Frequently Asked Questions

Charities

1. I have just been solicited by a charity. How can I tell if it is legitimate?
2. How can I check out a charity?
3. Can't I get information about a charity's operations and expenditures directly from the charity?
4. How can I understand the information that is on a charity's Form 990?
5. What is the role of governmental agencies regarding charities?
6. What does the Attorney General investigate?
7. What does the Attorney General's Office generally not investigate?
8. What can I expect when I submit a complaint to the Attorney General’s Office about a charity or a charitable solicitation?

1. I have just been solicited by a charity. How can I tell if it is legitimate?
   

   The Attorney General's office can tell you if a charity is registered and current in its reporting requirements. However, we can't tell you whether it is legitimate, or such things as how effective it is, or whether it uses its money wisely. There is no Attorney General's seal of approval. It is up to the individual donor to check out a charity for him/herself.

2. How can I check out a charity?
   

   You may find the most recently filed Form 900, 990EZ or 990 PF by searching the database. Please note, however, that not every charity report is available yet, and the information on the reports is unedited.

   The Attorney General's Registry of Charitable Trusts (Registry) (916-445-2021) maintains the public files containing financial reports (IRS Form 990) for the largest California registered charities. In addition, the Registry maintains a current index and a computer printout of all registered California charities. The Registry receives and processes the periodic financial reports which must be filed by the largest public benefit corporations and Charitable Trusts; many small charities are exempt from annual reporting. Currently, all hospitals, schools, and churches are also exempt from reporting to the Registry.

   If a charity has not registered with the California Attorney General, the Registry is unable to provide any information about it. If the charity has registered, the Registry can provide the following public information: a copy of its articles of incorporation or trust instrument, copies of annual information returns for the largest tax-exempt organizations (IRS Form 990 or 990 EZ for public charities and Form 990 PF for private foundations) filed by the charity, and the RRF-1 form. If a Form 990, 990 EZ, or 990 PF is available for the charity listed above, that document may contain valuable information about the charitable organization and its programs.

3. Can't I get information about a charity's operations and expenditures directly from the charity?
   

   Certainly. Federal law now requires a charity to send you a copy of its Form 990 for a reasonable charge. If the form is not available by searching the database, this is the fastest way to obtain the information.

   You can also request copies of Form 990 from the Attorney General's Registry of Charitable Trusts. The charge is 30 cents per page copying charges, plus mailing costs. All public copying requests are handled by a copying service and processed in the order received. The average time to process such requests is three weeks.

4. How can I understand the information that is on a charity's Form 990?
   

   IRS Form 990 basically explains how much money the charity received for the year reported, and gives a fairly detailed breakdown of how the charity spent the money. The Attorney General's Office has prepared instructions for detailed review of a Form 990. They are contained in the Attorney General's Guide to Charitable Solicitation at pages 20-24, pdf.

5. What is the role of governmental agencies regarding charities?
   

   Various government agencies take actions that affect the status and operations of charitable organizations. The IRS and the California Franchise Tax Board initially determine whether an organization qualifies for exemption from federal and state income tax. At any time during the operating life of a charity, the IRS or the Franchise Tax Board may audit the organization to determine its liability for taxes, penalties, or revocation of tax-exempt status.

   The role of the Attorney General in overseeing California charities is different from the IRS and Franchise Tax Board. The Attorney General represents the public beneficiaries of charities, who cannot sue in their own right. The Attorney General investigates and audits charities to detect cases in which directors and trustees have mismanaged, diverted, or defrauded the charity. If such improper actions by directors have resulted in a loss of charitable assets, the Attorney General may sue the directors to recover from them the missing funds. The funds recovered by the Attorney General are returned to the charity.

6. What does the Attorney General investigate?
   

   Some of the problems frequently investigated by the Attorney General include:

   1. self-dealing transactions either between a director and the public benefit corporation, or by trustees;
   2. loans by a corporation to a director or officer;
   3. loss of substantial corporate funds or assets during one year;
   4. losses of charitable assets through speculative investments;
   5. excessive amounts paid by a public benefit corporation or charitable trust for salaries, benefits, travel, entertainment, legal and other professional fees;
   6. sale of a charity or conversion of a public benefit corporation to for-profit status (authorized by statute under restricted conditions) at a price that is unfair to the charity;
   7. illegal use of charitable funds; and
   8. diversion of charitable funds from their intended purpose.

   The Attorney General also investigates allegations of criminal activity by charities. Persons with complaints of criminal activity by a charity should also contact the local district attorney.

7. What does the Attorney General's Office generally not investigate?
   

   The Attorney General's charitable trusts jurisdiction does not apply to churches, religious corporations, homeowners’ associations, and most mutual benefit corporations. The Attorney General does not review matters involving internal labor disputes, contested elections, disagreements between directors and members over policy and procedures, and most legal actions between charities and third parties regarding contracts or torts. Persons with complaints in any of the foregoing areas may choose to consult a private attorney to review legal rights and remedies.

8. What can I expect when I submit a complaint to the Attorney General’s Office about a charity or a charitable solicitation?
   

   The Attorney General's Office receives thousands of inquiries and complaints from the general public, news reporters, and other interested parties regarding possible mismanagement or diversion of charitable assets. All complaints about charities are reviewed by the audit staff of the Attorney General's Charitable Trusts Section. An investigation is conducted in those cases in which there is reliable evidence of a diversion of assets or gross mismanagement resulting in a significant financial loss to the charity. If these improper actions have resulted in a loss of charitable assets, the Attorney General may sue the directors to recover from them the missing funds. The funds recovered by the Attorney General are returned to the charity. Although disclosure procedures prohibit the Attorney General from discussing pending investigations or indicating whether any specific action has or will be taken with respect to a particular organization, you may be assured that the Attorney General seeks to administer the charitable trusts laws equitably and efficiently.

