A nonprofit with a $1.9 million budget added a multi-state online giving campaign in October. By December 31 the organization had crossed $2.1 million in gross revenue. The board treasurer didn’t realize that crossing the $2 million threshold under California’s Nonprofit Integrity Act triggered a mandatory CPA audit for that same fiscal year — not the following year. The audit was scoped, signed, and delivered eight weeks after the fiscal year closed, costing $18,000 in unbudgeted professional fees and creating a board governance gap that took two cycles to close.

California enforces charitable solicitation rules more aggressively than most states. The Attorney General’s Registry of Charities and Fundraisers maintains a public database, and the consequences of late or missed filings — late fees, suspension, loss of solicitation rights — escalate quickly. These 14 questions cover what every Executive Director and Finance Manager operating in California needs to know.

Registration is required before solicitation, not after

The most common California compliance error is treating Form CT-1 as a post-launch task. Government Code section 12585 is unambiguous: registration is required within 30 days of first receiving charitable assets. That clock starts when the first dollar is received, not when the IRS issues the determination letter and not when the organization formally launches programming.

RRF-1 is the annual filing — and it scales

Every registered charity files Form RRF-1 annually, due May 15 for calendar-year filers (4 months 15 days after fiscal year end). The renewal fee scales from $0 for organizations under $25,000 in revenue up to $1,200 for organizations at $50 million or more. The form requires a copy of the IRS Form 990 attached. Late filings trigger a $25 fee and, after continued non-filing, suspension.

The $2 million audit threshold is a hard line

The Nonprofit Integrity Act requires audited financial statements prepared by an independent CPA for any charitable corporation with gross revenue of $2 million or more in a fiscal year. The same threshold triggers two governance requirements: an audit committee separate from the finance committee, and board review and approval of CEO and CFO compensation. There is no phase-in and no transition relief — the requirement applies the year the threshold is crossed.

Form 199 is separate from RRF-1

California requires a state tax filing in addition to charitable registration. Form 199 (or 199N for organizations under $50,000) goes to the Franchise Tax Board, not the Attorney General. The deadline is the same as RRF-1 — May 15 for calendar-year filers — but the filings are independent. Missing one does not affect the other; missing both is two separate compliance failures.

Online donations create registration obligations

California follows the Charleston Principles in practice. If your organization specifically targets California donors through email lists, social media campaigns, or mailing lists, you must register — regardless of where you are incorporated. Even passive online giving can create registration obligations if California donations are substantial and repeated.

Suspension is the practical consequence

Continued non-filing of RRF-1 leads to administrative suspension. A suspended organization loses the right to solicit donations in California, may be removed from public registry searches that funders verify, and must pay all back fees plus penalties to reinstate. Federal grants that flow through California state agencies often include a registration verification step — suspension can block draws.

Records and audit committee requirements

Beyond the audit, the Nonprofit Integrity Act requires the audit committee to oversee the audit engagement, review the audit findings with the auditor, and recommend acceptance to the full board. The committee may include some board members but must include at least one member who is not on the finance committee and is not the treasurer. This structural separation is enforced — boards that combine audit and finance functions in a single committee are out of compliance even if the audit itself is clean.

Practical sequence for new California nonprofits

File CT-1 within 30 days of first receiving charitable assets. Monitor for IRS 501(c)(3) determination — once received, submit the letter to update your Registry file. Calendar RRF-1 and Form 199 for May 15 each year. If approaching $2 million in gross revenue, engage an audit firm and form an audit committee before fiscal year end. Maintain financial records for seven years minimum, longer for restricted gifts.

Free resource

Get the Nonprofit Grant Compliance Checklist

A practical checklist for post-award grant compliance: restricted funds, reporting cadence, audit prep, and common failure points. Delivered by email.

California audit threshold: $2,000,000 in gross revenue triggers mandatory CPA audit

Source: California Government Code section 12586(e), Nonprofit Integrity Act

RRF-1 filing fee: $0 (revenue under $25K) up to $1,200 (revenue $50M+)

Source: California Attorney General Registry of Charities and Fundraisers

Initial registration fee Form CT-1: $50; due within 30 days of first receiving charitable assets

Source: California Attorney General — Initial Registration

RRF-1: Annual Registration Renewal Fee Report filed with the California Attorney General Registry of Charities and Fundraisers, due 4 months 15 days after fiscal year end.

Form CT-1: Initial Registration Form for new charities registering with the California Attorney General; $50 fee.

Nonprofit Integrity Act: California statute (Government Code 12580 et seq.) imposing audit, audit committee, and executive compensation review requirements on charities with $2M+ gross revenue.

Form 199: California Franchise Tax Board exempt organization annual return; required in addition to federal Form 990.

“California is one of the strictest states for charitable registration. The 30-day window after first receiving any charitable asset is enforced, and out-of-state organizations soliciting California donors are routinely cited for late registration. Treat CT-1 as a day-one filing.”

Compliance practitioner , Nonprofit attorney at California-licensed practice

“The $2 million audit threshold under the Nonprofit Integrity Act is a hard line. Organizations that cross it mid-year are sometimes surprised — the audit requirement applies for the fiscal year the threshold is met, not the following year.”

Audit specialist , Nonprofit audit partner at Regional CPA firm

Frequently asked

Frequently Asked Questions

Do I need to register with California to solicit donations?

Yes, if you solicit from California residents. Under California Government Code section 12585, every charitable corporation, unincorporated association, or trustee holding assets for charitable purposes must register with the California Attorney General's Registry of Charities and Fundraisers within 30 days of first receiving property (cash or otherwise) for charitable purposes. Registration is required regardless of the state where you are incorporated. An out-of-state nonprofit that posts a donate button accessible to California residents and accepts a single California donation is required to register.

