Welcome, potential 501(c)(4) practitioners, and welcome back, 501(c)(4) experts! This article provides clarity on the differences between 501(c)(3)s and 501(c)(4)s under federal tax rules, as well as a high-level overview of key distinctions between 501(c)(3) and 501(c)(4) organizations and the legal benefits of operating a 501(c)(4) organization.
Lobbying
Investing in lobbying to influence legislation is a core Impact Fellows investment strategy. The only exception is when lobbying is determined to be highly divisive in a campaign or strongly tied to a particular candidate. During election cycles, Impact Fellows vets prospective lobbying investments with our legal counsel to determine if they comply with IRS restrictions on supporting political campaigns.
Ballot Initiatives
Investing in support of, or opposition to, ballot initiatives is an Impact Fellows investment strategy in states where this is part of their legislative activity. Ballot initiatives are considered to be political activities only when they are related to, or tied to, a candidate. In these cases, Impact Fellows will proceed with the same vetting process and limit these investments in keeping with IRS restrictions.
Political Campaigning
Impact Fellows can invest in political campaign activities, including endorsements, pledges, supporting campaign events, legislative scorecards and partisan polling. Under federal tax law, political campaigning is permitted as a secondary activity, which Impact Fellows limits to no more than 30% of our annual budget, time and efforts.
Donor Anonymity
Impact Fellows does not publish or release donor names. Names and addresses are provided only to the IRS on Schedule B of our Form 990. Impact Fellows is not required to provide this information to anyone who requests a copy of the Form. This information is not available on Guidestar, which redacts names before publishing Forms 990 on its website.
Investment Agreements and Award Letters
Impact Fellows provides an Award Letter stating that recipients are required to comply with all legal and reporting regulations in keeping with their individual state and federal IRS laws. By signing the Investment Agreement, recipients acknowledge they are required to articulate and directly report lobbying and political campaign actions to their appropriate state agencies and the IRS.
