501(c)(4) Nonprofit Management Services
If your organization benefits social welfare, then consider filing a 501(c)(4) application. These organizations are typically civic organizations or associations at the forefront of making a change toward their chosen cause.
Be aware that there are some 501(c)(4) rules that must be adhered to in order to maintain compliance. Donations to 501(c)(4) nonprofits are often not tax-deductible, but they do get more opportunities to use their resources in the political realm. So, if you want to create an organization that can directly help people and has a voice in politics, this might be the type of nonprofit for you.
What is a 501(c)(4) Nonprofit?
The IRS defines a 501(c)(4) organization as a social welfare group, such as a civic organization or neighborhood association. It’s used for promoting the common good and general welfare of the people of the nonprofit’s chosen community, and all of its earnings must be used for charitable, educational, or recreational purposes.
The IRS rules for a 501(c)(4) define “educational purposes” to include lobbying political figures and informing the public on issues that directly impact them, similar to a 501c5 or 501c6. Plus, unlike a 501c3, a 501(c)(4) nonprofit can directly or indirectly support or oppose a candidate for public office, so long as that is not their primary activity.
The most notable and significant 501(c)(4)s include the American Civil Liberties Union (ACLU), the Sierra Club, and the National Rifle Association (NRA). While these are all household names and vary widely in their unique missions and politics, whatever your politics are, the 501(c)(4) designation allows you to accelerate your efforts.
501(c)(4) Rules
While a 501(c)(4) can participate in politics, that can’t be the majority of their activities. At least 51% of their resources must go towards their primary purpose. However, so long as they stay within that threshold, a 501(c)(4) nonprofit is allowed to spend however much they want on it. And that doesn’t include lobbying, on which they can spend however much money they want.
It’s worth keeping in mind, though, that while a 501(c)(4) is a tax-exempt organization, the IRS’s 501(c)(4) application states that money spent on politics is taxable.
Contributions to a 501(c)(4) are not considered tax-deductible charitable contributions unless the organization is a volunteer fire department or a veterans organization, and this must be disclosed to potential donors while fundraising. Dues or contributions might be deducted as a business expense unless used for political influence.
501(c)(4) Application
In order to file for tax exemption as a 501(c)(4) nonprofit, you have to file Form 1024 with the IRS. Be sure to answer all of the questions as fully as possible and include all required attachments.
Like every other 501c organization, a 501(c)(4) also has to file Form 990 every year, which are annual information reports. Failure to do so can result in the revocation of your tax-exempt status.
Frequently Asked Questions About 501(c)(4) Nonprofits
A 501(c)(4) nonprofit can directly or indirectly support or oppose political candidates as long as that is not their primary activity. This activity is very different from a 501c3 organization which cannot endorse or engage in direct political outreach and engagement on behalf of a candidate.
In addition to incorporating your entity at the federal and state level, you will need to complete a 501(c)(4) application that includes IRS Form 1024. This application is necessary for 501(c)(4) volunteer fire departments or veterans organizations to accept tax-deductible donations.
There are some 501(c)(4) rules that are unique to this nonprofit classification. Typically, donations to 501(c)(4) nonprofits are not tax-deductible. However, there are exclusions. While 501(c)(4) organizations are considered social welfare groups, such as civic organizations or neighborhood associations, 501(c)(4)s, such as volunteer fire departments or veterans organizations, can accept tax-deductible charitable contributions.
It’s also important to note that dues or contributions made to a 501(c)(4) may qualify as a business expense and be deductible as such.
While a 501(c)(4) nonprofit can participate in politics, it must be limited to no more than 49% of their activities. At least 51% of resources must go towards their primary purpose as a social welfare group which should promote the common good and general welfare of the people of the nonprofit’s chosen community.
Ready to Start Your 501(c)(4) Application?
If you’re confused by the 501(c)(4) application or any of the IRS 501c forms, or just want help from a company that has helped over 30,000 people start their nonprofits before, contact us here at BryteBridge Nonprofit Solutions! Our affordable service can walk you through the process because our mission is to help you help others.
