This article answers common questions asked by people about 501(c)(3) vs. 501(c)(4).
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What is the difference between a 501(c)(3) and a 501(c)(4) organization?
A 501(c)(3) organization is a type of nonprofit organization that is exempt from federal income tax under section 501(c)(3) of the Internal Revenue Code. These organizations are typically charitable, educational, scientific, or religious in nature, and are subject to strict rules regarding their activities and use of funds. A 501(c)(4) organization is also a type of nonprofit organization, but it is exempt from federal income tax under section 501(c)(4) of the Internal Revenue Code. These organizations are typically civic leagues or social welfare organizations that are organized for the promotion of social welfare, and are not required to be charitable in nature.
Can a 501(c)(3) organization engage in political activities?
A 501(c)(3) organization is generally prohibited from engaging in political activities, such as supporting or opposing political candidates or parties. These organizations are also prohibited from engaging in lobbying activities beyond a certain level. However, they may be able to engage in some limited lobbying activities if they follow certain rules and guidelines.
Can a 501(c)(4) organization engage in charitable activities?
A 501(c)(4) organization is generally not restricted from engaging in charitable activities, but these activities must be incidental to the organization’s primary purpose of promoting social welfare.
How are 501(c)(3) and 501(c)(4) organizations taxed?
Both 501(c)(3) and 501(c)(4) organizations are generally exempt from federal income tax, but 501(c)(3) organizations may also be eligible for state and local tax exemptions. Donations to 501(c)(3) organizations may be tax-deductible for the donor, but donations to 501(c)(4) organizations are not tax-deductible.
Can a 501(c)(3) organization accept donations from individuals or businesses?
A 501(c)(3) organization can accept donations from individuals and businesses, but it must use these donations for charitable, educational, scientific, or religious purposes.
Can a 501(c)(4) organization accept donations from individuals or businesses?
A 501(c)(4) organization can accept donations from individuals and businesses, but these donations are not tax-deductible.
Can a 501(c)(3) organization lobby for legislative change?
A 501(c)(3) organization is generally prohibited from engaging in lobbying activities beyond a certain level, but it may be able to engage in some limited lobbying activities if it follows certain rules and guidelines.
Can a 501(c)(4) organization lobby for legislative change?
A 501(c)(4) organization is generally not restricted from engaging in lobbying activities, but these activities must be incidental to the organization’s primary purpose of promoting social welfare.
Can a 501(c)(3) organization endorse political candidates or parties?
A 501(c)(3) organization is generally prohibited from endorsing political candidates or parties.
Can a 501(c)(4) organization endorse political candidates or parties?
A 501(c)(4) organization is generally not restricted from endorsing political candidates or parties, but these endorsements must be incidental to the organization’s primary purpose of promoting social welfare.
Can a 501(c)(3) organization engage in grassroots lobbying?
501(c)(3) organization is generally prohibited from engaging in grassroots lobbying, which is defined as attempting to influence legislation by attempting to mobilize public support.
Can a 501(c)(4) organization engage in grassroots lobbying?
A 501(c)(4) organization is generally not restricted from engaging in grassroots lobbying, but these activities must be incidental to the organization’s primary purpose of promoting social welfare.
Can a 501(c)(3) organization accept grants from government agencies?
A 501(c)(3) organization can accept grants from government agencies, but it must use these grants for charitable, educational, scientific, or religious purposes.
Can a 501(c)(4) organization accept grants from government agencies?
A 501(c)(4) organization can accept grants from government agencies, but these grants must be incidental to the organization’s primary purpose of promoting social welfare.
Can a 501(c)(3) organization have members or shareholders?
A 501(c)(3) organization can have members, but it must be organized and operated for charitable, educational, scientific, or religious purposes, and it cannot be organized or operated for the benefit of private interests.
Can a 501(c)(4) organization have members or shareholders?
A 501(c)(4) organization can have members, but it must be organized and operated for the promotion of social welfare, and it cannot be organized or operated for the benefit of private interests.
Can a 501(c)(3) organization engage in commercial activities?
A 501(c)(3) organization can engage in commercial activities, but these activities must be related to the organization’s exempt purposes and must not be the organization’s primary activity.
Can a 501(c)(4) organization engage in commercial activities?
A 501(c)(4) organization can engage in commercial activities, but these activities must be incidental to the organization’s primary purpose of promoting social welfare.
Can a 501(c)(3) organization be involved in labor unions or collective bargaining?
A 501(c)(3) organization can be involved in labor unions or collective bargaining, but it must ensure that these activities are related to its exempt purposes and do not become its primary activity.
Can a 501(c)(4) organization be involved in labor unions or collective bargaining?
A 501(c)(4) organization can be involved in labor unions or collective bargaining, but these activities must be incidental to the organization’s primary purpose of promoting social welfare.