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| Posted: May 24th, 2013
It remains debatable whether the impropriety of the IRS’ actions in targeting certain politically-oriented 501(c)(4) “social welfare” organizations for heightened scrutiny rises to the level of scandal. Nevertheless, the related Congressional and media attention have thrust a glaring spotlight on a previously overlooked area of the nonprofit sector, with reactions pouring in from all corners.
One of those reactions has been a rush to condemn the entire 501(c)(4) universe, including calls to eliminate it entirely. Granted, that would be one way to ensure 501(c)(4) status is no longer exploited by partisan-oriented political organizations, in the same way that it’s possible to kill a mosquito with a chainsaw.
But just like wielding a chainsaw irresponsibly, that approach to reform would leave an awful lot of collateral damage. A clear majority of 501(c)(4) organizations have little to no involvement with lobbying or advocacy, let alone political activity. Using National Center for Charitable Statistics data obtained from the IRS, we can estimate a more precise number.
First, the basics. There were 86,451 active 501(c)(4) organizations approved by the IRS as of December 2012. (For comparison, there are 1,075,140 501(c)(3) charities.)
Determining how many are engaged in lobbying or the political process is a rather tricky endeavor – if it weren’t, the IRS probably wouldn’t be in trouble in the first place. Yet using NCCS data tools, it is possible to get to at least a rough estimate.
Avoiding ideologically loaded terms, a keyword search for groups with names including “advocacy,” “activist” or “activism,” “action,” “voting” or “voter,” “citizen” (excluding “senior citizens”), “grassroots,” “movement,” or “change” turns up 2,059 organizations, just 2.4 percent of the total. A more exhaustive search that includes similar terms appearing in program descriptions only adds another 191, but those added include the two largest and best known 501(c)(4) lobbying groups, the AARP and the NRA.
To further supplement the keyword search, we can add organizations that fall into certain program codes under the National Taxonomy of Exempt Entities (NTEE). These categories, developed by the NCCS team, consist predominantly of advocacy organizations. This includes all organizations located within the “R (civil rights, social action, and advocacy)” category; the part of the “W (public & societal benefit)” category that covers organizations focusing on government, taxes, and citizen participation; and all “01” codes designating advocacy-related activities within other broad categories, such as environment or healthcare. Combining those categories with the previously mentioned search results yields 5,808 organizations, representing roughly one in 15 501(c)(4) groups approved by the IRS.
Not only are the politically active 501(c)(4) organizations rather difficult to find, it is possible to identify a clear majority of organizations not engaged in such activity. To demonstrate that point, a random sample of 100 (c)(4) organizations with revenues greater than $25,000 includes:
Healthpartners, Inc., a giant HMO based in Minnesota
The Miss America Organization
The Military Order of the Purple Heart Service Foundation
12 volunteer fire departments
20 community service clubs such as Rotary Clubs, Kiwanis Clubs, and Lions Clubs
Two Disabled American Veterans chapters
Nine groups that appear primarily geared toward ideological, constituency-based or issue advocacy, representing both left-leaning and right-leaning interests
One group that exists “to promote voting and civic participation within the Latino community,” but does not necessarily appear to be partisan in nature
Fully two-thirds of these organizations can be easily identified as not engaged in lobbying or political activities. In addition, not one of the shadowy groups spending large amounts of money on political activity appears on the list. Many, though not all, of the large 501(c)(4) organizations reporting 2012 election spending to the FEC do appear in the NCCS database, but their numbers are negligible in comparison to the broader universe of 501(c)(4) organizations. Instead, the local Rotary Club is much more indicative of a typical (c)(4).
The rules governing what kinds of activities are and are not allowable within 501(c)(4) organizations need to be clarified, and those few groups directly engaging in politics and using the (c)(4) designation to hide their donors need to be held accountable in a more systematic way. But the presence of a small number of political actors shouldn’t jeopardize a legal structure that works for the vast majority of 501(c)(4) organizations that have little to do with lobbying, let alone election-season attack ads.
