How to Start a Nonprofit in California
The complete step-by-step guide to forming a 501(c)(3) tax-exempt organization. From paperwork to IRS approval—everything you need to know.
The Two-Step Process
Creating a 501(c)(3) requires two separate filings with different agencies. Many first-time founders mix these up:
Step 1: Incorporate in California
File with the California Secretary of State to create your legal entity. This alone does NOT make donations tax-deductible.
Step 2: Apply for 501(c)(3) Status
File with the IRS to become tax-exempt. This is what makes donations tax-deductible for your donors.
Beyond these core steps, you may also need to register with the California Attorney General (if receiving charitable assets), apply for California state tax exemption with the Franchise Tax Board, and maintain ongoing annual compliance.
2026 Government Fees
| Filing | Fee | Where / When |
|---|---|---|
| Articles of Incorporation | $30 | bizfileonline.sos.ca.gov • ARTS-PB-501(c)(3) (PDF) |
| Statement of Information (SI-100) | $20 | Within 90 days • How to file & deadlines |
| EIN (Employer ID Number) | Free | irs.gov – apply directly |
| IRS Form 1023-EZ | $275 | Pay.gov 1023-EZ filing • IRS form overview |
| IRS Form 1023 (full) | $600 | Pay.gov 1023 filing • IRS form overview |
| CA Attorney General CT-1 | $50 | Within 30 days of receiving charitable assets • Initial registration • CT-1 (PDF) |
| CA FTB Form 3500A | Free | After IRS determination • Instructions • Form 3500A (PDF) |
💡 Tip
Avoid third-party services that charge for EIN—it's always free when you apply directly through the IRS.
Three Formation Pathways
DIY
- 40-100+ hours of your time
- 4-8 months timeline
- Highest error risk
- Best for detail-oriented founders
Blended
- 15-30 hours of your time
- 3-6 months timeline
- Service handles state filing
- You file IRS application
- Best for most founders
Done-for-You
- 5-10 hours of your time
- 3-6 months timeline
- Full-service with guarantee
- Best for time-constrained
Consider Fiscal Sponsorship First
Before forming your own nonprofit, consider fiscal sponsorship—a faster, cheaper alternative that can let you accept tax-deductible donations sooner than going through full formation.
When fiscal sponsorship makes sense:
- Testing a new idea before committing to full formation
- Projects expected to last 1-3 years
- Annual budget under $100,000
- First-time founders lacking nonprofit management experience
Top Fiscal Sponsors for California:
| Sponsor | Fee | Focus |
|---|---|---|
| Fractured Atlas | 8% + membership | Arts (broadly defined), 1-2 week approval |
| Social Good Fund | 6.5-8% | Social justice, environment, education |
| Tides Foundation | 9% | Large-scale social impact projects |
| Community Partners | 9% | LA-based, broad focus |
Find more options at fiscalsponsordirectory.org
Formation Checklist
1 Pre-Formation
- Define mission and programs
- Decide: form own 501(c)(3) or use fiscal sponsorship
- Check name availability via bizfileonline.sos.ca.gov/search
- Identify 3+ unrelated board members
2 State Incorporation
- Prepare Articles of Incorporation with IRS-required language
- File with CA Secretary of State $30 (bizfileonline)
- Apply for EIN at irs.gov Free
- File Statement of Information (SI-100) within 90 days $20 (instructions)
3 Organizational Setup
- Draft and adopt Bylaws
- Adopt Conflict of Interest Policy (sample in Form 1023 Instructions (PDF))
- Hold organizational board meeting; document with minutes
- Elect officers (President, Secretary, Treasurer)
- Open bank account
4 Federal Tax Exemption
- Complete Form 1023-EZ Eligibility Worksheet (see IRS 1023-EZ page)
- If eligible: File Form 1023-EZ via Pay.gov $275
- If ineligible: File Form 1023 via Pay.gov $600
- Receive 501(c)(3) Determination Letter
5 State & Attorney General Registration
- File CA AG initial registration (CT-1) within 30 days of receiving charitable assets $50
- File CA FTB Form 3500A after IRS determination (instructions) Free
Common Mistakes to Avoid
🚫 Don't Make These Errors
- Using basic CA Articles template without IRS-required dissolution/purpose clauses
- Thinking state incorporation = tax-exempt status — you still need IRS approval
- Stacking board with compensated family members — may create governance/compliance issues
- Filing Form 1023-EZ when ineligible — complete the eligibility worksheet first
- Missing 90-day deadline for Statement of Information — can trigger penalties and administrative issues
- Missing 27-month deadline for IRS application — can jeopardize retroactive exemption
- Failing to file Form 990 for 3 consecutive years — can lead to automatic revocation
📋 Board Requirements Quick Reference
Minimum: California law can allow as few as one director, but the IRS often expects stronger governance (commonly 3+ unrelated directors).
Best practice: Independent board oversight and clear conflict-of-interest procedures.
Official Links & Resources
🏛️ California Secretary of State
🇺🇸 Internal Revenue Service
- Applying for tax-exempt status (IRS hub)
- About Form 1023
- About Form 1023-EZ + eligibility worksheet
- File Form 1023 on Pay.gov
- File Form 1023-EZ on Pay.gov
- Form 1023 Instructions (PDF) – includes sample conflict policy
- Tax Exempt Organization Search (TEOS)
- Annual filing & Form 990 resources
- EIN application (free)
⚖️ CA Attorney General (Charities)
🏦 CA Franchise Tax Board
📝 Free Templates & Guides
📌 Ongoing Compliance (Do Not Skip)
📚 Training & Step-by-Step Walkthroughs
These are stable, official resources (not YouTube links).
IRS Virtual Workshop
Applying + maintaining 501(c)(3)IRS Application Process
Step-by-step overviewIRS Publication 4220
Applying for 501(c)(3)IRS Publication 557
Tax-exempt status rulesCheck any nonprofit (TEOS)
Status + filings lookupCA state tax exemption
FTB charities & nonprofitsFrequently Asked Questions
Costs vary, but common government fees include CA Secretary of State filings, IRS application user fees (Form 1023 or 1023-EZ), and CA Attorney General initial registration. Total minimum fees depend on which IRS form you file and your situation.
State incorporation can be quick online. IRS processing times vary depending on the application type and IRS workload, so plan for a multi-month timeline overall.
Fiscal sponsorship lets you operate under an existing nonprofit’s tax-exempt umbrella so you can receive tax-deductible donations sooner. Sponsors usually charge a percentage fee and may offer back-office support.
California law can allow as few as one director, but for credibility and strong governance, many nonprofits use three or more unrelated directors. The IRS generally expects reasonable oversight and safeguards against conflicts of interest.
Form 1023-EZ is a streamlined option available only to organizations that meet eligibility requirements. Use the eligibility worksheet on the IRS Form 1023-EZ page to confirm, and file on Pay.gov.
You can often fundraise while your application is pending, but tax deductibility depends on IRS recognition and timing rules. If you need donors to receive tax deductions immediately, fiscal sponsorship may be a better fit.
Ready to Make an Impact?
Close the Gap Foundation has helped hundreds of first-generation, low-income students reach their potential. Join our mission.
Support Our Work →