-By Dina Rasor

July 5, 2012- We interact with nonprofit organizations every day – little league, Girl Scouts, churches, League of Woman Voters, the PTA, the Rotary Club, volunteer firefighter organizations and veterans' service organizations. The US tax law set up two main types of nonprofit organizations to help the general society. The IRS describes them this way:

501(c)3 non profit organization – Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organizations.

501(c)4 non profit organization – Civic Leagues, Social Welfare Organizations and Local Associations of Employees

C3 organizations do not have to pay tax on their income, and donors can take a charitable tax deduction. C3 organizations are not allowed to be involved in political campaigns, but can do limited lobbying for legislation that involves their mission.

C4 organizations also don't have to pay taxes on their income, but donors cannot take tax deductions. C4 organizations are allowed to lobby and even be involved in political campaigns, with restrictions. Both C3 and C4 organizations do not have to divulge the names of their donors. According to Wikipedia:

501(c)(4) organizations are generally civic leagues and other corporations operated exclusively for the promotion of social welfare, or local associations of employees with membership limited to a designated company or people in a particular municipality or neighborhood and with net earnings devoted exclusively to charitable, educational, or recreational purposes. 501(c)(4) organizations may lobby for legislation and unlike 501(c)(3) organizations they may also participate in political campaigns and elections, as long as its primary activity is the promotion of social welfare.

The actual IRS language is more blunt on the limitations for C4 political activity:

The promotion of social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. However, a section 501(c)(4) social welfare organization may engage in some political activities, so long as that is not its primary activity. However, any expenditure it makes for political activities may be subject to tax under section 527(f).

As with any law in the United States, it is only as effective as the government's willingness to enforce it. Right now, under the current "anything goes" mentality since the US Supreme Court's Citizens United case, some wily "educational" "charitable" and "social welfare" C3 and C4 organizations have opened the floodgates to unlimited political money and they don't have to tell us who is giving it to them. The IRS stated limitations above have become election year road kill, especially since these groups know that any excessive violations of the political restrictive rules won't be looked at until after the elections or perhaps not at all.



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