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Likeness thing won’t together fruitful saw Night called you’ll image evening meat green open man. Multiply hath life own days third yielding grass lights male shed earth morning one.
Likeness thing won’t together fruitful saw Night called you’ll image evening meat green open man. Multiply hath life own days third yielding grass lights male shed earth morning one.
Running a nonprofit organization in California requires more than passion for a cause; it demands strong financial stewardship, transparent governance, and ongoing compliance with state and federal regulations. Maintaining good standing is not just a legal obligation; it’s a reflection of your organization’s credibility and commitment to responsible financial management.
Compliance is an integral part of your nonprofit’s financial ecosystem. It ensures your organization remains accountable to donors, regulators, and the communities you serve. Falling behind on filings or neglecting governance obligations can lead to penalties, loss of exempt status, and damage to your organization’s reputation.
To remain compliant and financially sound, every California nonprofit must meet the ongoing requirements of three main agencies:
California Attorney General (AG)
The Attorney General’s Registry of Charitable Trusts oversees nonprofit organizations that operate or solicit charitable funds in California.
Franchise Tax Board (FTB)
The FTB monitors tax compliance and ensures that exempt organizations file accurate annual returns.
California Secretary of State (SOS)
The Secretary of State tracks your organization’s basic information and governance structure.
By fulfilling these requirements, your organization safeguards its good standing and avoids administrative suspension or loss of exemption, both of which can disrupt your financial operations.
Strong governance and transparent recordkeeping are the backbone of nonprofit accountability. These practices not only ensure legal compliance but also enhance your organization’s reputation among donors, grantmakers, and partners.
Keep Accurate and Complete Records
Maintain detailed records of all financial transactions, grants, contracts, board meeting minutes, and correspondence with regulatory agencies. Organized documentation provides evidence of responsible fiscal management and simplifies the audit process.
Conduct Regular Board Meetings
Adhering to your organization’s bylaws, hold consistent board meetings to review budgets, financial statements, and major decisions. Documenting these meetings shows transparency and helps align leadership with your mission and long-term goals.
Adopt and Follow a Conflict of Interest Policy
A strong conflict of interest policy prevents potential misuse of funds and ensures that board and staff decisions are made objectively. This policy not only fulfills regulatory expectations but also protects the integrity of your nonprofit’s financial practices.
Monitor Compliance Continuously
Regularly verify your standing with the Attorney General, Franchise Tax Board, and IRS. Use compliance calendars or management tools to track filing deadlines and renewal periods. Staying proactive prevents costly lapses and demonstrates organizational diligence.
While meeting filing deadlines is crucial, true financial stewardship goes further. Responsible financial management ensures that your nonprofit can continue to serve its mission despite changing economic conditions or funding challenges.
Track and Meet All Filing Deadlines
Late or missed filings can result in late fees, revoked exemptions, or frozen assets. Develop a compliance calendar that includes all due dates for Form RRF-1, Form 990, and Form SI-100 to stay ahead.
Seek Expert Guidance
When in doubt, consult a compliance professional, accountant, or financial advisor. Expert support helps you interpret complex tax requirements, navigate audits, and strengthen your internal controls.
Comply with Fundraising Laws
If your nonprofit engages in online or third-party fundraising, ensure compliance with Assembly Bill 488 (AB 488), which requires fundraising platforms and charities to register with the Attorney General. Noncompliance can lead to restrictions on fundraising activities or penalties.
Manage Unrelated Business Income (UBI)
Income generated from activities unrelated to your mission may be taxable. Track and report these earnings to the FTB and IRS to maintain transparency and avoid jeopardizing your exempt status.
Prioritize Long-Term Financial Planning
Nonprofits that fail to prioritize compliance risk losing not only their tax-exempt status but also the trust of donors and beneficiaries. In contrast, financially disciplined organizations demonstrate professionalism and accountability, qualities that funders and community partners value deeply.
Stay compliant. Stay accountable. Strengthen your mission.
Contact Scout Financial today to discover how our nonprofit compliance and financial management services can help your organization stay transparent, efficient, and financially strong for years to come. We offer:
