501(c)(4) Status
Unlike the limited purposes of Section 501(c)(3), under Section 501(c)(4) of the Code, an organization need only be organized to promote social welfare, i.e., be primarily engaged in promoting in some way the general good and general welfare of the people in the community. In addition, provided that the organization files a return with the Service, a 501(c)(4) organization may engage in political activity on behalf of or in opposition to a candidate for public office and may lobby for legislative action or to affect public opinion. Similar to Section 501(c)(3), Section 501(c)(4) requires that no part of an organization’s net earnings may benefit any private shareholder or individual. There are no limits on the amount of financial support a 501(c)(4) organization may receive from investment income or other sources, and there is no requirement for any percentage of public support. However, the Service could conclude that a 501(c)(4) organization is not fulfilling its social welfare purposes if it accumulated too much profit. Finally, a 501(c)(4) organization must disclose its substantial contributors on its Form 990 filed with the Service, but the public may not have access to its list of substantial contributors.
SOURCE: Claire Topp, Attorney, Dorsey & Whitney, LLP
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