Image by Tim Meko, Urban Institute
Filed under: Government |Tags: 501(c)(4), irs, IRS scandal, nonprofit, Obama, tea party, Urban Institute Add a Comment »
| Posted: May 24th, 2013
Yesterday afternoon, Gil Kerlikowske, director of the White House Office of National Drug Control Policy, joined Marc Mauer of the Sentencing Project, Chief Thomas Manger of the Montgomery County Police Department, and The Urban Institute’s Nancy La Vigne for a panel discussion on 21st century drug policy reform. Their conversation revealed big changes in the way we address, treat, and even talk about drug issues in the United States.
Here are three ways drug policy is evolving:
The “War on Drugs” is over: One of the biggest shifts in recent years involves the way we frame organized efforts to reduce drug abuse among Americans. “War on Drugs,” a part of the American vernacular since its declaration by President Nixon more than 40 years ago, is no longer an accurate representation.
“[‘War on Drugs’] wasn’t going to define the Obama administration’s approach to the drug problem,” said Kerlikowske. “I could never really remember any of my colleagues around the country ever talking about it as a war on drugs. When you think about the oath of office that we took, to protect people, and to work with them and make sure they felt they had a law enforcement agency that could be trusted…The war analogy is not a particularly good one to use.”
We need more than “simplistic bumper sticker approaches” to fight drug abuse, Kerlikowske added, explaining that the American public is ready for a more substantial dialogue on the problem. It’s a trend that’s gaining traction globally as well—the Organization of American States just released a report that encourages more comprehensive drug policies.
“We’re not going to arrest our way out of this problem,” said Kerlikowske. “We have to approach drug policy from a public health standpoint, not just the criminal justice standpoint.”
In this regard, one of the administration’s priorities is equal access to drug treatment. “The Affordable Care Act is one important tool in this area,” said Kerlikowske. “It is revolutionary for drug policy. For the first time, it makes drug treatment for substance abuse disorders a required health benefit.”
Equal access to treatment also applies those in prison. Research (including our own) has shown that those who treat their addictions while incarcerated are less likely to commit additional offenses upon their release.
Drug courts, which stress treatment over punishment, are another important—and research-supported— piece of the puzzle.
There’s a new focus on “decriminalization” (but not necessarily legalization): Though no one on the panel expressed favor for blanket legalization, decriminalization received enthusiastic support, especially from Manger, the Montgomery County police chief.
Manger described the challenges faced by school resource officers, who are “taking dope out of lockers every single day.” As Manger put it, "nothing good happens when the only option we have is to charge [these kids] criminally, and see what kind of sanctions we can get from the courts. That’s not the way to go. That’s where decriminalization comes in."
“So many of the cases that we deal with are strictly possession cases,” Manger continued. “They’re cases that involve very minor, if any, other criminal activity, and those are the ones where decriminalization makes sense. Let’s get them the treatment they need.”
As the discussion came to close, all the panelists agreed that the future of drug policy reform looks promising, though not without a few challenges.
“We’ve made great strides, particularly in the last decade, in our thinking about drug policy, criminal justice policy, the reforms that have been enacted. It’s very different than it was at the height of the wars on crime and drugs in the ‘80s and early ‘90s,” said the Sentencing Project’s Mauer. “But I think we’re still at a point where changing politics, changing policy, changing culture is a very difficult thing to do, and we have a long way to go.”
Photo by Simona Combi, Urban Institute
Filed under: Crime, Quality of Life |Tags: decriminalization, drug policy, drugs, Kerlikowske, ONDCP, public health, Urban Institute, war on drugs Add a Comment »
| Posted: May 23rd, 2013
Today, I spoke at the Urban Institute to call for the expansion of criminal justice reforms aimed at addressing the underlying causes of criminal behavior in light of new data confirming the nexus between drug use and crime. The 2012 Arrestee Drug Abuse Monitoring Annual Report (ADAM II) shows that in five cities/counties, more than half of adult males arrested for crimes ranging from misdemeanors to felonies tested positive for at least one illegal drug. According to ADAM II, positive test results among arrestees ranged from 62 percent in Atlanta to 86 percent in Chicago.