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Charities - Nonprofit Integrity Act of 2004

1. To whom does the Nonprofit Integrity Act of 2004 apply?
2. What is included in "gross revenue" for the purpose of determining whether a charity must prepare audited financial statements under Government Code section 12586(e)?
3. Are non-cash contributions included in "gross revenue" for the purpose of determining whether a charity must prepare audited financial statements under Government Code section 12586(e)?
4. For purposes of determining gross revenue, how will income derived from special events be treated?
5. For purposes of determining gross revenue, how will one-time donations be treated?
6. Must a charity that has audited financial statements for any fiscal year ending before January 1, 2005, make those statements available for public inspection or provide copies to the public or to the Attorney General?
7. What documents related to audited financial statements must be released to the public?
8. Does the extension for filing IRS Form 990 also apply to the completion date for the audit?
9. Who may serve on the audit committee?
10. What is the permissible minimum size of the audit committee?
11. May the board rely on the audit committee?
12. When must a charitable organization conduct an initial review of the compensation of its president or CEO and its treasurer or CFO? May it wait to do so until one of the events set forth in the new law occurs?
13. If a charity has staff members who are paid more than the president or CEO or the treasurer or CFO, does the compensation-review provision of the Act apply to them?

1. To whom does the Nonprofit Integrity Act of 2004 apply?
   

   The Nonprofit Integrity Act of 2004 amended existing law, including the Supervision of Trustees and Fundraisers for Charitable Purposes Act (Government Code sections 12580-12599.7), which requires registration and annual reporting by all charitable corporations, unincorporated associations, trustees, and other legal entities holding property for charitable purposes, commercial fundraisers for charitable purposes, fundraising counsel for charitable purposes, and commercial coventurers, over which the Attorney General has enforcement or supervisory powers. The Nonprofit Integrity Act of 2004 did not alter the range of persons and entities that are subject to the registration and reporting requirements.

   The law’s application is not limited to entities that are tax exempt under section 501(c)(3) of the Internal Revenue Code, which pertains to charities. With certain limited exceptions, the law applies to any person holding money or property for charitable purposes. This includes entities that are tax exempt under other subsections of section 501(c), entities that are not tax exempt, and for-profit entities, if, apart from their general purposes, they hold assets for charitable purposes. If, for example, a social club or fraternal organization holds a fundraising event for a charitable purpose, such as creation of a college scholarship fund, the moneys it collects are held as a charitable trust and it is subject to the law.

   The law applies to all foreign charitable corporations (corporations formed under the laws of other states) doing business or holding property in California for charitable purposes. Doing business in California includes soliciting donations in California by mail, by advertisements in publications, or by any other means from outside of California that satisfy the constitutional "minimum contacts" test. Other examples of doing business in California include engaging in any of the following activities in California: holding meetings of the board of directors or corporate members here, maintaining an office here, having officers or employees who perform work here, and/or conducting charitable programs here.

   In general, if a foreign charity´s sole contact with California is that it makes grants to persons, programs or charitable organizations located in California, or maintains financial accounts or investments at an office of a financial institution located in California, it is not considered to be doing business in California for purposes of compliance with Government Code section 12580 et seq.

   The law applies to all commercial fundraisers for charitable purposes who solicit charitable donations, including donations of salvageable personal property, in California, or who receive any funds, assets, or property as a result of a solicitation in this state for charitable purposes, or who employ any compensated person to solicit, receive, or control funds, assets, or property for charitable purposes here.

   The law applies to all fundraising counsel for charitable purposes who for compensation plan, manage, advise, counsel, consult, or prepare material for any charitable solicitation in this state.

   (Government Code sections 12581, 12582, 12582.1, 12583, 12586(a), 12599(a), 12599.1(a); Business and Professions Code section 17510.)

2. What is included in "gross revenue" for the purpose of determining whether a charity must prepare audited financial statements under Government Code section 12586(e)?
   

   "Gross revenue" under that section is the same as "total revenue," which currently appears on Line 12 of IRS Form 990 for public charities and Line 12, column (a) for private foundations. Follow instructions for IRS Form 990 and 990PF, Part I, Line 12.

3. Are non-cash contributions included in "gross revenue" for the purpose of determining whether a charity must prepare audited financial statements under Government Code section 12586(e)?
   

   Yes. Follow instructions for IRS Form 990, Part I, Line 1.

4. For purposes of determining gross revenue, how will income derived from special events be treated?
   

   Income from special events will be treated as reported on IRS Form 990. Follow instructions for IRS Form 990, Part I, Lines 9a through 9c.

5. For purposes of determining gross revenue, how will one-time donations be treated?
   

   The statute does not provide for an exemption for such donations. Follow instructions for IRS Form 990, Part I, Line 1.

6. Must a charity that has audited financial statements for any fiscal year ending before January 1, 2005, make those statements available for public inspection or provide copies to the public or to the Attorney General?
   

   No; the statute is not retroactive, although the Attorney General has the power, under investigative powers conferred by other statutory provisions, to require production of such financial statements.

7. What documents related to audited financial statements must be released to the public?
   

   The audited financial statement and notes to the statement must be released to the public. The management letter is not part of the audited financial statement and is not required to be released to the public.

8. Does the extension for filing IRS Form 990 also apply to the completion date for the audit?
   

   No. The statute does not provide for an extension of time.

9. Who may serve on the audit committee?
   

   The audit committee may include persons who are not members of the board, but may not include any members of the staff of the corporation, including the president or CEO or the treasurer or CFO. (Government Code 12586(e)(2).)

10. What is the permissible minimum size of the audit committee?
    

    The committee may consist of a single member.

11. May the board rely on the audit committee?
    

    Corporations Code section 5212 provides that the board may appoint one or more committees that, to the extent provided by resolution of the board or in the bylaws (and with certain reservations), shall have all the authority of the board.

