501(c)(4) organizations defined as “social welfare” organizations. A 501(c)(4) may not be primarily engaged in political activity. A commonly held legal interpretation is that these organizations must spend at least 51% of their activity on non-political activity. However this interpretation has been disputed. Political activity does not include general advocacy to influence public opinion or lobbying to influence legislative activity.
Contributions to a 501(c)(4) are not disclosed. Donors to 501(c)(4)s remain anonymous. These organizations file with the IRS. Donations to these organizations are not tax deductible. Donations may be subject to gift tax.
501(c)(4)s are controversial because they may accept unlimited contributions from both individuals and corporations (including unions), do not have to disclose who contributes, and report their overall income and expenses on an annual basis set by the IRS[1]. The IRS timeline for reporting is much longer than a political campaign cycle. It is possible for all of a 501(c)(4)’s political activity to be disclosed after the election has already occurred.
501(c)(4)s can also contribute to Super PACs. This allows individuals, corporations, and unions to contribute unlimited amounts to a 501(c)(4) without disclosure, which can then contribute to a Super PAC. The 501(c)(4)’s contribution to the Super PAC will be disclosed, but it may be unclear where the funds originally came from.
Return to 501(c) Organizations
[1] "A Guide to Political Donations." The New York Times. Sept. 2011. Web. 11 Dec. 2011. <http://www.nytimes.com/interactive/2011/10/17/us/politics/a-guide-to-political-donations.html?hp>.
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