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501(c)(4)

Section 501(c)(4) organizations – so designated because of the provision of the Internal Revenue Code that covers them – are established to promote “social welfare,” that is, to achieve any of a near-limitless range of public policy goals through advocacy and action.  A 501(c)(4) organization may engage in unlimited lobbying activity and some partisan political campaign activities.  Section 501(c)(4) organizations often interact with federal and state public officials by holding meetings, generating public contacts and testifying before legislative committees.  Almost all of these types of activities are regulated.  Our firm assists clients through the maze of lobbying registration requirements, including the Lobbying Disclosure Act, the Foreign Agents Registration Act, gift rules and ethics regulations.

In addition, many of our nonprofit clients consist of multiple related groups.  The firm’s attorneys are leading experts on affiliations between 501(c)(3), 501(c)(4) and political organizations, and they understand the unique and complex issues associated with affiliated organizations.  We help organizations large and small maximize the benefits and efficiencies of these affiliations by providing easily understood advice and guidance.

Tax-Exempt Status and Organizational Governance

Our attorneys help 501(c)(4) organizations with a wide array of issues unique to tax-exempt organizations. We are experienced in incorporating organization in states across the nation and drafting organizational documents, including articles of incorporation or association, bylaws, conflict of interest policies and other structural documents. 

For clients seeking IRS recognition of their 501(c)(4) status, we have a proven record of success at obtaining favorable IRS determinations.  For both new entities and existing organizations, we help nonprofit managers ensure that their organizations comply with state registration and reporting requirements.  We review federal and state annual tax returns and other required reports.  When organizations face IRS audits, they turn to us for advice, and we help clients navigate the audit process as swiftly and painlessly as possible. 

As organizations grow, we assist them in drafting employment manuals tailored to their needs and in negotiating reasonable employment contracts.  And, we provide advice regarding affiliations and joint ventures with other nonprofit or for-profit organizations, and the tax implications of different  kinds of activities and income.

Many of our 501(c)(4) clients are affiliated with a section 501(c)(3) public charity and a section 527 political organization or PAC.  We help organization leaders to manage these affiliations by drafting documents regarding shared staff, office space and resources, and helping clients establish policies and procedures to track staff time between the organizations.  We also work with clients to develop the best online strategy regarding websites so the three types of organizations can maximize their social media presence while ensuring compliance with tax and campaign finance laws.

Campaign Finance and Elections

Section 501(c)(4) organizations may spend on political activities without disclosing their donors, and the Supreme Court’s 2010 decision in Citizens United v. FEC created new opportunities for these organizations to speak out publicly about candidates and elections.  But under federal tax law, political activity may not be the organization’s “primary purpose,” an elastic legal standard.  Section 501(c)(4) organizations seeking to flex their political muscle also must abide by a tangled thicket of campaign finance laws.  For federal elections, the Federal Election Commission produces hundreds of pages of regulations, explanations and opinions each year.  And, each of the 50 states and the District of Columbia has its own unique campaign finance laws and various officials, commissions and agencies that enforce them.  Our attorneys help organizations pursue electoral opportunities and understand related restrictions and disclosure obligations.

Our attorneys have extensive experience helping 501(c)(4) organizations and their affiliated federal and state PACs and other “527” arms establish compliance systems to cut through the confusion.  With our guidance, organization leaders know where they’ll need to register, how much they can give candidates, when they’ll need to report their activities, and whether a certain activity will require them to identify their donors.  From answering simple questions like, “How much can we give a gubernatorial candidate in Missouri?” to establishing complex multi-million-dollar national operations with multiple campaign-finance arms, our attorneys provide tailored advice based on an organization’s individual needs.

When laws change, we help organizations adapt quickly to comply with new restrictions and to take advantage of new opportunities.  And, when campaign finance authorities launch investigations, we have years of experience helping 501(c)(4)s and their political committees successfully defend themselves.

Lobbying and Government Ethics

At their core, many 501(c)(4)s are grassroots or direct lobbying organizations.  If they choose, they may spend every dollar in their budget on lobbying.  As they do so, they must pay careful attention to the ever-changing mosaic of registration and reporting requirements, restrictions and gift rules applicable to communications with Members of Congress, White House staffers and other executive branch officials, governors, state legislators and other state officeholders.  In some cases, disclosure laws may reach to unexpected depths of organizations, for example forcing them to report the costs of their annual dinner if it honors a government official, or preventing the organization from taking a Senator to tour a threatened wildlife habitat.  Our attorneys are experienced at helping organizations to consider the implications of lobbying registration and gift rules and to develop compliance systems that enable them to maximize their legislative influence while minimizing administrative burdens.  Advance planning can help an organization consider how it will be affected by lobbying restrictions, and what alternatives may be available to help the organization achieve its goals. 

 

 

 

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