In 2004, according to the Bureau of Justice Statistics, 53 percent each of jail and state inmates and 46 percent of Federal inmates suffered from drug use abuse or dependence – and yet only 7 percent of jail inmates, 15 percent of state inmates, and 17 percent of Federal inmates received treatment.
These data show that reform is needed. A month ago, the Obama Administration released the 2013 National Drug Control Strategy (Strategy), the president’s plan for 21st century drug policy reform based on scientific research about the nature of addiction. This plan reflects our understanding of addiction as chronic brain disease—one that can be prevented, treated, and from which people can recover.
The Strategy also supports a “smart on crime” approach to drug enforcement, protecting communities from domestic and international drug-related crime while diverting non-violent drug offenders into treatment instead of prison. As part of this approach, our plan highlights promising criminal justice reform, like drug courts and smart probation programs that reduce incarceration rates, along with community-based policing programs that break the cycle of drug use, crime, and incarceration while focusing limited enforcement resources on more serious offenses.
Far too often, addiction is at the root of what drives crime in our communities. To stop the revolving door of the criminal justice system in America, we must address not only serious criminal activities, but equally important, underlying substance use disorders. The ADAM II report confirms an urgent need to support policy reform outlined in the Obama Administration’s new drug policy strategy, which emphasizes prevention, treatment, and “smart on crime” policies that break the vicious cycle of drug use, crime, and incarceration in America.
To read the full 2012 Arrestee Drug Abuse Monitoring Annual Report (ADAM II) report, click here.
Photo by Simona Combi, Urban Institute
Filed under: Crime, Quality of Life |Tags: crime, drug, drug policy, Kerlikowske, MetroTrends, ONDCP, Urban Institute Add a Comment »
| Posted: May 23rd, 2013
Social Security is in trouble and not just because its balance sheets are off-kilter, according to Eugene Steuerle, the Richard B. Fisher Chair at the Urban Institute.
Steuerle told the House Ways and Means Social Security Subcommittee on Thursday that the program is decreasingly able to meet its core objectives. More specifically, he said the program treats many Americans unfairly, deters work and personal savings, and is losing capacity to protect the poor and elderly.
“Every year we wait, we put more of the burden on the young,” said the former deputy assistant secretary of the Treasury for tax analysis. “If we encourage more work, we get more tax revenues than any tax raise [could]. [And] not adjusting the retirement age is like throwing money off the roof and hoping some of the poor get it.”
Since its creation, the system has morphed into one that generates a lot of regressive elements, he said.
For example, Social Security provides about $579,000 in lifetime benefits for an average-wage-earning couple retiring in 2013, and that number is expected to grow to $700,000 by 2030. At the same time, the government is forced to cut programs that benefit their grandchildren in order to tackle the debt and deficits, he said.
The crux of the problem, Steuerle told the subcommittee, is that Social Security has become a middle-age retirement system. That is, a couple retiring at age 62 today is expected to live about 28 more years, compared to a couple that would retire on average at age 68 in 1940 and live another 12 to 13 years.
With many baby boomers retiring, nearly one-third of Americans will soon be on Social Security and collecting almost three decades’ worth of benefits, he added.
Leaving the fiscal implications of this trend aside, Steuerle said, the system discourages middle-age Americans with numerous healthy years left, and a lot of professional experience, from working and contributing to the economy.
On top of that, too often, truly elderly Americans find they don’t have much retirement income left when they really need it, he added. Usually the reason is that they saved for fewer years than they could have, while spending more years enjoying retirement.
Most of all, Steuerle emphasized that Social Security doesn’t treat all citizens equally.
Among the disadvantaged he listed are:
Working single heads of households,
Couples with relatively equal levels of earnings,
Parents who have children in their 20s and 30s,
Married couples that are close in age.
Subcommittee Chairman Sam Johnson, R-Texas, said he’s in talks with Ranking Democrat Xavier Becerra, D-Calif., to move legislation that can address many of these issues.
Steuerle encouraged the panel to move forward with reforms that could fix these issues and others in the near term. To do so, he said the lawmakers should consider:
Increasing the earliest retirement age, currently 62, by one month per year, for the next 36 years. By doing this, the earliest retirement age would be 65 in 2050.
