California, the state that minted more billionaires than any other—246, as of an April report by Oxfam—finds itself in a peculiar contradiction. It is the home of megadonors like MacKenzie Scott, Jensen Huang, and Mark Zuckerberg, who have funneled billions into charitable causes. Yet a new index from the Philanthropy Roundtable, a right-of-center advocacy group pushing for fewer regulatory restrictions on donors and charities, ranks California dead last among the 50 states for the freedom to give.

The index scores states on a 10-point scale based on three broad categories: the overall economic and tax climate, regulatory burdens that charities face in registering and reporting, and the legal protections and tax incentives available to donors. California earned a dismal 2.73. Its donor confidence measure, which tracks tax treatment, donor privacy, and legal protections for donor intent, stood at 0.88—the lowest in the nation by a wide margin.

At the opposite end of the spectrum sits Montana, which tops the list with a score of 8. The report’s authors, Matthew Mitchell and Jack Salmon, observed that "large coastal states tend to score worse on the index while Mountain West states tend to score better." Indeed, 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.

The disparity extends beyond rankings. The bottom five states have 63 charities per billion dollars of GDP, while the top five have 122. As the authors wrote, "This underscores the point that freedom in the philanthropic sphere is not a mere abstraction. 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."

California’s regulatory landscape is particularly burdensome. The state 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. It 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 running a nonprofit, said these requirements hit smaller organizations hardest. "California has a large charitable regulatory structure, and the administrative burden can be significant for smaller nonprofits," she explained. "Everything from registration, annual reporting, and ongoing compliance needs resources that many startups don’t have quite yet." While larger organizations have legal and accounting teams to manage those obligations, she noted that smaller charities can struggle with "compliance costs that 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 fair, Panetta pointed out that the rules are not meant to be hostile but rather to "promote public trust and accountability." She added, "Requiring charities to disclose financial information and comply with reporting obligations helps regulators identify fraud and misuse of assets. 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, as reported by The Nonprofit Times, and the state paused new delinquency designations while it overhauls an overwhelmed registration portal.

Even billionaire donors have voiced frustration. Elon Musk, who moved from California to Texas a few years ago, told the WTF podcast last year that it’s "very difficult to give away money well." He elaborated: "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." Musk’s complaint was more about deploying money effectively than about compliance costs, but his relocation is telling: Texas ranks 6th on the same index, 44 spots above the state he left.

Despite all this, California’s regulations have not exactly deterred its billionaire donor class. 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. Meta CEO Mark Zuckerberg and his wife Priscilla Chan have committed more than $7 billion through their Redwood City-based Chan Zuckerberg Initiative. The rules the index penalizes, in other words, haven’t stopped the country’s biggest donors from giving in California. They’ve just made it harder for everyone else.