Fund Your Heroes: 501(c)(3) and 501(c)(4)s Understanding the election impact of your Giving

In this election year, we’ve been talking with clients and CPAs about resources that support democracy, especially the difference between donating to a 501(c)(3) and a 501(c)4.

The tl;dr is it’s about DIRECT vs. LEGISLATIVE impact.

501(C)(3) V. 501(C)(4)

501(c)(4) organizations advance issues through advocacy and lobbying activity. They can engage in lobbying for/against legislation, support/oppose ballot measures, and endorse political candidates that align with their missions. Examples: the National Rifle Association (NRA), Basic Rights Oregon, Citizens United, League of Conservation Voters, the ACLU, etc. Donations to these orgs ARE NOT tax-deductible.

501(c)(3)s have more limitations in place when it comes to lobbying and connecting with voters on specific issues or candidates. Their work is focused on impacting the issue directly, i.e. what most of us think about when we talk about charitable donations: World Central Kitchen, the American Red Cross, Everytown, the MacArthur Foundation, etc. Gifts to these orgs ARE tax-deductible

AN EXAMPLE IN VOTING RIGHTS

As an example, when it comes to elections:

🗳 When We All Vote is a 501(c)(3) nonpartisan initiative on a mission to change the culture around voting and to increase participation, advance civic education, and build an engaged electorate.
🗳 Movement Voter Project is a 501(c)(4), a self described “mutual fund for political donations” targets specific, pivotal races around the country, invests in voter organizing groups, and organizes key voters who have the power to tip the scales.

WE NEED FUNDING ADVOCACY

We’re thrilled to see our partners at Seeding Justice prioritizing Funding advocacy (a crucial component of movement building) for both types of orgs. Their team has started connecting with community partners, grantees, and advocates to understand the needs of 501(c)(3)s and 501(c)(4)s doing policy work, advocacy work, and define how they would leverage these lobbying dollars.

In conclusion: as we’ve been asking our clients and ourselves: Do you really need a deduction? In an election year, could you shift to supporting a policy-level change-maker as well?

We hope this primer was helpful and inspires you to consider the different ways your money can have impact this election year!

Want to know more?

Here are some of the sources we used to better understand this important topic:

• Comparison of 501(c)(3) and 501(c)(4) Permissible Activities, Alliance for Justice

• 501(c)(3) Organization: What It Is, Pros and Cons, Examples, Investopedia

• Examples of 501(c)(3)s and 501(c)(4)s, Wikipedia

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For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based upon third party data which may become outdated or otherwise superseded without notice. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article.

© 2022 Buckingham Wealth Partners. Buckingham Strategic Wealth, LLC, & Buckingham Strategic Partners, LLC (Collectively, Buckingham Wealth Partners). R-22-4113

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