Bush founded the Foundation for Florida's Future and the Foundation for Excellence in Education to research and advocate on issues. A band of activists is trying to organize Florida education groups toward a common purpose. To do so they are forming two non-profit groups, one a c 3 and the other a c 4.
What does that mean? Under Internal Revenue Service rules, a c 3 is a non-profit for religious, charitable or educational purposes. These types of non-profits typically conduct research and can only engage in a limited amount of lobbying, advocacy or political activity. A c 4 is a social welfare group and can engage in more advocacy and lobbying. Donations to c 4 groups are not tax-deductible, and donors are often not disclosed. While certain features of these two tax designations are alike, there are critical differences between the c 3 and c 4 that you need to understand before applying.
Nonprofits in this classification are very limited to the kinds of political activity or advocacy work they can undertake. Donations to organizations in this category are tax-deductible and typically include churches, medical or scientific research groups, mental and physical health support groups, education programs, and more.
The other is that while these organizations are exempt from taxes, charitable donations to them are not considered tax-deductible. These nonprofits can engage in public outreach about their causes and may educate the public in areas relevant to their mission.
As a social welfare organization, c 4 s can be politically involved and partisan in their outreach and communications. For example, these organizations may endorse political candidates, lobby for legislative changes, and advocate for legal measures.
With c 3 organizations, coordinating nonpartisan lobbying activities is allowed. If you are planning on doing limited or no lobbying, then you should choose the c 3 status so donors can benefit from giving to your organization.
However, if your organization will be doing a lot of lobbying or any campaigning, you should form a c 4 to inoculate yourself from any charges of violating your c 3 status.
If you want the best of both worlds, you can have two separate but affiliated organizations - one a charitable c 3 and the other a c 4 lobbying arm. Many trade organizations lobby extensively on behalf of their members, but have an affiliated c 3 foundation for charitable giving and educational purposes. Examples of c 4 organizations include unions, fraternal organizations and trade associations. Note to readers: if you purchase something through one of our affiliate links we may earn a commission.
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