    Government Code section 12586(e)(2) states that, subject to supervision by the board, the audit committee shall recommend to the board the retention and termination of the independent auditor and may negotiate the auditor’s compensation. With respect to those functions, the audit committee does not have all the authority of the board because section 12586(e)(2) expressly makes the powers of the audit committee "subject to the supervision of the board of directors." Section 12586(e)(2) controls over section 5212 because it is more specific. For all other responsibilities outlined in subsection (e)(2), the audit committee does function as a section 5212 committee if all of the committee members are members of the board. If, however, the audit committee includes a non-board member, all of the committee’s actions are subject to the supervision of the board.

    Regardless of how the audit committee is constituted and regardless of what functions it performs, a director must perform the duties of a director in compliance with the provisions of Corporations Code section 5231.

12. When must a charitable organization conduct an initial review of the compensation of its president or CEO and its treasurer or CFO? May it wait to do so until one of the events set forth in the new law occurs?
    

    The organization may wait until the occurrence of one of the events set forth in the statute to conduct its initial review of compensation. Those events are the hiring of the officer, the renewal or extension of the term of the officer's employment, and the modification of the officer´s compensation.

    This compensation review requirement does not supersede the existing fiduciary duties of officers, directors, and trustees in managing charitable organizations. They have a continuing duty to pay compensation to officers and directors that does not exceed what is fair and reasonable to the organization, and may incur personal liability for paying excessive compensation. Therefore the payment of excessive compensation at any time is a violation of the law. (Government Code section 12586(g); Corporations Code section 5235.)

13. If a charity has staff members who are paid more than the president or CEO or the treasurer or CFO, does the compensation-review provision of the Act apply to them?
    

    No. As stated above, however, the members of the board of directors have a continuing duty to pay compensation that does not exceed what is fair and reasonable to the charity. Moreover, if a staff member actually performs the duties and functions of a president or CEO or a treasurer or CFO, a charity may not avoid the compensation review required by the Act by giving that person a different job title. (See California Code of Regulations, title 11, section 312.1., pdf)

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Charities - Registration & Renewals

1. When is an organization required to register with the Attorney General's Office?
2. Is there an annual fee for charities?
3. We already sent this information to "The State." Why are you requesting it again?
4. Our organization is "very small." We don't complete the IRS Form 990, so we don't need to register, right?
5. My organization is not incorporated. Do we need to submit articles of incorporation?
6. Why did my organization receive a Notice to Register? We did not apply for registration.
7. My organization has filed the RRF-1 already. Why did we receive a Notice to Register?
8. Our organization does not have copies of documents you have requested and the government agency we have ordered copies from says it will take longer than 30 days for us to receive them. What should we do?
9. I mailed my initial registration documents before July 1, 2005. Will I need to submit the $25 registration fee payment?
10. How is gross annual revenue defined?
11. If an organization filed an extension prior to July 1st, is it required to remit the fee according to the new fee schedule?
12. If an organization began operating prior to registering with the Registry of Charitable Trusts, is it required to file RRF-1's and IRS Form 990's for all years of operation?
13. If an organization is planning to dissolve, does it need to file a final RRF-1?
14. If an organization failed to file RRF-1's for prior years, would the organization be subject to the new fee schedule for those years?
15. Can an organization check its filing status online?
16. If an organization requests an extension of time to file the RRF-1, does it need to notify the Registry of the extension?
17. Can an organization submit the Uniform Registration Statement as a renewal form?
18. If an organization is changing its fiscal year, must it file an RRF-1 for the partial fiscal year?
19. If an organization is filing an amended RRF-1, does it have to pay an additional fee?
20. If a foreign corporation (i.e. a nonprofit corporation incorporated in a state other than California) files an RRF-1, is the fee based on annual gross revenue generated in California only, or on total annual gross revenue?
21. Do you accept estimated amounts on the RRF-1?
22. Why does my organization need to register with your office?
23. You have an outdated address for my organization. What form do I need to complete?
24. Why can't I find our information on your website?

1. When is an organization required to register with the Attorney General's Office?
   

   As of January 1, 2005, registration is required within 30 days after receiving assets. To register, an organization must submit articles of incorporation and bylaws and pay an initial registration fee of $25. The initial registration fee applies to all charities registering with the Attorney General's Registry of Charitable Trusts for the first time regardless of gross revenue or assets. Use form CT-1, pdf and the initial registration guide, pdf, both of which are available on the Attorney General’s Charities website.

   If already registered, a charity must submit the annual Registration Renewal Fee Report along with the appropriate fee. Charities renewing their registration also must submit a copy of the IRS Form 990, if applicable.

2. Is there an annual fee for charities?
   

   Yes. Registration renewal fees must be paid each year by charities with gross annual revenues of $25,000 or more. The fee is a sliding scale ranging from $25 to $300, based on the charity's gross annual revenue. View the fee schedule in Instructions for Filing Annual Registration Renewal.

3. We already sent this information to "The State." Why are you requesting it again?
   

   Charitable corporations incorporated in or doing business in California are required to file documents with a number of state agencies regarding various aspects of their operations. The Attorney General has primary supervisory jurisdiction over charitable corporations to assure that their assets are used for charitable purposes. The Supervision of Trustees and Fundraisers for Charitable Purposes Act (Government Code sec. 12580 - 12599.7) requires charitable corporations to register with the Attorney General's Registry of Charitable Trusts and to file annual reports.

4. Our organization is "very small." We don't complete the IRS Form 990, so we don't need to register, right?
   

   Regardless of assets or revenue, once an organization is operating in California it is required to register with the Registry of Charitable Trusts within 30 days after receipt of assets, and file Form RRF-1 with the Registry annually.

