Forming a 501(c)(4)

This week we are talking about 501(c)(4)s, or social welfare organizations. What are the advantages to starting one?  How are they different than 501(c)(3)s and other types of nonprofits? And what are the important considerations when determining if a 501(c)(4) would be a good vehicle to use to conduct the types of activities you are hoping to engage in to achieve your mission? If you are curious about 501(c)(4)s, what they can do, and how they operate... this podcast episode is for you. Attorneys for this Episode Natalie Ossenfort Susan Finkle Sourlis Quyen Tu Shownotes Scenario: ·      Existing 501(c)(3) has a mission focused on providing potable water to the residents of a community, who are currently unable to tap into a reliable water supply. ·      The city, county, and state have failed to step up, so the 501(c)(3)'s staff raise funds for bottled water that they deliver to the community. ·      What the organization's founders thought would be a temporary fix, has now been operational for several years, and the water situation is not improving. ·      The 501(c)(3)'s founders want to do more to address the needs of the community, and some are considering starting an affiliated 501(c)(4). General Rules & Characteristics for 501(c)(3)s: ·      501(c)(3) organizations have a very favorable tax status. ·      They are tax-exempt, and their donors can take advantage of a tax deduction for their contributions.   ·      501(c)(3) public charities are limited in the amount of lobbying (or legislative advocacy) they can engage in, and they are prohibited from engaging in partisan political activity. Advantages of 501(c)(4)s ·      501(c)(4)s are social welfare organizations. ·      They are tax-exempt organizations that operate for the common good and general welfare of the community. ·      Donations to 501(c)(4)s are not tax-deductible for donors, but... ·      501(c)(4)s can conduct an unlimited amount of lobbying (or legislative) activity, and they can do some partisan work to support or oppose candidates for public office, but that type of activity must remain a secondary activity of the organization. Scenario: ·      If the 501(c)(3) founders wanted to advocate more aggressively for legislative changes that could provide a long-term solution to their community's water access problem, they might consider forming a 501(c)(4). ·      How much political (or partisan) activity could the organization conduct? If a 501(c)(4) decides to engage in any partisan political activity, that must be a secondary purpose of the organization and not the primary purpose. Primary Purpose Activities ·      Issue advocacy and lobbying o   In our scenario, this could include advocacy in front of the local city council or state legislature for reliable access to water. o   It could also include ballot measure advocacy. ·      Nonpartisan voter outreach to get out the vote and mobilize the community ·      Conduct research and educate legislators on issues ·      Engage i