The charitable sector is an important part of the economy, and it is important to understand the legal forms of charitable organizations that can be created under the law. It is not just limited to entities that are exempt from taxes under section 501 (c) () of the Internal Revenue Code. The law applies to anyone who owns money or property for charitable purposes, including entities that are exempt from taxes under other subsections of section 501 (c), entities that are not exempt from taxes, and for-profit entities if they own assets for charitable purposes other than their general purpose. For example, if a social club or fraternal organization organizes a fund-raising event for charitable purposes, such as the creation of a college scholarship fund, the money it raises is deposited in a charitable trust and is subject to the law. If your organization is listed as suspended or delinquent in the Attorney General's Register of Charitable Trusts, you can contact the Attorney General's office for assistance.
Penalties may be imposed if delinquency is not corrected, including the revocation of your tax-exempt status. The City of Los Angeles has amended Section 21.22 of the LAMC to authorize the Director of Finance to issue a tax-exempt registration certificate to charitable, non-profit, or religious institutions when these institutions are entitled to an exemption under state or federal law. Businesses may also be exempt from paying gross income tax when the organization is recognized as a non-profit, charitable, or religious organization under IRS Section 501 or State Tax Section 23701d. CalNonProfits provides resources such as this compliance checklist in the space where government and non-profit organizations meet. Foreign charities may not need to comply with sections 12580 et seq. of the Government Code if their only contact with California is to grant grants to individuals, programs, or charitable organizations located in California, or to maintain financial accounts or investments in an office of a financial institution located in California.
The law applies to all commercial charitable fundraising collections that solicit charitable donations, including donations of recoverable personal property, in California, or that receive funds, assets, or property as a result of a request in this state for charitable purposes, or that employ a compensated person to request, receive, or control funds, assets, or property for charitable purposes here. Organizations recognized under IRS Section 501C and State Tax Section 23701d are exempt from paying business taxes. The Finance Office has three locations in the city of Los Angeles to better serve your needs, as well as a new virtual public counter. Additionally, officers, directors, and trustees have fiduciary obligations in the management of charitable organizations. The federal government's annual informational statement for tax-exempt organizations is Form 990.
