for 501(c)(iii) revenue enhancement-exempt status, you tin can submit copies of the Form 1023 awarding and federal determination letter (Step nine) after receiving the conclusion alphabetic character to complete your filing with the Registry.
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8. File the Statement of Information (Form SI-100) with the Secretarial assistant of State.

The Statement must initially be filed within xc days of the date of incorporation. This biennial filing requirement, which identifies the system's address, principal officers, and agent for service of process, tin be filed online or by mail. (Yous can find information and instructions on completing the Statement of Data here.)
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nine. Employ for federal taxation exemption with the Internal Revenue Service (IRS) and receive a conclusion letter from the IRS.

Completing the Class 1023 application for exempt status under Internal Acquirement Code (IRC) Section 501(c)(three) may exist the most challenging function of the startup process. It is a legally-driven and comprehensive inquiry covering 10 Parts and eight Schedules.

As of January 31, 2020, the IRS revised Form 1023 to exist an online backup class that must be filed electronically at Pay.gov. While substantively the new electronic Form 1023 is mostly similar to its paper version predecessor, there are some new changes with the electronic class and east-filing procedure and some wrinkles that may be addressed in the futurity. Luckily, the IRS has added new tools and instructional videos to their website to assist yous understand the east-filing process. You will be required to create an business relationship at Pay.gov in which yous volition be able to preview and download the class, save your progress, and return to the course at a later time. Please notation that although you will be able to salve your progress, the application will not let you to advance to the adjacent page until you have completed all of the questions on the current page, including entering required descriptions or explanations or completing required schedules.

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

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

Form 1023 also requires information regarding (a) organizational structure; (b) compensation and other fiscal arrangements with officers and directors, and certain highly paid employees and contained contractors; (c) members and other individuals and organizations that receive benefits from the organization; (d) organizational history (east.g., an organization that was spun off or previously fiscally sponsored by another organization may need to complete an additional schedule as a successor organisation); (due east) specific activities; and (f) actual and/or projected argument of revenues and expenses (which should be consistent with any identified activities).

Part VIII is designed to determine the organization'due south classification as either a private foundation or a public charity. Public charity status is generally the more favorable tax condition simply requires an organization to run across sure requirements. For about organizations, this means passing a public back up test over an ongoing v-year measuring period. For organizations that volition receive a big bulk of their support from few sources over their first five years, monitoring and managing of the public back up ratio may be critically important. Public Clemency Status Simplified (a piffling) is a helpful online resource from Insight Center for Community Economic Development.

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

The filing fee for Course 1023 is currently $600. The filing fee for Form 1023-EZ is $275. Fees are paid online here.
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10. Use for California tax exemption with the California Franchise Tax Lath (FTB) and receive an affidavit of exemption alphabetic character from the FTB.

Organizations with a 501(c)(3) federal conclusion letter can request California recognition of tax exemption under California Acquirement & Taxation Lawmaking section 23701d from the FTB by filing Course 3500A forth with a copy of the IRS determination letter. Y'all can notice instructions here. The FTB will mostly recognize the organization'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 Form 3500 for state income revenue enhancement exemption. There is no fee for either Course 3500A or Form 3500.
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Bonus: Additional Resources

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

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Do you need to work with an chaser to showtime a nonprofit?

Although the majority of nonprofits are fix without the aid of lawyers, information technology'south easy to make mistakes that get plush to correct later (such as unwisely creating voting membership structures, adding unlawful provisions to template bylaws, violating the commerciality doctrine, etc.). We recommend having experienced professionals involved -- such every bit attorneys, board members with nonprofit incorporation feel, and experienced consultants. Don't discount the value of a knowledgeable attorney. Y'all can discover a list of firms and consultants who are CalNonprofits members in the Professional Directory online. (Search for "Starting a Nonprofit and Staying Compliant.")
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What are some alternatives to starting a nonprofit?

At present that you know how to start a California nonprofit, y'all should thoughtfully consider whether this is the right selection for your ideas and for the public benefit. There may exist other means to carry out your dreams, including working under the umbrella of an existing nonprofit. One often-overlooked culling is fiscal sponsorship, a relationship that may permit a group to house a charitable project within an existing nonprofit with the ability to spin it off at a after date. For more information on fiscal sponsorship, see Fiscal Sponsorship Nuts from the Bar Association of San Francisco. Very small operations may consider forming themselves equally an unincorporated association. Yous may also notice that starting a for-turn a profit company will serve your purposes better than a nonprofit structure.

Once you have started your nonprofit, be certain to look at CalNonprofits' Nonprofit Compliance Checklist, a regularly updated listing of all the federal and country forms required from nonprofits, including links to all the forms.
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Nigh THE AUTHORS: Emily Chan and Gene Takagi

Attorneys Emily Chan and Gene Takagi wrote this guide for the California Association of Nonprofits equally part of their commitment to pro bono work and customs service.

Emily Chan is of counsel with Adler & Colvin and a former recipient of the Outstanding Nonprofit Lawyer – Young Attorney honour recognized past the Nonprofit Organizations Committee of the American Bar Clan. Gene Takagi is a principal attorney of NEO Police Group, a role-fourth dimension lecturer at Columbia University, and a contributing editor of the Nonprofit Law Blog.

Y'all can reach Emily at world wide web.adlercolvin.com or 415-421-7555
You can reach Gene at world wide web.neolawgroup.com or 415-977-0558
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