Which form do I file to register initially in California?

Form CT-1 (Initial Registration Form) filed with the Registry of Charities and Fundraisers. The filing fee is $50. You submit Form CT-1 along with a copy of your founding documents (Articles of Incorporation and Bylaws), your IRS determination letter (if you have one), and Form CT-NRP-1 if you are a nonprofit raffle registrant. File via the online portal at oag.ca.gov/charities.

What is Form RRF-1 and when is it due?

Form RRF-1 (Annual Registration Renewal Fee Report) is the annual report every registered charity files with the California Attorney General. It is due four months and 15 days after the end of the organization's fiscal year — May 15 for calendar-year filers. The form requires basic financial information, a copy of the IRS Form 990 (or 990-EZ or 990-PF), and a registration renewal fee that scales with gross revenue: $0 for revenue under $25,000, up to $1,200 for revenue of $50 million or more.

What is California's audit threshold?

Under the Nonprofit Integrity Act (Government Code section 12586(e)), a charitable corporation with gross revenue of $2 million or more in any fiscal year must prepare audited financial statements by an independent CPA. The audit must be conducted in accordance with generally accepted auditing standards. Gross revenue excludes grants from government entities for which the agency requires an accounting. The audit must be made available to the public on request and submitted to the Attorney General with the RRF-1.

Do I need a CPA review at lower revenue thresholds?

California does not require a separate CPA review tier. Below $2 million in gross revenue, no audit or review is required by state law. However, your bylaws, your funders, or your bank loan covenants may require a review or audit at lower thresholds. The Nonprofit Integrity Act also requires every charitable corporation with gross revenue of $2 million or more to have an audit committee — independent of the finance committee — that oversees the audit.

Do I file Form 199 with the Franchise Tax Board?

Yes. California requires every nonprofit organized in California (and most operating in California) to file FTB Form 199 (California Exempt Organization Annual Information Return) annually. Organizations with gross receipts normally $50,000 or less may file Form 199N (the e-Postcard) instead. Form 199 is due the 15th day of the 5th month after the close of the fiscal year — May 15 for calendar-year filers. The minimum filing fee is $10 for Form 199; Form 199N is free.

What happens if I miss the RRF-1 deadline?

A late RRF-1 triggers a $25 late filing fee and accrues penalties under Government Code section 12586.1. Continued non-filing results in the Attorney General suspending the organization's registration and revoking its right to solicit donations in California. Suspension also prevents the organization from receiving federal grants administered through California pass-through agencies that verify state registration. Reinstatement requires filing all delinquent RRF-1s and Form 199s plus paying accrued late fees.

Do I register before or after IRS 501(c)(3) determination?

Before. California requires registration within 30 days of first receiving charitable assets — well before most organizations receive their IRS determination letter. File Form CT-1 with whatever federal status you have at that time (typically a pending Form 1023 application). Once you receive your IRS determination letter, submit a copy to update your file. Operating without state registration while waiting for IRS determination is a common compliance error.

How long does California registration take?

Initial registration typically takes 30 to 90 days from submission of a complete Form CT-1 package. The Registry processes applications in the order received. You may continue soliciting during the registration review period as long as the application has been submitted and you are not in suspended status. Status is verifiable on the Registry's public search at rct.doj.ca.gov.

What about online donations from California residents if my nonprofit is in another state?

Under the Charleston Principles (the standard California follows in practice), if your nonprofit specifically targets California residents through email, mailing lists, or social media, or if you receive substantial contributions from California on a repeated basis, you must register. A passive donate page that accidentally receives an occasional California gift is generally not enough to trigger registration — but the line is fact-specific. If you know donations are coming from California, register.

Are there any exemptions from California charitable registration?

Under Government Code section 12583, exempt entities include religious corporations, educational institutions accredited by a recognized accrediting body, hospitals licensed by the state, government agencies, and a few other narrow categories. The exemption is from registration only — exempt organizations are still subject to other Nonprofit Integrity Act provisions if they meet the revenue thresholds. Most 501(c)(3) public charities are not exempt and must register.

Do California professional fundraisers have separate registration?

Yes. Commercial fundraisers, fundraising counsel, and commercial coventurers must register separately with the Attorney General before soliciting in California. Charities that hire a commercial fundraiser must file Form CT-694 (Notice of Intent to Solicit) at least 10 working days before the solicitation campaign begins, attach the contract, and require the fundraiser to post a $25,000 surety bond. Failure to verify your fundraiser's registration is a separate violation.

What records do California nonprofits have to keep?

Government Code section 12586 requires charities to maintain records sufficient to substantiate the financial information reported on RRF-1 and Form 990. The Attorney General can audit at any time and may request supporting documentation for any line item. Standard practice: retain financial records for at least seven years, board minutes permanently, and donor restrictions documentation for the life of the restriction plus seven years after release.

What is the California Nonprofit Integrity Act and does it apply to me?

The Nonprofit Integrity Act of 2004 (codified at Government Code section 12580 et seq.) imposes specific governance requirements on charitable corporations operating in California with gross revenue of $2 million or more, including: an audit committee separate from the finance committee, board review and approval of executive compensation, and audited financial statements by an independent CPA. The Act applies regardless of state of incorporation if the organization is registered with the California Attorney General.

California Nonprofit Compliance FAQ: Charitable Solicitation Registration, RRF-1, and Audit Thresholds