“Unfortunately, the Social Security debate has largely proceeded on the basis of being ‘for the box,’ or ‘against the box,’” Steuerle said. “[But] the contents themselves deserve scrutiny.”
Photo by Matthew Johnson, Urban Institute
Filed under: Quality of Life |Tags: congress, eugene steuerle, House Ways and Means Committee, problems, retirement, seniors, social security, Urban Institute Add a Comment »
| Posted: May 23rd, 2013
As millions of baby boomers reach retirement age, cities across the country will face unprecedented demand for housing, services, and health care. Urban Institute President Sarah Rosen Wartell sees opportunity for smart growth and investment amid that challenge.
Wartell spoke today at the first annual AtlanticLive Generations Forum hosted by The Atlantic. A series of panels with participants including Secretary of Transportation Ray LaHood and Secretary of Housing and Urban Development Henry Cisneros tackled thorny issues about demographic change and how the millennial and boomer generations alike will deal with housing, transportation, city and neighborhood choice, and other issues.
“The same dynamics for housing demand are at play among baby boomers and millennials,” Wartell said.
As many boomers choose to “age in place,” that is, to retire and continue living in their homes and/or neighborhoods as opposed to in retirement homes, they will demand accessible transportation, services, walkability, and access to health care in their communities. These demands also characterize today’s young, educated, millennial generation.
Will cities and neighborhoods be able to cope with these interrelated demands? There are several key reasons for concern and also several important opportunities.
Areas for concern
Urban Institute models project that between 2010 and 2030 there will be a 70 percent increase in senior homeowners and a 100 percent increase in senior renters
As many seniors choose to “age in place” by staying in their homes and communities, their cities and neighborhoods may not be equipped to provide the transportation, services, and health care they increasingly demand.
Affordable housing is limited, but retirees on fixed incomes and millennials facing an unprecedented wealth gap will increasingly demand affordable housing in walkable urban areas.
Reasons for optimism according to panelists
Health care will increasingly comprise the largest share of living expenses for seniors, but in-home care and other in-home services can reduce health care costs, and those cost savings can be reinvested in the services that generate them.
Social Impact Bonds and other public-private partnerships may be well-placed to make the initial investments in the many services that will be needed, increasing economic efficiency and generating profits.
Technology will allow many seniors to receive health care monitoring and service delivery in their homes, while millennials will use it to interact with and replace many neighborhood amenities.
In the closing session, Cisneros reiterated many of the points made by the panelists, saying that “demographics is destiny.” Changes in age cohorts, racial composition, and economic equality all illuminate what our future needs will be. Smart policy and planning can take advantage of this knowledge.
Further, he said, amid this general demographic sea change, our country’s minority population is booming just as millennials—and especially minority millennials—face growing wealth and income gaps. Boomers need those populations to reach the middle class to buy their homes, invest in their neighborhoods, and grow the economy. All of these issues will increasingly converge on America’s urban neighborhoods, where tomorrow’s demographics must drive today’s policy.
Photo courtesy The Atlantic/Kris Tripplaar
Filed under: Economy, People |Tags: Atlantic, AtlanticGen, boomers, Henry Cisneros, millennials, Sarah Rosen Wartell, Urban Institute Add a Comment »
| Posted: May 22nd, 2013
A fascinating recent article in The New Republic reviewed a body of new science documenting the pernicious physiological effects of loneliness.
Researchers have shown that loneliness—more formally, the want of intimacy—exacerbates a host of ailments, including Alzheimer’s disease, obesity, diabetes, high blood pressure, heart disease, neurodegenerative diseases, and even cancer. The share of Americans who report “not feeling close to people” at any given time is 30 percent and growing, and deemed by some a social health crisis.
Should public policy researchers and practitioners care about something as intangible and inaccessible as loneliness? I’ll give you three reasons why I think we should.
First, some background… Feeling lonely actually sends misleading hormonal signals that physically change the molecular structure of the brain. According to the article, this “wrenches a whole slew” of bodily systems out of whack, causing loneliness to be seen by some as a risk factor for death as great as smoking.
