Answers To Your Burning Questions About 501c4 Nonprofit Organizations
Posted by rpm
A 501c4 is a nonprofit corporation or association designed to promote social welfare.
How is that different from a 501c3? A 501c3 nonprofit organization has to largely restrict their lobbying efforts or risk losing their tax status. 501c4’s can engage in an unlimited amount of lobbying, as long as the issues relate to the exempt purposes of the organization. In addition, a c4 may engage in some partisan political campaign activities in accordance with federal and state campaign finance laws, provided that its political activities do not become its primary activity. 501c3’s, on the other hand, are limited to strictly nonpartisan political work.
To illustrate the difference, here is an example of how a 501c3 and a 501c4 may frame a question to a candidate on a voter guide (a popular voter education strategy).
In a 501c3 voter guide you have to ask a really balanced question:
“Some people think that once you commit a felony, you should lose voting rights forever. Others think that once you’ve completed your sentence, you should have your voting rights restored. What’s your position on voting rights for formerly incarcerated individuals?”
In a 501c4 voter guide you can be more direct:
“312k Kentuckians are locked out of the voting booth because of a felony conviction on their record. These folks are not allowed a vote even though they have completed the punishment given to them through the court system. Would you support legislation to restore voting rights to formerly incarcerated individuals?”
Why are 501c4s important?
- 501c4s can more fully support their members to participate on the local, state and national level. They can not only register voters, they can also educate them about the issues and candidates on their ballot, get them to the polls and, after election day, help them lobby.
- A 501c4 can be more direct in their communications. Using the voter guide example, because the 501c4 can ask a more direct question, the candidate must also be more direct in their response. From there, that organization can take those responses to voters so they can cast educated ballots.
- After election day, those organizations can support voters to contact the elected officials about specific legislation. This is an important way change is made, and it’s a critically important tool that is woefully underfunded.
Why is funding different for 501c4s?
501c4s are non-profits, but donations made to them are not tax deductible. Since the money donated is not deductible, the majority of their funding comes mostly from small individual gifts. This makes that funding stream an asset because it represents a lot of people (think the of the power of large grassroots scale), but also no small feat to build and manage.
This is where RPM comes in.
Raising money using RPM strategies (through a ticket add-on or special merch item) is basically the best of both: small gifts that don’t need a deduction, delivered in a large sum!
Contributions to a 501c4 are not deductible for federal income tax purposes.