California AG: Proposed Changes to Annual Registration Renewals for Charities

The Office of the Attorney General, Department of Justice (“DOJ”) of the State of California is proposing to amend certain regulations and Forms that will affect charities subject to registration in California. The Notice of Amendments to Regulations and related documents can be found here. We wrote about proposed changes to the Initial Registration Form CT-1 here. In this post, we look at the proposed changes to the annual registration renewals.

Any interested person, or his or her authorized representative, may submit written comments relevant to the proposed regulatory action to DOJ. The written comment period closes at 5:00 p.rn. on February 11 , 2019. We’ll share some of our comments in a future post.

Proposed Changes to the Annual Registration Renewals

There are few proposed changes to the annual registration renewal Form RRF-1. Notably:

  • The Form asks a new question: “At the end of this reporting period, did the organization hold restricted net assets, while reporting negative unrestricted net assets?” This question simply facilitates the required disclosure under California Government Code Section 12599.8, which became effective on January 1, 2013. See New California Law Affecting Fiscal Sponsors (2/19/13).
  • The Form no longer asks the question: “During this reporting period, did non-program expenditures exceed 50% of gross revenue?” See Overhead Myth: Thoughts from a Nonprofit Attorney.
  • The Form adds the one-page privacy statement as required under California Civil Code Section 1798.17. 
  • The Instructions make clear that: “A signature of an authorized agent is required. An authorized agent may be the president or chief executive officer, treasurer or chief financial officer of a public benefit corporation; or a trustee if the organization is a trust; or other authorized agent of the organization. Signatures do not need to be original inked signature. Copies or electronic signatures are acceptable.” It will be helpful to allow an Executive Director not identified as the CEO in the Bylaws to sign the Form. See Who is the Chief Executive Officer – the Executive Director or the Board Chair?

New Form CT-TR-1 for Small Charities

Organizations whose revenue falls below the threshold for filing IRS Form 990-EZ (normally $50,000 or less), shall file Form RRF-1 with the Attorney General’s Registry of Charitable Trusts, together with new Form CT-TR-1, the Annual Treasurer’s Report. Currently, reporting charitable organizations with total gross revenue or assets of $25,000 or more must file the IRS Form 990, 990-EZ, or 990-PF with the Registry. But the California requirements do not dovetail with the federal filing requirements that permit public charities with annual gross receipts that are normally $50,000 or less to file the IRS Form 990-N (e-Postcard). The proposed changes to the California regulations and forms generally require from IRS e-Postcard filers Form CT-TR-1, which is essentially a simple balance sheet and statement of revenues and expenses.

Submit Comments to:

James Toma, Supervising Deputy Attorney General 
California Department of Justice 
Charitable Trusts Section
300 S. Spring St., Suite 1702
Los Angeles, CA 90013
Email: [email protected]

Teresa DePaz, Legal Secretary 
California Department of Justice 
Charitable Trusts Section 
300 S. Spring St., Suite 1702 
Los Angeles, CA 90013 
Email: [email protected]