Team work makes the dream work. While nonprofits normally have their individual policy agendas and platforms, sometimes working with an affiliated organization, most also join in coalition with others in order to more effectively drive policy change. For example, immigration right groups may join with groups that advocate for kids to better protect our youngest undocumented immigrants.
Today’s show addresses the differences between c3 and c4 types of organizations so that coalitions can think more strategically about how to use both within a campaign.
- The Different Types of Nonprofits That We’ll be Talking About Today.
- Tax lawyers are not creative when it comes to naming conventions. 501(c)(3) refers to the Tax Code provision that defines the creation of a nonprofit public charity.
- That’s right, there’s 501(c)(1) through ((c)(29).
- 501(c)(3) organizations are those typically referred to as nonprofits: and are designed to be tax exempt so long as they are organized and operated for religious, charitable, scientific, literary, or educational purposes. We’ve linked to the law in our show notes so you can see the long-winded version.
- Organizations that are also tax exempt but found under 501(c)(4) of the Tax Code are referred to as social welfare organizations
- A social welfare organization is defined as a civic leagues or an organization operated exclusively for the promotion of social welfare.
- These 501(c)(4) organizations will look a lot like the public charities and are often referred to as nonprofit.
- The key takeaway is that there are lots of different types of nonprofits—organizations that do not pay a federal income tax on the money they collect at the end of the year. And because these organizations are under different sections of the tax code, different rules apply.
- That’s why tax lawyers are very creative when it comes to strategy–you can find all sorts of ways to craft language to meet what an organization can do, and to use money to its fullest extent possible, even when it is restricted in use.
- Lobbying and Partisan work
- A c3 can lobby and do advocacy but is expressly prohibited from engaging in partisan work, anything that supports or opposes candidates running for public office.
- A c4 must have as its primary purpose the same types of activities that a c3 can do (advocacy and lobbying) but can also engage in partisan candidate work during elections so long as it is only a secondary activity for the organization
- Secondary purpose
- What is secondary? Well, generally that means less than 50% but conservative attorneys often recommend that partisan candidate work is less than 40% of the organization’s total activities.
- So a c4 can do everything the c3 can do but can also hold candidates accountable, endorse candidates, compare candidates to the org’s issues
- Affiliated structures: Common Paymaster and other behind the scenes details (Ronnie)
- A c3 and c4 can also be related organizations and share employees and resources
- common paymaster, grants and resource agreements are the behind the scenes details that make affiliated organization relationships work–with really only the common paymaster visible to the staff as it results in one paycheck.
- So the code provides 4 different ways for common paymasters to be supported, and one of the easiest is that the c3 and c4 have at least 50% overlap on the board. Another one of the tests is that the organizations share 30% of its employees.
- When it comes to engaging in advocacy, affiliated organizations face many of the same issues when deciding what activities to engage in. The primary issue is always how to ensure the c3 is following the rules that apply to its tax structure.
- Example of Coalition Work with c4
- Sometimes the back office flow of money needs to be discussed in coalition when talking about a coalition where the groups need to be more strategic in who pays what. Because a c3 coalition member has to be clear about how its money and name are being utilized.
- For example, sometimes the coalition members agree to work together on a policy issue but recognize that each member is going to do different types of activities. Always be clear with your brand and where your dollars are being used. Or like a loose coalition, mostly acting under your own name but strategically trying to stay together and pull different levers. The goal is to not work at cross purposes or undermine each other.
- Pledge Cards by the c4.
- A c4 organization can compare its mission to whether the candidate agrees with its mission. A c3 cannot.
- Example, Vote for ProChoice Candidates Like Candidates x.
- When there’s a flyer that uses logos, the c3 logo cannot appear on a coalition flyer that is partisan.
- Knocking on Doors
- A c4 organization could wear the nonprofits shirts and provide volunteers to specific campaigns with their issue.
- For example, lets say it is a pro-immigration candidate and the c4 organization provides refugee services. The c4 can walk with flyers saying this candidate supports refugees.
- In coalition, the c3 has to think about the political perception issues when working in coalition with c4 organizations that do this type of work.
- Sharing Resources. When a c4 organization works with a c3 organizations, sometimes the c3 organization will provide a grant for lobbying purposes to the c4. The c3 has to count that money on its 990 as lobbying, as does the c4, but in this way, the c3 can sometimes more easily account for policy work since it is providing a lump sum. Sort of like a contractor relationship. Similarly, if the dollars aren’t all going to lobbying, the c3 and coalition must know where the money is going. The budget for the coalition has to be understood by all the parties. For example, the coalition could issue the “dues request” or “funding request” outlining how much is lobbying, education, etc.
- Websites: A shared coalition website has to remain nonpartisan and cannot have the endorsement slate. The two click idea –that the c3 reference to the c4 website land on something c3 permissible. Or even use a pop up window.
Resources at bolderadvocacy.org
https://www.law.cornell.edu/uscode/text/26/501
BA Coalition Checklist: https://bolderadvocacy.org/wp-content/uploads/2018/03/BA-Coalition-Checklist-1.pdf
https://www.bolderadvocacy.org/wp-content/uploads/2016/12/501c4-Strategy-and-Discussion-Guide.pdf
