Comprehensive Guide to Starting a Nonprofit in California

1. Name Your Nonprofit and Define Its Identity
• Choosing a Name: Ensure your nonprofit’s name is unique, memorable, and reflective of your mission.
• Mission Statement: Summarize your nonprofit’s purpose and methods in 1-2 sentences.
• Vision & Values: Describe your ideal future state and core values.
• Branding: Develop a consistent brand identity with a logo, colors, fonts, and more.

2. Determine Your Corporate Structure
• Religious Corporations: For churches, synagogues, or mosques.
• Public Benefit Corporations: For charitable purposes, the most common nonprofit structure.
• Mutual Benefit Corporations: For non-charitable purposes.
• Mutual Benefit Common Interest Development Corporations: For associations like homeowners’ groups.

3. Develop a Business Plan
• Executive Summary: An overview of your mission, vision, goals, and financial plans.
• Programs and Services: Detail how your programs work and their impact.
• Market Analysis: Insights into your target audience, competitors, and potential partners.
• Marketing Plan: Strategies and timelines to build your presence.
• Operational Plan: Day-to-day operations, partnerships, insurance, and costs.
• Impact and Financial Plans: Goals, measurement strategies, and financial stability.

4. Recruit a Board of Directors
• Typical roles include President, Vice President, Secretary, Treasurer, and Committee Officers.
• Aim for a diverse board with a range of perspectives and expertise.
• California law allows starting with one director, but three are recommended for tax-exempt status.

5. Appoint a Registered Agent
• This person or corporation handles legal documents and notices.
• They must be available during business hours in a physical office.
Find a registered agent here.

6. File Articles of Incorporation
• Choose the appropriate form based on your nonprofit structure.
Search for your name here:
• File online with the Secretary of State with a $30 fee here.

7. File Your Initial Report
• Submit Form SI-100 within 90 days of incorporation here.
• Include details about your organization’s name, address, registered agent, and board directors.

8. Obtain an Employer Identification Number (EIN)
• Apply for an EIN via IRS Form SS-4 here.
• Necessary for opening bank accounts, hiring employees, and filing tax returns.

9. Draft Bylaws and a Conflict of Interest Policy
• Bylaws: Outline roles, election procedures, meetings, and membership.
• Conflict of Interest Policy: Define and manage potential conflicts.
Get more information here.

10. Hold Your First Board Meeting
• Approve bylaws, organize committees, and prepare to open bank accounts.
• Document all proceedings meticulously.

11. Open a Nonprofit Bank Account
• Provide incorporation documents, bylaws, and EIN.
• Some banks may require a board resolution.

12. Register with the California Attorney General’s Registry of Charitable Trusts
• File Form CT-1 within 30 days of receiving donations.
• Annual renewals required with Form RRF-1.

13. Apply for Federal Tax Exemption
• File IRS Form 1023 or 1023-EZ for 501(c)(3) status.
• Forms have associated fees and varying processing times.

14. Apply for California State Tax Exemption
• Submit Form 3500A with your federal determination letter.
• If done prior to federal approval, file Form 3500 and pay a $25 fee.

15. Report Beneficial Ownership Information to FinCEN
• Submit your filing here.
• Once a nonprofit receives tax-exempt status from the IRS as a 501(c)(3) organization, they are no longer required to report BOI updates..

16. Obtain Necessary Licenses and Permits
• Check requirements for specific activities like bingo or raffles.
• Consult the Attorney General’s website or a nonprofit lawyer if needed.

17. Hire Core Staff
• Focus on essential roles initially, such as Executive Director, Marketing Manager, and Fundraising Coordinator.
• Use job boards like CalNonprofits and Idealist for recruitment.

18. Choose Nonprofit Software
• Membership management software like WildApricot can streamline operations, member communications, and event management.
Other CRM's that are FREE

19. Launch Your Nonprofit
• Develop a strong launch strategy with a branded website, marketing efforts, community engagement, and an inaugural fundraising event.

Staying Compliant
Annual Obligations
• Annual Report: Showcase programs, finances, and success stories to attract donors.
• Corporate Report (SI-100): Re-file every two years.
• Annual Return (FTB-199): File by May 15th to retain state tax exemption.
• Federal IRS Form 990: Document expenses, income, and major donors.
• Charitable Solicitations Renewal (Form RRF-1): File annually to maintain donation privileges.

FAQ
How long does it take to start a nonprofit in California?
• Typically under a year, with the federal tax exemption process being the longest.

How much does it cost?
• Base costs around $700, excluding salaries, insurance, overhead, and consultant fees.

Can I start a nonprofit by myself?
• Yes, but it’s challenging. A small team is recommended for efficiency and tax-exempt status.

How many board members are needed?
• At least three for federal tax exemption, though legally only one is required in California.

Can I lose tax-exempt status?
• Yes, due to non-compliance, excessive political activity, unrelated business income, conflicts of interest, or personal gain from the nonprofit’s work.

With this guide, you’re equipped to embark on the journey of establishing a nonprofit in California. Step by step, you’ll build a solid foundation for making a meaningful impact.