As of February 1, 2020, the California Attorney General’s update to Form RRF-1, Annual Registration Renewal Fee Report to Attorney General of California, has taken effect. 

The update includes four main changes.

Restricted and Unrestricted Net Assets

The redesigned California RRF-1 includes a new question to gauge compliance with California Government Code Section 12599.8, which states, “At the end of this reporting period, did the organization hold restricted net assets while reporting negative unrestricted net assets?”

“Restricted assets” are assets the charity holds that may be used only for a specific purpose.  The restriction may come from the governing documents, a condition imposed by the donor, or the solicitation that led to the donation. Examples of restrictions are endowment funds, building funds, gifts for specific purposes, and fiscally-sponsored projects.

Organizations that answer yes must attach two items:

• A written statement that confirms all restricted funds were used consistently with their restricted purpose and explains why unrestricted net assets were negative at the end of the reporting period.
• Proof of directors’ and officers’ liability insurance coverage, which should include a cover note stating “confidential” to minimize the likelihood of the proof being included in public postings.

Nonprogram Expenditures

Form RRF-1 no longer asks the question, “During this reporting period, did nonprogram expenditures exceed 50% of gross revenue?”

Detail of Activities

Part A of the form now requires organizations to report the aggregate noncash contributions recorded in revenue during the reporting period. These recorded contributions should tie to the amount reported on IRS Form 990, Part VIII, Line 1g.

In addition, Part A of the form now also requires the reporting of total program expenses and total expenses. These figures should tie to Form 990, Part IX, Line 25, Columns (B) and (A), respectively.

Signature Requirements

The update clarified that Form RRF-1 must be signed by an authorized agent, a signature doesn’t need to be an original inked signature, and electronic signatures are acceptable. 

An authorized agent is defined as one of the following:

• The president
• Chief executive officer
• Treasurer
• CFO of a public benefit corporation
• A trustee, if the organization is a trust
• Other authorized agent of the organization

We’re Here to Help

For more information about the updates to Form RRF-1 and how they may affect your organization, contact your Moss Adams professional.