End of a Decade – Checklist for California Nonprofits

Farella Braun + Martel LLP

Farella Braun + Martel LLP

As 2019 comes to a close, we thought about our customary note to nonprofit officers and directors to take a few moments to confirm that important year-end responsibilities have not been overlooked. But since this year's end also marks the end of a decade, let’s go deeper and check on other housekeeping that busy nonprofits sometimes overlook.

  1. Employees: When was the last time the employee handbook was updated? There have been many important changes to employment laws in the past decade—and even in the past year.
  2. Annual Meetings: Check your bylaws for any specific requirements, and if you haven’t held a formal meeting, get it scheduled or prepare a unanimous written consent for the board of directors to sign before the end of the year. Have board members been re-appointed or re-elected as required by the bylaws? If governance formalities haven’t been followed, often it is easier (and cheaper) to correct oversights before a real problem arises.
  3. Bylaws: When was the last time you reviewed your bylaws? Are your actual governance practices following the bylaws? While changes to corporate governance rules and practices haven’t changed very much in the past decade, there are some beneficial changes that could streamline your organization’s governance practices.
  4. Conflicts of Interest: Have your directors and officers reviewed the organization’s Conflicts of Interest Policy and disclosed conflicts in the past decade? While annual disclosure is a best practice, once every few years is better than nothing.
  5. Other Policies: Nonprofits that file IRS-form 990 are required to state whether they have whistleblower and document retention policies. While there are no penalties for not having them, they do reflect best practices. If you don’t have them, consider getting them in place for the ‘20s.
  6. Other States: Do you operate programs in other states or fundraise nationally, including through your website? Check with the relevant regulatory agencies in the states where you operate or fundraise, and consider whether your organization should register or apply for tax-exempt status in additional states.
  7. Website: Is your website content out-of-date? This is a good time to make sure your website has relevant and accurate content for the start of the New Year. Make sure contact information and lists of officers and directors are accurate. Privacy policies are now standard even for private foundations, and changes to applicable state laws should be incorporated in the published policies.
  8. Annual Filings: Don’t forget those pesky annual/biennial filings. Forgetting to file the annual 990s, even for a small organization, can result in loss of tax-exempt status. Make sure someone is attending to all of the following:
  • Form 990 must be filed with the IRS
  • Make sure to collect vendor W-9’s and provide Form 1099 to vendors, as required, by January 31, 2020.
  • Forms W-2 and/or 1099 must be provided to staff, and Forms 941 or 944 for employment taxes must be filed with the IRS by January 31, 2020.

For nonprofits operating in California:

  • Form 199 must be filed with the Franchise Tax Board
  • Form RRF-1 must be filed by most charitable nonprofits with the California Attorney General Registry of Charitable Trusts (churches and schools are exempt)
  • Organizations subject to the RRF-1 filing requirement are also required to have an independent audit if the nonprofit’s annual revenue exceeds $2 million. Other states have lower thresholds; if operating in other states as well as California, an audit may be required at a lower revenue level.
  • Form SI-100 must be filed biennially with the California Secretary of State
  • Registered Agent filings may need to be renewed with the California Secretary of State

Nonprofits operating or fundraising in other states will have filing obligations there as well.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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