IRC 501(c)(4) provides for exemption of:
- Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare.
The statutory terms disclose that IRC 501(c)(4) embraces two general classifications:
- Local associations of employees, the membership of which is limited to the employees of a designated person or persons in a particular municipality and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes.
a. Social welfare organizations, and
b. Local associations of employees.As a matter of law, 501(c)(3) organizations are prohibited from supporting candidates directly in any election. The rules for a 501(c)(4) organization in political campaigns are far less stringent:
How does one draw the line for promoting "social welfare," when it comes to political campaigning? Not all that long ago, Democrats and liberals were up in arms about this issue. Why? Because of Crossroads GPS and Americans for Prosperity, two 501(c)(4) organizations that were funneling "dark money" into the election process:
- The promotion of social welfare does not include participation in political campaigns on behalf of or in opposition to any political candidate. Reg. 1.501(c)(4)–1(a)(2)(ii). An exempt IRC 501(c)(4) organization may intervene in political campaigns as long as its primary activity is the promotion of social welfare. IRC 501(c)(4) organizations are subject to the tax imposed by IRC 527 on any expenditure for a political activity that comes within the meaning of IRC 527(e)(2). See Rev. Rul. 81–95, 1981–1 C.B. 332.
- The rules determining what constitutes intervention in a political campaign for an IRC 501(c)(4) organization are the same as those governing IRC 501(c)(3) organizations.
- An organization whose exempt status under IRC 501(c)(3) is revoked for intervention in a political campaign may not thereafter qualify for exemption under IRC 501(c)(4). See IRC 504.
Two conservative nonprofits, Crossroads GPS and Americans for Prosperity, have poured almost $60 million into TV ads to influence the presidential race so far, outgunning all super PACs put together, new spending estimates show.Here's Andrew Sullivan bitching about these orgs and dark money. Here's Gavin Aronsen at Mother Jones doing the same. And that's just a sample. The call--then--was to get these beasts under control, because these kinds of nebulous groups operating under subjective rules were a problem as a matter of course. Where are the complaints now, with regard to Organizing for Action? Crickets. Already, the org has begun targeting GOP politicians with ad buys. Pushing a social issue, sure, but the effort is politically one-sided.
And that would be fine, would put OFA in the same ballpark as Crossroads GPS and the like (though the critics of the latter would still be hypocrites). The problem is, as I detailed in my previous piece, OFA is set up specifically as a tool of the current Administration. From it's own FAQ page:
OFA is advocating for the agenda that President Obama has presented to the nation, and as an organization dedicated to this purpose, OFA has been grateful for the expression of support for its work by the President, Vice President and First Lady. Although it was privately established and will be privately operated, without government funding, OFA will work hard to retain the support and confidence of the President by effectively advocating for his Administration's core agenda. It also looks forward to working with other civic organizations that are similarly committed to the successful enactment of this agenda.Thus, in order for it to qualify as a 501(c)(4) organization, we must allow that "advocating for his [Obama's] Administration's core agenda" is qualitatively and legally equal to being "operated exclusively for the promotion of social welfare." Wait, what? So anything Obama puts on his agenda is automatically a positive for social welfare? I can't help but wonder how unmanned drone strikes fit in here. Whether one is okay with such a policy or not is inconsequential, because if the Administration supports it, it would have to be about improving social welfare under this rubric.
What we have here: a "private" org whose stated goals are about backing the current President's agenda nothing more, that is enjoying tax exempt status even as it openly flouts the spirit of the requirements, that was birthed from the remnants of the President's campaign, and that ultimately answers to him and his core group of advisers.
Yeah, this is no problem...