What Is a 501c4 Organization?

The difference between a 501(c)3 and a 501(c)4

© Estela Kennen

501c4s are a common type of non-profit organization that can engage in lobbying or political campaigning.

501(c)4s are tax-exempt non-profit organizations. More specifically, according to the Internal Revenue Code (IRC), 501(c)(4)s are:

Comparing 501(c)3s and 501(c)4s

501c3 and 501c4 organizations are very similar in many respects. In fact, any organization that qualifies for a 501c3 tax-exemption would also qualify for a 501c4. There are, however, important differences.

Non-profit status:

Tax-exemption:

Lobbying (trying to affect legislation):

Political campaign activity:

Charitable Donations:

Should your organization be a 501(c)3 or a 501(c)4?

If you are planning on doing limited or no lobbying and no campaigning, then you probably want the 501(c)3 tax-exemption so that people can benefit from donating to your organization. However, if your organization will be doing substantial lobbying or any campaigning, you should form a 501(c)4.

If you want the best of both worlds, you can have two separate but affiliated organizations – one a charitable 501(c)(3) and the other a 501(c)(4). Many trade organizations lobby extensively on behalf of their members, but have an affiliated 501c3 foundation for charitable giving.


The copyright of the article What Is a 501c4 Organization? in Non-Profit Management is owned by Estela Kennen. Permission to republish What Is a 501c4 Organization? must be granted by the author in writing.



Comments
Sep 11, 2007 4:37 PM
Bonnie Locchetta :
I am a member of a community theatre group. Through bad management in the past, we lost our 501c3 status. We re-filed for status, but now we are a 501c4. Why is this? We do not lobby, are completely non-profit, and have a fairly small membership. Is it possible for us to switch? How difficult would that be? Can anybody help me???
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