5. My organization is not incorporated. Do we need to submit articles of incorporation?
   

   Articles of incorporation are the founding document for nonprofit corporations. For unincorporated entities, articles of association or articles of organization are required. The founding document should be signed and dated by the founders and contain organizational information such as, but not limited to: the charitable purpose and what will happen to the entity's assets should it dissolve.

6. Why did my organization receive a Notice to Register? We did not apply for registration.
   

   The two most common reasons are: (1) your tax preparer's software directed the preparer to submit a copy of your IRS Form 990 to this office, and we then determined that the entity is required to register and report to this office; or (2) a member of the general public made an inquiry concerning a solicitation from your organization.

7. My organization has filed the RRF-1 already. Why did we receive a Notice to Register?
   

   Registration documents must be submitted to the Registry of Charitable Trusts in order for the Registry to determine if your organization is subject to registration. The RRF-1 is an annual renewal form and cannot be processed for organizations that are not registered with this office.

8. Our organization does not have copies of documents you have requested and the government agency we have ordered copies from says it will take longer than 30 days for us to receive them. What should we do?
   

   Send us a fax, letter or email, include your CT file number and contact information. Indicate which agency you have contacted and how long it will take for you to receive the requested information.

9. I mailed my initial registration documents before July 1, 2005. Will I need to submit the $25 registration fee payment?
   

   No.

10. How is gross annual revenue defined?
    

    Please refer to instructions for Line 12 of IRS Form 990 and Line 12(a) of Form 990 PF

11. If an organization filed an extension prior to July 1st, is it required to remit the fee according to the new fee schedule?
    

    No, if a copy of the extension is submitted with the filing.

12. If an organization began operating prior to registering with the Registry of Charitable Trusts, is it required to file RRF-1's and IRS Form 990's for all years of operation?
    

    Yes.

13. If an organization is planning to dissolve, does it need to file a final RRF-1?
    

    Yes.

14. If an organization failed to file RRF-1's for prior years, would the organization be subject to the new fee schedule for those years?
    

    Yes.

15. Can an organization check its filing status online?
    

    Yes. To check an organization's filing status, go to the Attorney General's website at:
    http://rct.doj.ca.gov/MyLicenseVerification/Search.aspx?facility=Y .

16. If an organization requests an extension of time to file the RRF-1, does it need to notify the Registry of the extension?
    

    No. Send a copy of request for IRS extension, and if applicable, copy of approved extension, with completed RRF-1 and IRS Form 990.

17. Can an organization submit the Uniform Registration Statement as a renewal form?
    

    No, the Uniform Registration Statement can only be used for initial registration.

18. If an organization is changing its fiscal year, must it file an RRF-1 for the partial fiscal year?
    

    Yes. If so, would a renewal fee be required? Yes, based on total revenue for the reporting period.

19. If an organization is filing an amended RRF-1, does it have to pay an additional fee?
    

    No.

20. If a foreign corporation (i.e. a nonprofit corporation incorporated in a state other than California) files an RRF-1, is the fee based on annual gross revenue generated in California only, or on total annual gross revenue?
    

    The filing fee is calculated based on total gross annual revenue.

21. Do you accept estimated amounts on the RRF-1?
    

    Yes, but an amended form would need to be submitted with the actual amounts, together with any additional fee due if gross annual revenue exceeded the estimate. Refunds will not be made.

22. Why does my organization need to register with your office?
    

    Please see the "Guide for Charities" for more information.

23. You have an outdated address for my organization. What form do I need to complete?
    

    There is no specific form for updating information. Please notify us in writing (mail, fax or email) and indicate the name and title of the individual requesting the change.

24. Why can't I find our information on your website?
    

    Depending on when in our "cycle" your entity was registered, it may take up to four months for the information to appear on our website.

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Commercial Fundraiser

1. What is a commercial fundraiser for charitable purposes?
2. What is a fundraising counsel?
3. What is a commercial coventurer?
4. What is required to register as a commercial fundraiser?
5. What is required to register as a fundraising counsel?
6. What is required to register as a commercial co-venturer?
7. When is registration required?
8. Do I have to file a financial report or accounting of funds or assets received as a result of a solicitation for charitable purposes?
9. Which financial reporting form should I use to file the required financial report(s)?
10. When must annual financial reports be filed?
11. Is there a penalty for not completing registration or filing annual financial report(s) by the required dates?
12. Does a copy of the contract between the commercial fundraiser or fundraising counsel and the charitable organization need to be filed with the Attorney General's Office?
13. What is the Notice of Intent to Solicit For Charitable Purposes and when is it required to be filed?

1. What is a commercial fundraiser for charitable purposes?
   

   A commercial fundraiser for charitable purposes is defined as any individual, corporation, or other legal entity who for compensation does either of the following:

   • Solicits funds, assets, or property in California for charitable purposes.
   • As a result of a solicitation of funds, assets, or property in this state for charitable purposes, receives or controls the funds, assets, or property solicited for charitable purposes.
   • Employs, procures, or engages any compensated person to solicit, receive, or control funds, assets, or property for charitable purposes.

   (See Government Code section 12599 for a complete definition.)

2. What is a fundraising counsel?
   

   A fundraising counsel for charitable purposes is defined as any person who is described by all of the following:

   • For compensation plans, manages, advises, counsels, consults, or prepares material for, or with respect to, the solicitation in this state of funds, assets or property for charitable purposes.
   • Does not solicit funds, assets, or property for charitable purposes.
   • Does not receive or control funds, assets, or property solicited for charitable purposes in this state.
   • Does not employ, procure, or engage any compensated person to solicit, receive, or control funds, assets, or property for charitable purposes.

   Note: Registration is not required if the total annual gross compensation for performing fundraising counsel activities does not exceed $25,000.

   (See Government Code section 12599.1 for complete definition.)

