Nonprofit leaders and state regulators say the recent collapse of Oakland-based Flipcause underscores the difficulties of overseeing online donation platforms.
In 2021, California enacted Assembly Bill 488, a law designed to regulate online charitable fundraising platforms and ensure participating nonprofits are in “good standing” with the state.
However, the large volume of online fundraising activity has made oversight difficult. State officials say they are still unsure how many such platforms are currently operating, making effective monitoring a challenge.
Enforcement of the law has also created complications, with some nonprofits reportedly unable to receive donations because they are not listed as being in good standing in the state registry.
“We are concerned that the number of registered charitable fundraising platforms is low. We are reviewing the market and determining which unregistered platforms to send notices to register,” said Brian Armstrong, supervising deputy attorney general at the California Department of Justice.
Flipcause fiasco exposes oversight gaps
The attorney general’s office says it lacks a clear picture of how charitable fundraising platforms operate in California or how many are out of compliance with state law, according to Armstrong.
“We are concerned that the number of registered charitable fundraising platforms is low,” Armstrong said. “We are reviewing the market and determining which unregistered platforms to send notices to register.”
Under state law, companies are required to register annually. However, the system does not clearly distinguish between newly registered companies and those renewing their registration, nor does it effectively track those that fail to renew. For example, in 2024, 174 companies were registered, according to Armstrong’s presentation. In 2025, that number rose slightly to 177, but the data does not indicate how many were new versus returning registrants.
An Oakland Voices analysis last December found that nearly one in five donation platforms—including Flipcause—were not registered.
The law also requires annual reporting, but compliance has been inconsistent. For 2024, the California Department of Justice accepted 63 reports, while 60 were incomplete and 78 from registered companies were overdue, according to Armstrong. Together, these account for 198 organizations—more than the total number reported as registered. The DOJ maintains a public Registry of Charities and Fundraisers listing all charities, fundraisers, and charitable fundraising platforms.
“Given limited fixed resources, the Registry has been unable to process submissions as quickly as we would like,” Armstrong testified, adding that a new online filing system is expected to launch in summer 2026.
Flipcause, which Armstrong cited as an example of an unregistered donation platform, reportedly owes nearly $29 million to more than 3,200 nonprofits nationwide. The state issued a cease-and-desist order against the company, and after Flipcause filed for bankruptcy, the attorney general’s office said it successfully pushed for the appointment of an independent trustee to oversee its assets. Flipcause has appealed the order.
California’s donation platform law: “a mixed bag”
Geoff Green, CEO of CalNonprofits, described California’s donation platform law as a “mixed bag.”
While AB 488 improved transparency in online fundraising, he said outdated systems and complex requirements have created serious delays and barriers for smaller nonprofits.
California is home to more than 110,000 tax-exempt nonprofit organizations, according to the DOJ, and roughly 30,000 of them are not registered with the state.
“When you’re frozen out of fundraising efforts and the majority of fundraising is now online, that’s a big problem,” Green said.
State law requires donation platforms to verify whether nonprofits are in “good standing” with the Registry of Charities and Fundraisers. However, some organizations only discovered issues when platforms stopped processing donations on their behalf.
“Most nonprofits first heard about it from their fundraising platform saying, ‘we can no longer give you a cent,’” Green testified. He warned that such disruptions can severely impact smaller nonprofits with limited staff and resources.
Green credited Oakland Voices with first reporting the Flipcause issue.