What’s in a Number?
by Kelly LuchtmanFriday, April 18th, 2008
What’s your message? It might depend on your number–501(c)3 or 501(c)4 or 527.
Because this is an election year, many of our projects have a political bent. But how much of one? Well, that depends on the type of nonprofit status a client holds. Most of our clients are 501(c)3s, but some are 501(c)4s or 527s. The degree to which they can speak out on political issues or campaigns is determined by their designation. Some of our clients, like the Sierra Club, have all three designations, in which case, their money has to be divided into different funds with c3, c4, or 527 designations, and used appropriately. (There are actually 28 different 501c designations! But we’re only going to talk about three here).
501(c)3s are defined by the IRS as charitable, religious, scientific or educational organizations and mostly consist of public or private foundations such as Red Cross or Habitat for Humanity. The money they use for media is generally to educate viewers about issues or an organization’s mission, with or without a call to action at the end, such as “join us” or “donate now”. Although they can heighten public awareness about certain issues, they aren’t allowed to show political affiliation or urge people to vote for or against a specific candidate. They can only use a small percentage of funds to lobby. They can issue a “Tell Congress you’re fed up” statement, as it is not specific to any candidate, or release a non-partisan report on a politically charged issue such as global warming, but they must stop short of advocating for or against a particular candidate.
What we hear often is that many (c)3s don’t go as far as they can because they worry that if they violate the restrictions, they will lose their nonprofit status.
c4 funds are different. 501(c)4 organizations are described in the IRS code as non-profits that promote social welfare; but unlike a (c)3, a 501(c)4 organization can lobby for specific policy change. Examples of prominent c4s include NARAL Pro Choice America and Moveon.org Civic Action. Here is an example of the difference: A 501(c)3 can tell you how important it is that you use your right to vote, but a c4 can ask you to sign a petition to Congress about a specific piece of legislation. However, c4 money cannot be used in election campaigns on behalf of or against any candidates.
A 527 group (or 527 funds) can influence the nomination, election, appointment or defeat of candidates for public office. 527 money can be used on behalf of or against candidates; for instance, Political Action Committees (PACs) are 527s. Here is where it gets confusing if it isn’t already. A 527 is NOT allowed to coordinate with a specific election campaign. Rather, it must be an “interest group” who is advocating on issues or mobilizing voters. Not surprisingly, sometimes 527s get into trouble for pushing the limits. For example, in the 2004 election cycle, Swift Boat Veterans for Truth was a famous 527 that was eventually accused of coordinating with George Bush’s campaign in its anti-John Kerry ads during the presidential campaign.
Are you confused yet? Well, let me tell you, it can be hairy trying to work out messaging for these various organizations or funds in the video and social media marketing campaigns we undertake on their behalf. But we really enjoy the challenge and are happy to be doing a lot of work this cycle around the critical elections this fall.