3. What is a commercial coventurer?
   

   A commercial coventurer is defined as any person who, for profit, is regularly and primarily engaged in trade or commerce other than in connection with the raising of funds, assets, or property for charitable organizations or charitable purposes, and who represents to the public that the purchase or use of any goods, services, entertainment, or any other thing of value will benefit a charitable organization or will be used for a charitable purpose.

   (See Government Code Section 12599.2 for complete definition.)

4. What is required to register as a commercial fundraiser?
   • A completed and signed Registration Form (CT-1CF, pdf ).
   • $350 in certified funds.
   • The original of a properly executed $25,000 surety bond in the registrant's name. If unable to obtain the bond, both the Deposit of Assignment form (CT-8CF, pdf) (completed by the commercial fundraiser) and the Receipt for Notice of Assignment form (CT-9CF, pdf ) (signed by the bank) must be submitted along with the original pass book or certificate of deposit indicating $25,000 is held in the Attorney General's name.
5. What is required to register as a fundraising counsel?
   • A completed and signed Registration Form (CT-3CF, pdf ).
   • $350 in certified funds.
6. What is required to register as a commercial co-venturer?
   • A completed and signed Registration Form (CT-5CF, pdf ).
   • $350 in certified funds.
7. When is registration required?
   

   Registration is required prior to soliciting any funds in California for charitable purposes, or prior to January 15 of each year.

8. Do I have to file a financial report or accounting of funds or assets received as a result of a solicitation for charitable purposes?
   

   Commercial fundraisers must file an annual financial report for each campaign conducted for each charity during a calendar year.

9. Which financial reporting form should I use to file the required financial report(s)?
   

   There are three different financial reporting forms:

   • Annual Financial Report (Commercial Fundraisers ) (CT-2CF, pdf).
   • Annual Financial Report (Thrift Store Operations) (CT-2TCF, pdf  ).
   • Annual Financial Report (Vehicle Donation Program) (CT-2VCF, pdf).

   Registered commercial fundraisers should use the financial reporting form that is appropriate for their organization. All financial reporting forms are available on the commercial fundraiser website.

10. When must annual financial reports be filed?
    

    Annual financial reports must be filed by January 30 of each year.

11. Is there a penalty for not completing registration or filing annual financial report(s) by the required dates?
    

    SB 2015 has added Section 12586.1 to the Government Code which reads "In addition to a registration fee, a ...commercial fundraiser, fundraising counsel, or co-venturer may be assessed a late fee or an additional fee of twenty-five dollars ($25) for each month or part of the month after the date on which the registration statement or financial report were due to be filed ...if the commercial fundraiser, fundraising counsel or co-venturer does any of the following:

    • Exists and operates in California without being registered.
    • Solicits contributions in California without being registered or, if applicable, bonded.
    • Fails to correct the deficiencies in its registration or annual report within 10 days of receipt of written notice of those deficiencies.

    A complete copy of Government Code sections 12580-12599.7 is available on the commercial fundraiser website under "Statutes and Regulations."

12. Does a copy of the contract between the commercial fundraiser or fundraising counsel and the charitable organization need to be filed with the Attorney General's Office?
    

    No, a copy of the contract does not need to be submitted unless specifically requested by the Attorney General's Office.

13. What is the Notice of Intent to Solicit For Charitable Purposes and when is it required to be filed?
    

    Effective January 1, 2005, commercial fundraisers for charitable purposes and fundraising counsel are required to file a notice of intent to solicit for charitable purposes, not less than 10 working days prior to the commencement of each solicitation campaign, event or service. For campaigns to solicit aid for victims of emergency hardship or disasters, the notice must be filed not later than the commencement of solicitation.

    CT-10CF, pdf :
    Notice Of Intent To Solicit For Charitable Purposes - Commercial Fundraiser

    CT-11CF, pdf :
    Notice Of Intent To Solicit For Charitable Purposes - Fundraising Counsel

    (See Government Code Sections 12599(h) and 12599.1(e).)

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Raffles

1. May charities now hold raffles to raise funds?
2. What is a raffle?
3. Do we need to register if we call our raffle an “opportunity drawing”? What sort of raffle can we have if we don’t want to register?
4. I want to verify that the type of raffle I want to hold is legal even if it doesn’t meet all of the criteria in Penal Code section 320.5. Can you give me advice?
5. Can an individual raffle off his house to pay off the mortgage if he gives any remaining funds to charity?
6. Can individuals affiliated with the nonprofit organization conducting the raffle purchase raffle tickets?
7. Who may hold raffles?
8. I don’t know if my organization qualifies as an “eligible” organization under Penal Code section 320.5. How do I find out?
9. What is the 90/10 rule? Does it apply to 50/50 raffles?
10. What happens if we do not meet the 90/10 requirement?
11. Does an organization already registered with the Registry of Charitable Trusts as a charity need to register separately to conduct a raffle? Are there separate reporting requirements?
12. Must all eligible organizations register and report?
13. May we sell raffle tickets prior to the raffle drawing if we are not currently registered?
14. If an organization gives away raffle tickets, does it have to register and report?
15. How do I register to conduct a raffle?
16. When is the deadline for registration, and can I still submit an application if I miss the deadline?
17. How long is a raffle registration valid?
18. If my organization registers to conduct raffles but decides not to hold a raffle, is the fee refundable?
19. What information must we provide for raffle registration?
20. Our organization is a chapter which operates under the tax-exempt status of a national organization. Can we conduct our own raffles?
21. Our organization is an auxiliary [or chapter, charter, lodge, etc.] with a group exemption and has its own Federal Employer Identification Number (FEIN). How do we register?
22. My organization has changed the raffle date noted on the registration form. Do we need to contact the Registry?
23. When is the Nonprofit Raffle Report required to be filed?
24. What kind of record-keeping is required?
25. Are there limits on raffle prizes?
26. Is disclosure of the identity of individual purchasers of raffle tickets required on annual raffle report?
27. When can an organization expect to receive confirmation of registration?
28. What are the consequences for an eligible organization that fails to register with the Attorney General’s Registry of Charitable Trusts to conduct raffles in California?
29. What is my recourse if a raffle was cancelled, the drawing was not held or was delayed, or a different prize was substituted for the prize that was advertised?
30. If an organization is interested in conducting a casino night, where do we go to get information on how to register and what are the requirements?
31. Our organization has registered in previous years. Why am I now being asked to submit a Franchise Tax Board determination letter before the Registry will process my application? Isn’t our IRS exemption letter sufficient?
32. How many raffles may we conduct?
33. The raffle report form asks what other eligible organizations received funds from our raffles. Our organization does not distribute funds until our fiscal year-end, which conflicts with the October 1st report deadline. What do we do?