Who tends to be affected by loneliness, according to this research? Women more than men, blacks more than whites, the less-educated, the unemployed, the retired, anyone different. In other words, many of the same people affected by today’s long-term unemployment and wealth disparities, persistent poverty, and isolation. If loneliness exacerbates these ills, it will further diminish people’s ability to engage in economically and socially valuable and productive activities, which in turn could exacerbate loneliness.
Three reasons why loneliness should be a public policy concern:
Loneliness contributes to a vicious economic cycle in which economically isolated people are further removed from the system, costing productivity and draining resources from social and health systems.
Too often we quantify how people are struggling by using impersonal numbers like poverty statistics, the unemployment rate, and the labor force participation rate. New research on loneliness reinforces the valuable lesson that suffering has a real, human, emotional face.
Scientific evidence of how loneliness links mental, physical, and economic well-being reminds us of the interdisciplinary nature of our country’s social problems and validates policy that draws on an inclusive range of research, methods, and approaches.
Loneliness may not be the most acute or immediate public policy concern of our day, but considering the role it and other little-talked-about ailments play in the socioeconomic realm can only make our public policy more thoughtful, robust, and responsive.
Illustration by Daniel Wolfe, Urban Institute
Filed under: People, Quality of Life |Tags: isolation, labor force, loneliness, long-term unemployment, persistent poverty, The New Republic, wealth disparities Add a Comment »
| Posted: May 20th, 2013
There’s been a lot of talk about North Korea in the news cycle of late, but little of it relates to the most prominent humanitarian crises occurring within its borders.
In 2000, all 193 U.N. member states, including North Korea, agreed to meet eight human development goals by 2015, including:
- Eradicating extreme poverty and hunger,
- Achieving universal primary education,
- Promoting gender equality and empowering women,
- Improving maternal health,
- Reducing child mortality rates,
- Combating HIV/AIDS, malaria, and other diseases,
- Ensuring environmental sustainability,
- Developing a global partnership for development.
Since these “Millennium Development Goals” (MDGs) were adopted, some 600 million people worldwide have escaped abject poverty, which is defined as living on less than $1.25 a day.
But as the contrast of North Korea and its neighbor China show us, this progress has been lopsided.
Most of the global reduction in extreme poverty comes from the dramatic growth in China, India, and a few other countries.
On the other hand, in North Korea, with the loss of markets in the Soviet Union and elsewhere in the communist world, per capita income fell by 50 percent, life expectancy has declined by at least five years, and child and maternal mortality has increased. On top of that, one-third of North Korea’s population faces food shortage.
Proving the adage that a picture is worth a thousand words, the famous nighttime satellite image of the Korean peninsula tells the same story.
So while North Korea’s missiles may be a threat to the millions living in South Korea, its own government policies threaten the lives of its 12 million citizens who live in extreme poverty, and the one-third of its children who are stunted by malnourishment.
And, of course, these measures do not account for the burden North Korea’s human rights record imposes on its people. The surest sign of this political and social oppression is perhaps the flagging rates of productivity and innovation.
So as the 2015 date for achieving the MDGs approaches, and as the international community begins considering new goals for improving the human condition, North Korea’s case highlights a broader gap in the current MDG roadmap and a topic that needs to be part of the framework going forward.
While North Korea’s declining living conditions can be visibly and unarguably connected to its politics, there are plenty of other countries where government policies—more so than geography, climate, colonial history, or natural resources—are the main impediment to meeting the MDGs or any new set of targets.
North Korea provides a clear illustration of a vital component missing from the original MDGs: inclusive political institutions are essential to sustained growth.
It is therefore somewhat refreshing that concepts generating buzz in the discussions of post-2015 development goals are an “inclusive future” and “inclusive growth.”
Precise definitions for these concepts are a work in progress, but they generally hone in on the development community’s concerns about growing inequality and the lack of shared benefits resulting from post-2000 development.
It is hard to be against “inclusive growth,” especially in an era of increasing income and wealth inequality. But it is hard to agree on how this can be achieved. In meetings organized by the United Nations and other international institutions, people with various interests and perspectives on how poverty should be eliminated are weighing in.
