Starting a nonprofit organization in California is a structured process for establishing an entity dedicated to a public or charitable cause. It requires careful attention to legal and administrative details at both the federal and state levels. Successfully launching a nonprofit involves a series of sequential steps, from initial planning and naming to filing legal documents and ensuring long-term compliance.
Complete Pre-Filing Preparations
Before any official documents can be submitted, several foundational tasks must be completed to set the stage for a successful nonprofit launch. These initial steps are centered on defining the organization’s identity, purpose, and leadership structure, which will inform all subsequent filings. This preparatory phase is about building a solid framework upon which the legal entity will stand.
Choose a Compliant Name
The first step is selecting a name that is unique and compliant with state regulations. The proposed name cannot be the same as or confusingly similar to an existing corporation’s name on file with the California Secretary of State. Founders can perform a preliminary check using the Secretary of State’s online business search database. California law also requires the name to include a corporate designator such as “Corporation,” “Incorporated,” or an abbreviation like “Inc.” or “Corp.”
Draft a Mission Statement
A clear and concise mission statement articulates the organization’s fundamental purpose, the audience it serves, and the outcomes it aims to achieve. It serves as a guiding principle for all organizational activities, from program development to fundraising appeals. This mission statement becomes a part of the official record, as it must be included in the Articles of Incorporation and the application for tax-exempt status.
Appoint the Initial Board of Directors
Assembling an initial board of directors is a necessary step in the pre-filing stage. While California law permits a nonprofit to be formed with just one director, federal tax-exempt status under section 501(c)(3) typically requires a minimum of three directors. The individuals appointed as initial directors are responsible for governing the organization and overseeing its activities. The incorporator, who is the person signing and filing the formation documents, will officially appoint this initial board.
File Articles of Incorporation
Filing the Articles of Incorporation with the California Secretary of State is the legal action that officially creates the nonprofit corporation. This document serves as the organization’s charter, establishing it as a distinct legal entity. The state provides a fillable form that can be used as a template, though organizations can also draft their own. As of 2025, the standard filing fee for a public benefit corporation is $30, and the document must be submitted by mail or online.
The Articles of Incorporation must contain specific and accurate information, including the exact name of the nonprofit corporation. A purpose statement is required, which declares that the corporation is a nonprofit public benefit corporation organized for charitable purposes. This section should align with the mission statement and use language that meets the requirements for 501(c)(3) status.
Another mandatory element is the designation of an initial agent for service of process. This individual or corporate agent must have a physical street address in California and is responsible for receiving legal notices. The Articles must also include a dissolution clause, which dictates that upon the nonprofit’s dissolution, any remaining assets will be distributed to another 501(c)(3) organization, a condition for securing federal tax-exempt status.
Establish Corporate Governance
Once the Articles of Incorporation are filed and the nonprofit is legally formed, the next phase involves establishing its internal operating framework. This is accomplished by creating bylaws and holding the first official board meeting. These steps translate the legal structure into a functional organization with clear rules, roles, and procedures.
The bylaws are the internal rulebook that governs the nonprofit’s operations and management. This document outlines the procedures for activities such as holding board meetings, establishing quorums, and conducting votes. It also defines the duties and responsibilities of directors and officers, the process for their election, and the terms they will serve. A well-drafted set of bylaws includes a conflict of interest policy.
The first meeting of the board of directors is where foundational governance actions are taken. During this meeting, the board formally adopts the bylaws and elects its officers, such as a President, Secretary, and Treasurer. The board also passes a resolution to open a corporate bank account. To do this, the organization must first obtain an Employer Identification Number (EIN) from the IRS by filing Form SS-4, as it is required for banking.
Apply for Federal Tax-Exempt Status
Incorporating a nonprofit at the state level does not automatically grant it tax-exempt status. To become exempt from federal income tax and eligible to receive tax-deductible contributions, the organization must apply to the Internal Revenue Service (IRS) for recognition under Section 501(c)(3). This application is a review of the nonprofit’s purpose, structure, and planned activities to ensure they align with charitable, religious, educational, or scientific goals.
The primary application used for this purpose is Form 1023, Application for Recognition of Exemption. This document requires detailed information about the organization’s history, governance policies, and operational structure. Applicants must provide a narrative description of their activities, along with detailed financial data, including statements of revenue and a proposed budget.
For smaller organizations with gross receipts under $50,000 annually and assets valued at less than $250,000, a streamlined version, Form 1023-EZ, may be an option. The IRS review process confirms that the organization is organized and operated exclusively for exempt purposes. The agency ensures no part of its net earnings benefits any private shareholder or individual.
Fulfill California Registration and Tax Requirements
After receiving the federal determination letter from the IRS, the nonprofit must complete additional registrations at the state level to be fully compliant in California. These steps involve securing state tax exemption and registering with the Attorney General’s office to legally solicit donations. These actions ensure the organization is recognized as a charity by state authorities.
The first step is to apply for state income tax exemption from the California Franchise Tax Board (FTB). Organizations that have already received their 501(c)(3) determination letter from the IRS can use a simplified form, Form 3500A, to obtain state tax exemption. Submitting a copy of the IRS determination letter with this form typically streamlines the approval, and the FTB will usually grant the exemption retroactively.
Next, the nonprofit must register with the California Attorney General’s Registry of Charitable Trusts. This is accomplished by filing the Initial Registration Form CT-1 within 30 days of first receiving assets or property. This registration is a prerequisite for any organization planning to solicit donations from the public in California. The initial filing must include copies of the Articles of Incorporation and the bylaws.
Maintain Ongoing Compliance
Once a nonprofit is fully established and registered, it must adhere to a series of annual filing requirements to maintain its good standing and tax-exempt status. Failure to meet these deadlines can lead to financial penalties, loss of tax-exempt status, and suspension of the right to operate.
At the federal level, all 501(c)(3) organizations are required to file an annual information return with the IRS, known as the Form 990 series. The specific version of the form depends on the organization’s annual gross receipts and total assets. This return provides the public with detailed financial information about the nonprofit’s revenue, expenses, and program activities.
In California, there are several annual state filings. Every two years, the nonprofit must file a Statement of Information (Form SI-100) with the Secretary of State to update information about its address, officers, and agent for service of process. Annually, it must renew its registration with the Attorney General’s Registry of Charitable Trusts by submitting Form RRF-1. Most nonprofits must also file an annual return with the Franchise Tax Board to maintain state tax-exempt status.