California Charitable Fundraising Platforms and Platform Charities Update

“Charitable fundraising platforms” and “platform charities” operating in California must now meet new requirements for registering with the state’s Attorney General’s office. 

The Registry of Charities and Fundraisers is launching an Online Filing Service to make registering and filing documents easier for fundraising platforms. This service will be the only way for fundraising platforms to register and report. As of May 9, 2024, this portal is not yet available, though PDF versions of the state's required forms are available on the Registry’s website.

The lay definitions below describe the types of organizations impacted by these new requirements.

• Charitable Platform - An app, website, or internet-based technology where donors can donate and distribute funds to nonprofits. (i.e. Facebook/Meta, PayPal, GoFundMe)
• Platform Charity - A nonprofit that uses a charitable platform to facilitate fundraising in some way (i.e., a local community foundation using a technology platform to fund other local nonprofits on a Day of Giving)
• Recipient Charity - Any nonprofit that receives funds from a charitable platform (i.e., is the beneficiary of any of the online fundraising activities)

Good Standing Requirements

As of March 26, 2024, to operate as a charitable fundraising platform, platform charity, or recipient charity, an organization must meet certain “good standing” requirements, including:

• Maintaining tax-exempt status with the Internal Revenue Service (IRS)
• Maintaining good standing with California’s Franchise Tax Board
• Avoiding being included on California’s Registry of Charities and Fundraisers lists of organizations that may not operate or solicit in California

Registration and Reporting Requirements

Beginning June 12, 2024, charitable platforms and platform charities must register with the California Department of Justice by submitting Form PL-1 and renew by January 15 each year with Form PL-2. Platform charities must register using Form CT-1 and renew annually by filing Form RRF-1. When a Platform Charity and Charitable Fundraising Platform enter into a partnership (usually by agreement), Form PL-3 is due to the CA Attorney General within 30 days.

Along with the registration, the Charitable Platform must submit reports (Form PL-4) covering the previous calendar year’s financial activities every year by July 15.

Recipient charities that receive funds only from these platforms are not required to register with the Attorney General’s Office. However, as before, fundraising by other means may trigger the need to register.

Additional Requirements

Beginning January 1, 2025, Charitable Platforms and platform charities must also:

• Obtain written consent from recipient charities before soliciting donations using their names.
• Keep donations in a separate account from other funds.
• Document any fees imposed for processing funds.
• Make conspicuous disclosures that prevent donor deception or confusion.
• Send a tax donation receipt to donors within 5 business days of receiving a donation.
• Direct donations to the consenting recipient charity within 30 business days after the end of the month in which the donation was made.
• Provide information about the donors to the recipient charity and vice versa.

Impact on For-Profit Fundraisers

These requirements may also impact commercial co-venturers and commercial fundraisers, whose business models include web-based donation platforms. These groups may or may not have had to register with California in the past, and should pay close attention to how the new requirements may trigger the need to register. 

While many cause marketing commercial co-venturers previously qualified for exemptions from registration requirements in California, the new platform regulations may apply to their operations.

Cause marketers engaged in any of the following activities on behalf of at least seven nonprofits will generally need to register as Charitable Platforms under the new regulations:

1. Offering to make a donation to charity in exchange for users taking certain online actions—for example, employers who offer to match employee giving or companies incentivizing users to take a survey in exchange for a donation to charity. 
2. Running charitable sales promotions on behalf of more than six nonprofits per year. Note that existing commercial co-venturer registration requirements would still apply to cause marketers running sales promotions in brick-and-mortar stores or online sales promotions that benefit fewer than seven nonprofits.
3. Conducting point-of-sale fundraising campaigns that invite customers to donate to charity at checkout 

It’s also worth noting that organizations that raise funds by offering donors something of value or a chance to win something of value are carved out from the new registration requirements. For example, sweepstakes companies that offer a chance to win a prize in exchange for donations would not have to register under the new platform regulations.

If your organization is raising funds for philanthropic purposes online, you should review your activities to determine if they might trigger registration requirements.

How We Can Help

Labyrinth, Inc. has helped thousands of organizations navigate fundraising compliance requirements for over 30 years. As your trusted nonprofit compliance experts, we are here to make maintaining regulatory requirements easy. Contact us today to learn more about our managed service to support your organization in maintaining this new requirement.