How to Start a Non-Profit Organization in California for Natural Resources Conservation

Starting a California nonprofit isn't that hard to do if you have a sound plan, the right team, and sufficient startup funds. The bad news is that running a successful nonprofit is not easy. You'll need to think through how you will bring value to the public, obtain funds, attract staff and/or volunteers, build a board of directors, and comply with the various laws that regulate nonprofits. 

 1.    Determine the name of the Corporation. A nonprofit is typically formed as a corporation and its name can be a valuable asset. A corporation’s legal name must be registered with the state of California.

 2  Draft and file the Articles of Incorporation. A corporation is legally created with the filing of the Articles of Incorporation. Articles of Incorporation typically identify:

a. The organization’s name;

b. Its purpose or purposes of the non-profit;

c. The agent for service of process -- that is, a person who can receive lawsuits and   other official correspondence and other matters, which can be an individual whose name and address are identified or a corporate agent registered with the California Secretary of State for such purpose;

d. Limitations on the corporation’s operations, consistent with its tax-exempt status;

e. The corporation’s street address and mailing address, if different; and

f.  Appropriate dedication and dissolution clauses.

 3. Appoint the Board of Directors. If the initial directors are not named in the articles of incorporation, the incorporator can and should appoint the board through a written action.

Under California law, a nonprofit board may be composed of as few as one director, but the IRS may take issue with granting recognition of 501(c)(3) status to a nonprofit with only one director. It is commonly recommended that nonprofits have between three and 25 directors.

These directors – board members – should understand their legal duties and responsibilities to act with reasonable care and in the best interests of the organization while providing direction and oversight over the organization’s activities, finances, officers, and legal compliance.

4. Draft the Bylaws and conflict of interest policy. Bylaws should provide guidance to the board and reassurance of sound governance practices to government authorities, funders, and other interested stakeholders. 

 

5. Take the initial board actions at a board meeting or by unanimous written consent of the directors. The board should take the following actions:

(a) Adopt the bylaws and conflict of interest policy;

(b) Set the exact authorized number of directors if the bylaws provide for a range for the size of the board;

(c) Adopt a fiscal year (such as a year ending December 31 or June 30);

(d) Approve establishing a bank account;

(e) Approve applying for federal and state tax-exempt status;

(f) Approve reimbursement of startup expenses (if applicable); and

(g) Approve the compensation of the president (CEO) or the treasurer (CFO) and anyone performing the functions of such officers, like an executive director (if applicable).

6.   Obtain an employer identification number (EIN). An officer or authorized third-party designee may apply for and obtain an EIN online. 

7.   File the initial registration form (Form CT-1) with the California Attorney General’s Registry of Charitable Trusts. The initial registration must be renewed annually, is required for the majority of nonprofit public benefit corporations, and must be filed within 30 days after receipt of assets. The CT-1 Form and Instructions are available online.

8.   File the Statement of Information (Form SI-100) with the Secretary of State. The Statement must initially be filed within 90 days of the date of incorporation. This biennial filing requirement, which identifies the organization’s address, principal officers, and agent for service of process, can be filed online or by mail.

9.   Apply for federal tax exemption with the Internal Revenue Service (IRS) and receive a determination letter from the IRS. Completing the Form 1023 application for exempt status under Internal Revenue Code (IRC) Section 501(c)(3) may be the most challenging part of the startup process. It is a legally-driven and comprehensive inquiry covering 10 Parts and 8 Schedules.

The filing fee for Form 1023 is currently $600. The filing fee for Form 1023-EZ is $275. Fees are paid online here. 

10.   Apply for California tax exemption with the California Franchise Tax Board (FTB) and receive an affirmation of exemption letter from the FTB. Organizations with a 501(c)(3) federal determination letter can request California recognition of tax exemption under California Revenue & Taxation Code section 23701d from the FTB by filing Form 3500A along with a copy of the IRS determination letter.

 Source:

https://calnonprofits.org/resources/starting-a-california-nonprofit