Whether your nonprofit is involved in a campaign or not, you should understand the differences between 501(c)(4) and 501(c)(3). These differences are important to understand, as they can help you decide whether you should engage in political activity or not. You should also consider your nonprofit’s goals and objectives before deciding whether to engage in partisan politics. A nonprofit focused on ending racism may receive different responses depending on its federal nonprofit status.
501(c)(4) and 501(c)(3) are nonprofit organizations that are organized around a mission and benefit society. However, they differ in several ways. Those differences affect how an organization can run its activities and perform legal actions. Here are all the differences between 501(c)(4) and 501(c)(3):
| 501c3 | 501c4 |
|---|---|
| The 501(c)3 nonprofit is typically a religious, scientific, or educational organization that is exempt from federal income tax | Unlike 501c(3) organizations, 501c4 organizations are not considered tax-exempt |
| Generally speaking, 501(c)(3)s have limited influence on public policy, because they can’t endorse specific candidates | They are social welfare groups, with more freedom to engage in lobbying and political activities. In fact, a 501c4 group can be tied to “super PACs” to raise funds for political advocacy during elections. However, these groups usually do not disclose donors’ names. |
| They can advocate for public policy, voice concerns about public issues, and participate in nonpartisan debates. In addition, they can endorse laws or legal measures that are relevant to their mission | While the 501(c)3 nonprofit may only engage in limited lobbying, a 501(c)(4) organization can spend an unlimited amount of money and engage in partisan activities, like political campaigning |
| A 501(c)(3) can organize nonpartisan voter registration drives | A 501(c)4 can also endorse a candidate and encourage voters to vote for a candidate who supports their mission |
| They can also give voter guides to the public, sponsor nonpartisan debates, and promote nonpartisan voter protection programs. | Unlike a 501(c)3, a 501(c)4 nonprofit is not obligated to disclose its donors and is free to spend its money to support candidates in support of its mission. |