Understanding how California AB 488 impacts online charitable fundraising
If you are a California-based nonprofit or solicit any donations in California, it’s critical to understand California AB 488 (AB 488). A new law that went into effect in California on January 1, 2023, AB 488 is aimed at improving transparency and accountability in online charitable fundraising.
While AB 488 is a California law, it could impact all charities in the United States that solicit donations in California, not just those headquartered in the state. It imposes new compliance requirements that could potentially cause your nonprofit to lose out on online fundraising dollars.
We will share an overview of California AB 488, including what your nonprofit can expect and resources for staying compliant with requirements when raising online donations for your cause in the Golden State.
What is California AB 488?
AB 488 establishes new requirements on nonprofits and regulates online fundraising platforms (these requirements may impact your ability to fundraise on platforms like Facebook, Network for Good, and PayPal Giving Fund). The California Attorney General’s office is charged with enforcing the provisions of the bill and is finalizing regulations that will allow the Attorney General to supervise online platforms to protect donors and charities from fraud and deceptive solicitations.
AB 488’s “good standing” requirements and potential financial impacts on your organization
AB 488 requires charitable fundraising platforms to only solicit for nonprofits that are in “good standing” with the California Attorney General’s Office, the California Franchise Tax Board, and the Internal Revenue Service (IRS). This means a nonprofit must be current, registered, and not delinquent in its registration status with these three agencies.
Before a fundraising platform can allow nonprofits to use its platform for online fundraising in California, it now has a legal obligation to first check the organization’s compliance status with all three government agencies.
If your nonprofit is not in “good standing” with even one of these agencies, you may be prohibited from soliciting donations in California on an online platform. You can check the following government databases and websites to see if your organization is on any of their block lists:
- The California Attorney General’s office updates a “May Not Operate List” once a month.
- The California Franchise Tax Board also maintains a Revoked exempt organizations list.
- The IRS maintains a Revocation List.
Why AB 488 matters for nonprofits in California and beyond
For California-based organizations, it’s important to stay up to date on your registration and “good standing” to remain compliant with AB 488. However, nonprofits incorporated in other U.S. states could also be affected by the law if they are doing business in California, including by engaging in fundraising in California to support their mission-driven work. Each charity based outside of California has to make its own determination whether it has to register in California based on its activities.
Here’s why: If your nonprofit is on any of the above block lists at any time, your organization will immediately lose access to fundraising tools on platforms like Facebook, Network for Good, and PayPal Giving Fund pursuant to the procedures these platforms have put in place to comply with AB 488.
This can happen simply because you may have forgotten to file the right documents and pay the right fees in a timely manner. It can also take weeks to be removed from these block lists, because they are currently not updated at a regular cadence.
Helpful resources for AB 488 compliance
Nonprofits that find themselves on any of the government block lists—and therefore blocked from fundraising on online platforms because of the requirements imposed by AB 488 can access these resources to help get reinstated:
- The California Attorney General’s Office website provides how-to webinars, instructions, and FAQs for delinquent organizations.
- The California Franchise Tax Board’s website offers search tools to check your nonprofit’s registration and directions for how to reinstate your organization’s tax-exempt status if suspended or revoked.
- The IRS website supplies instructions and FAQs for how nonprofits on their revocation list can reinstate their organization’s federal tax-exempt status.
In addition to using these resources to stay compliant with AB 488, we also recommend keeping your Candid nonprofit profile up to date. Many online donation platforms already use nonprofit profile data by directly integrating with Candid APIs to verify organizations’ tax-exempt status with the IRS.
How Candid eases the burden of navigating AB 488 compliance
To ease the burden of navigating compliance with this new California law for online fundraising platforms and nonprofits alike, we are also pleased to announce that our Charity Check API now also includes AB 488 compliance data.
By integrating with our newly enhanced API, online fundraising platforms can instantly verify that a nonprofit is compliant with AB 488’s requirements across all three relevant agencies. The only solution of its kind, it will also help them accelerate the process of reinstating nonprofits’ ability to fundraise on their platforms if placed on government block lists.