RESOLVING THE LEDGER
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California is home to more billionaires than any other state: 246 of them to be exact, according to an April report by Oxfam. It’s where MacKenzie Scott, Jensen Huang, and Mark Zuckerberg have funneled billions into charitable causes.
Yet somehow it’s actually the worst state in the country to be a donor, according to an index by Philanthropy Roundtable. The group, a right-of-center association that advocates for fewer regulatory restrictions on donors and charities, ranks all 50 U.S. states based on how friendly their laws are to charitable giving and nonprofit activity. And California came in dead last with a score of 2.73 out of 10, which is based on the state’s broad economic and tax climate, regulatory burdens charities face in registering and reporting, and the legal protections and tax incentives available to donors. On the report’s donor confidence measure, which tracks tax treatment, donor privacy, and legal protections for donor intent, California scored 0.88, the lowest in the nation by a wide margin.
By comparison, Montana tops the list with a score of 8 out of 10, based on its low regulatory barriers for charities, strong donor protections, and a favorable broad economic policy. Report authors Matthew Mitchell and Jack Salmon note “large coastal states tend to score worse on the index while Mountain West states tend to score better.” Meanwhile, the five highest-ranked states (Montana, Wyoming, South Dakota, Iowa, and Indiana) are small and largely rural. The bottom five (California, New Jersey, Washington, Connecticut, and Illinois) are among the country’s largest and wealthiest, and all but Illinois is coastal.
What’s more is there are 63 charities per billion dollars of GDP among the bottom five states in the index, but the top five states have 122 charities by the same measure.
“This underscores the point that freedom in the philanthropic sphere is not a mere abstraction,” the authors wrote. “These trends demonstrate that more charity freedom and stronger incentives for philanthropy are associated with more philanthropic activity, having a positive impact on the way we live, work, and care for one another in communities across the country.”
How does California rank last when there are so many billionaires there?
California requires charities to register to solicit donations, undergo audits once revenue tops $2 million, and pay some of the steepest fees in the country, including a top annual reporting fee of $1,200 and a $500 paid-solicitor fee . The state offers no general sales tax exemption for charities, no legal standing for donors to enforce their intent, and only what the report calls “very weak” protections for restricted gifts and endowments.
Brittnie Panetta , a California-based attorney who cofounded and spent more than a decade helping run a nonprofit, said the state’s requirements land hardest on the organizations least equipped to handle them.
“California has a large charitable regulatory structure, and the administrative burden can be significant for smaller nonprofits,” she said. “Everything from registration, annual reporting, and ongoing compliance needs resources that many startups don’t have quite yet.”
While bigger organizations have legal and accounting teams to manage those obligations, she said, smaller charities can struggle with “compliance costs can divert funds from their mission [and] discourage new organizations from forming.”
That disparity complicates the picture for a state defined by its megadonors. A billionaire’s foundation absorbs compliance as a routine cost, but a volunteer-run charity may not.
“Each additional filing or reporting requirement is going to be exponentially more expensive for smaller nonprofits, as they rely on volunteers and limited staff,” Panetta said. “So while the regulatory structure seems the same, the practical impact is not, by any means.”
To be sure, Panetta said the rules and regulations aren’t meant to be hostile, but rather to “promote public trust and accountability,” she said.
“Requiring charities to disclose financial information and comply with reporting obligations helps regulators identify fraud and misuse of assets,” she added. “There has to be a balance between preventing abuse and avoiding any unnecessary barriers to charitable giving.”
California’s own compliance system has struggled to keep up. More than 30,000 nonprofits were flagged as noncompliant at an August 2025 hearing, The Nonprofit Times reported , and the state paused new delinquency designations while it overhauls an overwhelmed registration portal.
Some billionaire donors have even complained about how philanthropy can be hard despite the number shown in their bank account. Elon Musk, who moved from California to Texas a few years ago, told the WTF podcast last year it’s “very difficult to give away money well.”
As he put it: “It’s very easy to give money away to get the appearance of goodness. It is very difficult to give money away for the reality of goodness.” To be sure, Musk’s complaint was moreso about deploying money effectively, not about compliance costs. But it’s worth noting where he landed: Texas ranks 6th on the same index, 44 spots above the state he left.
All that being said, some of the regulations appear to not have phased California’s billionaire donor class that much.
Scott has directed more than $461 million to California public education institutions since 2021, according to EdSource. Nvidia CEO Jensen Huang and his wife, Lori, gave $75 million to Vanderbilt University for its art, architecture, and design San Francisco campus, and Meta CEO Mark Zuckerberg and his wife, Priscilla Chan, have committed more than $7 billion through their Redwood City-based Chan Zuckerberg I...
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