1. May charities now hold raffles to raise funds?
   

   The California state constitution and Penal Code provide a narrow exception to the prohibition against gambling in California. Certain tax-exempt organizations such as charities may hold fundraising raffles.

2. What is a raffle?
   

   A raffle is a type of lottery in which prizes are awarded to people who pay for a chance to win. Each person enters the game of chance by submitting a detachable coupon or stub from the paper ticket purchased. A raffle must be conducted under the supervision of a natural person age 18 or older. At least 90 percent of the gross receipts from raffle ticket sales must be used by the eligible tax-exempt organization to benefit or support beneficial or charitable purposes in California.

   Awarding raffle prizes by use of a gaming machine, apparatus, or device such as a slot machine is prohibited. Operating or conducting a raffle via the Internet is also prohibited. However, the organization conducting the raffle may advertise the raffle on the Internet. See Penal Code section 320.5 and Laws and Regulations.

3. Do we need to register if we call our raffle an “opportunity drawing”? What sort of raffle can we have if we don’t want to register?
   

   If participants are required to purchase a ticket in order to have a chance to win a prize, the drawing is subject to the provisions of Penal Code section 320.5 and related regulations.

   Penal Code section 320.5, subdivision (m) states that a raffle is exempt from registration with the Attorney General’s Office if all of the following are true:

   1. It involves a general and indiscriminate distribution of the tickets;
   2. The tickets are offered on the same terms and conditions as the tickets for which a donation is given; and
   3. The scheme does not require any of the participants to pay for a chance to win.

4. I want to verify that the type of raffle I want to hold is legal even if it doesn’t meet all of the criteria in Penal Code section 320.5. Can you give me advice?
   

   The Office of the Attorney General does not provide legal advice to members of the public. If you are not sure that the raffle your organization is holding is in compliance with section 320.5, we suggest that you consult private legal counsel.

5. Can an individual raffle off his house to pay off the mortgage if he gives any remaining funds to charity?
   

   No. Only eligible organizations as defined in Penal Code section 320.5, subdivision (c) may conduct raffles in California, provided they are registered with the Registry of Charitable Trusts before conducting any raffle activities. The purpose of the statute is to benefit eligible organizations. Individuals, corporations, partnerships, and other legal entities are prohibited from holding a financial interest in the conduct of a raffle. (Pen. Code, § 320.5, subd. (g).)

6. Can individuals affiliated with the nonprofit organization conducting the raffle purchase raffle tickets?
   

   Penal Code section 320.5 does not prohibit individuals affiliated with an organization from participating in a raffle held by the organization.

7. Who may hold raffles?
   

   Only eligible private, tax-exempt nonprofit organizations qualified to conduct business in California for at least one year prior to conducting the raffle may conduct raffles to raise funds for the organization and charitable or beneficial purposes in California.

   Eligible organizations are charities and religious or other organizations that have been granted tax-exempt status by the Franchise Tax Board under the following Revenue and Taxation Code sections: 23701a (labor, agricultural, or horticultural organizations other than cooperative organizations); 23701b (fraternal orders); 23701d (corporations, community chests, or trusts operating exclusively for religious, charitable, or educational purposes); 23701e (business leagues, chambers of commerce); 23701f (civic leagues, social welfare organizations, or local employee organizations); 23701g (social organizations); 23701k (religious or apostolic corporations); 23701l (domestic fraternal societies); 23701t (homeowners' associations); and 23701w (veterans’ organizations).

   If an organization needs a copy of its exemption letter or entity status letter, one can be obtained by contacting the Franchise Tax Board or by using the "Entity Status Letter" tool on the FTB website. In addition, a list of California tax-exempt organizations by category may be found on the Exempt Organizations List page on the FTB website.

8. I don’t know if my organization qualifies as an “eligible” organization under Penal Code section 320.5. How do I find out?
   

   An “eligible organization” is defined in section 320.5, subdivision (c) as a “private, nonprofit organization that has been qualified to conduct business in California for at least one year prior to conducting a raffle and is exempt from taxation pursuant to Sections 23701a, 23701b, 23701d, 23701e, 23701f, 23701g, 23701k, 23701l, 23701t, or 23701w of the Revenue and Taxation Code.” This information can be found on the exemption letter or entity status letter received by an organization from the Franchise Tax Board. If an organization needs a copy of its exemption letter or entity status letter, one can be obtained by contacting the Franchise Tax Board or by using the "Entity Status Letter" tool on the FTB website. In addition, a list of California tax-exempt organizations by category may be found on the Exempt Organizations List page on the FTB website.

9. What is the 90/10 rule? Does it apply to 50/50 raffles?
   

   Penal Code section 320.5, subdivision (b)(4)(A) states that 90 percent of the gross receipts generated by the sale of raffle tickets for any given draw are to be used by the eligible organization for charitable purposes. For example: An organization raised $100 in ticket sales. It would be required to spend $90 of that amount to further its charitable purposes, and only $10 could be used to help pay for expenses or operating costs associated with conducting the raffle.

   The organization is not precluded from using funds from sources other than the sale of raffle tickets to pay for the administration or other costs of conducting the raffle. However, the organization must exercise due care in using other funds. The misuse of restricted assets or the use of unrestricted assets which results in losses to the corporation may subject the board of directors to personal liability for breach of fiduciary duty.

   The 90/10 rule applies to 50/50 raffles, in which 50 percent of ticket-sale revenue is awarded as the prize and 50 percent of the revenue is retained by the organization conducting the raffle. 50/50 raffles are illegal because 90 percent of the gross ticket-sale revenue is not used for charitable purposes.

10. What happens if we do not meet the 90/10 requirement?
    

    Penal Code section 320.5 is a criminal statute. Violations may be forwarded to the local district attorney, city attorney, or county counsel for investigation and possible prosecution. In addition, the Attorney General may take legal action under the provisions of the Nonprofit Corporation Law for breach of fiduciary duty or waste of charitable assets. The raffle registration may also be suspended or revoked. (See section 419.2(a)(2) of the raffle regulations, which can be found on our website: oag.ca.gov/charities/raffles.)

11. Does an organization already registered with the Registry of Charitable Trusts as a charity need to register separately to conduct a raffle? Are there separate reporting requirements?
    

    Yes. Raffle registration is a separate requirement from charity registration. The reporting requirements are separate as well. A report for all raffles conducted during the reporting year (September 1 through August 31) must be filed by September 1. Annual reporting for charity registration is based on an organization’s fiscal year and the timing of filing IRS Form 990 with IRS.

12. Must all eligible organizations register and report?
    

    Nonprofit religious organizations, educational institutions, and hospitals are exempt from the registration and reporting requirements; however, even though these categories of organizations are not required to register and file annual raffle reports with the Registry of Charitable Trusts, they must still comply with all other provisions of Penal Code section 320.5.

13. May we sell raffle tickets prior to the raffle drawing if we are not currently registered?
    

    No. You must obtain a confirmation letter from the Registry of Charitable Trusts prior to conducting any raffle activities. This includes selling tickets to an event that will be held in the future. If you wish to conduct the drawing after September 1 of any year, but you wish to sell tickets prior to September 1 of that year, you must register for both years.

14. If an organization gives away raffle tickets, does it have to register and report?
    

    Registration is not required if all tickets for a drawing are free, solicitations of voluntary donations to the organization are in no way connected to distribution of tickets, and this is made clear to all participants. If a "donation" is required in return for a ticket, registration is required.

15. How do I register to conduct a raffle?
    

    Complete the raffle annual registration form (CT-NRP-1) and mail it to the Registry of Charitable Trusts with the $20 registration fee. Checks should be made payable to the Department of Justice.

    Please note: You must receive written confirmation of registration before conducting any raffle activities, including the sale of tickets. Raffle registration forms are available on the Attorney General’s Website at Charities Forms, or may be requested by mail, fax, or telephone.

16. What is the deadline for registration, and can I still submit an application if I miss the deadline?
    

    The registration period for raffles runs from September 1 to August 31, and registration applications are due on or before September 1. If an eligible organization that has not registered by September 1 determines after that date that it will conduct a raffle during the reporting year (September 1 through August 31), the organization must submit its registration application at least 60 days before the scheduled date for the raffle. Applications are processed in the order received, and no expedited service is available. In order to receive confirmation of receipt of an application, the application must be mailed to the Registry of Charitable Trusts via certified mail.

17. How long is a raffle registration valid?
    

    A raffle registration is valid from the date registration is issued through August 31. Registration must be renewed annually, on or before September 1 of each year in which the organization wishes to conduct raffles.

18. If my organization registers to conduct raffles but decides not to hold a raffle, is the fee refundable?
    

    No.

19. What information must we provide for raffle registration?
    

    An eligible nonprofit organization must provide the following information on the registration form:

    1. Name of organization;
    2. Address of organization;
    3. One or more of the following:
    • Federal Tax/Employer Identification Number
      (assigned by the Internal Revenue Service and usually found on the IRS letter granting tax-exempt status. Contact the Exempt Organization Division of the IRS at (877) 829-5500; or www.irs.gov/Charities-&-Non-Profits if you have questions)
    • Corporate Number
      (assigned by the Secretary of State at the time the articles of incorporation are endorsed and filed)
    • Organization Number
      (assigned by the Franchise Tax Board to associations, trusts, and organizations that are not incorporated in California but do business in California)
    • California State Charity Registration Number [CT number]
      (assigned by the Registry of Charitable Trusts)
    4. Signature of director or authorized officer of the organization.
    5. IN ADDITION, the organization must attach to the registration application proof of California Franchise Tax Board exempt status. To obtain a copy of an organization’s exemption letter or entity status letter, contact the Franchise Tax Board at (916) 845-4171 or use the "Entity Status Letter" tool available at www.ftb.ca.gov under “Online Services”. In addition, a list of California tax-exempt organizations by category may be found on the Exempt Organizations List page on the FTB website.

20. Our organization is a chapter which operates under the tax-exempt status of a national organization. Can we conduct our own raffles?
    

    Only an “eligible organization” may conduct a raffle. An “eligible organization” is defined as one that has conducted business in California for at least one year and is exempt from taxation under one of the subsections of Revenue and Taxation Code section 23701 listed in Penal Code section 320.5, subdivision (c). If the organization has not, independent of the national organization, applied for and received tax-exempt status from the Franchise Tax Board, it is not, by definition, an “eligible organization.”

    Whether a “chapter” (sometimes referred to as a “subsidiary” or “child”) of a national office or other organization (“parent”) may conduct a raffle is determined on a case-by-case basis after a review of relevant facts:

    • Does the parent organization qualify as an “eligible organization” in California?
    • Is the subsidiary funded by the parent?
    • Do the parent and subsidiary file a group return with IRS?
    • How independent is the subsidiary from the parent, and to what degree does the parent control and manage the subsidiary?

    If the parent is an “eligible organization” and there is a true parent-subsidiary relationship, only the parent is required to register for raffles conducted by both the parent and subsidiary. The parent is also responsible for filing all subsequent raffle reports. The parent is ultimately responsible for conducting the raffle, but may delegate responsibilities to the subsidiary.

21. Our organization is an auxiliary [or chapter, charter, lodge, etc.] with a group exemption and has its own Federal Employer Identification Number (FEIN). How do we register?
    

    Only an “eligible organization” may conduct a raffle. To qualify as an “eligible organization” within the meaning of Penal Code section 320.5, the organization must have one of the requisite California Franchise Tax Board (FTB) exemptions set forth in the statute. (See Pen. Code § 320.5, subd. (c).) Please note that an Internal Revenue Service exemption does not qualify an organization to conduct raffles.

    The organization must submit its FTB tax exemption letter or entity status letter with the raffle registration application. If you cannot find one of these letters, contact FTB to request a copy. If the organization has never been granted FTB tax exemption, you must file an application with FTB to obtain the requisite tax-exempt status. Please contact the California Franchise Tax Board at (916) 845-4171 for more information.

22. My organization has changed the raffle date noted on the registration form. Do we need to contact the Registry?
    

    No. You can indicate the revised date on the Nonprofit Raffle Report (Form CT-NRP-2) when it is completed and filed.

23. When is the Nonprofit Raffle Report required to be filed?
    

    An aggregate report is required for all raffles held by the organization during the reporting year. The report must be filed with the Registry of Charitable Trusts at any time after the conclusion of a raffle, but no later than October 1 of each year for activities in the current registration period.

24. What kind of record keeping is required?
    

    Record-keeping must be sufficiently detailed in order to complete the Nonprofit Raffle Report form (CT-NRP-2). Organizations should review that form before conducting a raffle in order to assure all necessary categories of information are being maintained, including the date and location of each raffle held, total funds received from each raffle, total expenses for conducting each raffle, the charitable or beneficial purpose for which raffle proceeds were used or the amount and organization to which proceeds were directed. (See Nonprofit Raffle Report form at: oag.ca.gov/charities/forms.)

25. Are there limits on raffle prizes?
    

    State law does not specify any limits on the value of raffle prizes.

26. Is disclosure of the identity of individual purchasers of raffle tickets required on annual raffle report?
    

    No.

27. When can an organization expect to receive confirmation of registration?
    

    Depending on volume of registration applications received, staff may not send confirmation of registration for up to 60 days after receipt of the registration application.

28. What are the consequences for an eligible organization that fails to register with the Attorney General’s Registry of Charitable Trusts to conduct raffles in California?
    

    Gambling is illegal in California unless it is permitted by statute. A raffle is defined as gambling unless it meets all of the criteria set forth in Penal Code section 320.5. One of the criteria is that an eligible organization must be registered with the Attorney General prior to conducting any activity associated with a raffle. Failure to comply with the provisions of section 320.5 is a misdemeanor. Violations of section 320.5 may be forwarded to the local district attorney, city attorney, or county counsel for enforcement. Section 320.5 and related regulations can be found on the Attorney General’s website at oag.ca.gov/charities/raffles.

29. What is my recourse if a raffle was cancelled, the drawing was not held or was delayed, or a different prize was substituted for the prize that was advertised?
    

    Contact local law enforcement (the police department or district attorney), the city attorney or county counsel in your county.

30. If an organization is interested in conducting a casino night, where do we go to get information on how to register and what are the requirements?
    

    Rules and regulations regarding nonprofit casino nights can be found at oag.ca.gov/gambling/charitable.

31. Our organization has registered in previous years. Why am I now being asked to submit a Franchise Tax Board determination letter before the Registry will process my application? Isn’t our IRS exemption letter sufficient?
    
    

    An “eligible organization” is defined in section 320.5, subdivision (c) of the Penal Code as a “private, nonprofit organization that has been qualified to conduct business in California for at least one year prior to conducting a raffle and is exempt from taxation pursuant to Sections 23701a, 23701b, 23701d, 23701e, 23701f, 23701g, 23701k, 23701l, 23701t, or 23701w of the Revenue and Taxation Code.” In the past, organizations self-certified that they were exempt under one of the above subsections of section 23701. Registry staff has determined that some organizations did not have state tax exemption under one of the subsections listed above. If an organization does not currently have exemption under one of the those subsections, it must first apply for, and receive, exemption from the California Franchise Tax Board (FTB). Information about obtaining tax-exempt status from FTB can be found on the FTB website at https://www.ftb.ca.gov/businesses/Exempt_organizations/index.shtml. IRS exemption does not qualify an organization to conduct raffles.

32. How many raffles may we conduct?
    

    There is no limit to the number of raffles an organization may hold during any registration period for which it holds a valid registration certificate. A valid registration certificate allows an organization to conduct raffles from September 1 through August.

    Though an organization may conduct numerous raffles during that time, the organization must keep records adequate to account for all revenue received from, and expenses incurred for each raffle held during the registration year in order to properly complete their year-end raffle report (CT-NRP-2). A report that reports only estimates of revenue and expenses will not be accepted for filing.

    Organizations that host raffles as part of a larger fundraising event must maintain raffle proceeds and expenses separate from all other event monies and report only raffle proceeds and expenses on form CT-NRP-2.

33. The raffle report form asks what other eligible organizations received funds from our raffles. Our organization does not distribute funds until our fiscal year-end, which conflicts with the October 1st report deadline. What do we do?
    

    Submit the report by October 1st with an attachment indicating that a revised report will be submitted listing the recipient organizations at the end of your organization’s fiscal year. When submitting the revised report, please type or print “Revised Report” next to the raffle year on Part B, Question 1.

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