In their 2012 book “Why Nations Fail,” academics Daron Acemoglu and James Robinson theorize that inclusive economic policies are only sustained in places with inclusive politics.
“Inclusive politics,” as general a concept as it is, is at least more specific than “inclusive growth,” and targets political processes and structures that sustain a polarizing status quo in many places.
This is an advance on the simple-minded ideas that led to past fads in goal-setting, such as “participatory development,” in which excluded groups were invited into discussions of development projects and programs.
These efforts were not wrong, but they never confronted the growth-killing political climates of the countries in question.
Now, as we go about setting new post 2015 targets, we have the opportunity to integrate politics into the thinking and activities of the development/anti-poverty community.
Activists and policymakers serious about making headway would do well to revisit Mancur Olson’s Power and Prosperity, which anticipated the vital nature of politics when it comes to progress.
Olson explained that market-augmenting institutions provided by a capable, but democratically constrained state are the necessary other invisible hand.
I doubt the North Koreans would have agreed to the UN’s 2000 MDG commitment if it had listed “inclusive politics” amongst the goals. But if we’re serious about “inclusive growth,” we should include these goals in the 2015 batch and be clear what we mean, even at the risk of having fewer members of the General Assembly sign up.
Nighttime view of the Korean Peninsula from NASA
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Nancy La Vigne Laura Pacifici
| Posted: May 17th, 2013
For years, lawmakers on Capitol Hill watched as the federal prison system continued to grow. But as the federal government increasingly tightens its belt through furloughs and budget cuts, Congressional leaders are turning their attention to curbing this unsustainable growth.
This issue is increasingly receiving bipartisan support, as policymakers from across the political spectrum join together to take action. The Chairman of the House Appropriations subcommittee responsible for federal prison expenditures, Republican Frank Wolf, has plans to join with the subcommittee’s ranking Democrat, Chaka Fattah, to create a task force to assess and identify ways to reduce prison population and spending growth.
The House Judiciary Committee also recently launched a bipartisan task force—dubbed the Over-Criminalization Task Force of 2013—to review and streamline the nearly 4,500 federal offenses in the criminal code.
As they begin this work, policymakers are confronted with a bloated and ever-expanding system. In fiscal year 2013, for example, the federal Bureau of Prisons (BOP) commanded a 25 percent share of the Department of Justice’s overall budget, representing a 4.2 percent increase from fiscal year 2012. If current rates of growth in the BOP’s budget continue, this agency is projected to consume nearly 30 percent of the DOJ’s budget by 2020.
The growth in the BOP’s portion of the budget is mirrored by dramatic increases in the federal prison population. The BOP population is now nearly 10 times what it was in 1980. In addition to posing substantial costs to taxpayers, the expanding BOP prison population prompts concerns about overcrowded facilities and the disproportionate impact of incarceration on certain subpopulations and communities.
So what can federal policymakers do to stem the tide of mass incarceration, saving scarce resources that could be better used to prevent cuts to essential services, such as federal law enforcement and state and local grants for drug courts, reentry programs, and gang reduction initiatives?
They can start by looking at the two main drivers of the growth in the federal prison population: increasing numbers of prisoners and longer sentence lengths. In particular, the increase in time served by drug offenders—who make up half of the entire BOP population today—was the biggest factor in the growth of the federal prison population between 1998 and 2010.
Reducing the prison population requires policies that both divert nonviolent drug offenders from prison and impose back-end sentence reductions for those already incarcerated. While the BOP plays a key role in implementing some of the back-end changes, its ability to do so on a large scale is limited by, and dependent upon, statutes and budget constraints controlled by Washington lawmakers.
Moreover, making policy changes to curb federal prison growth requires input and support from a wide array of federal criminal justice stakeholders, such as judges, prosecutors, defense attorneys, corrections officials, and victims’ advocates. Buy-in from these key decisionmakers will be essential to the success of attempts to drive down the federal prison population.
Levenworth Federal Prison, Map data ©2013 Google, DigitalGlobe
Filed under: Quality of Life |Tags: Federal, incarcerated, inmates, MetroTrends, politics, population, prison, Urban Institute Add a Comment »
| Posted: May 15th, 2013
If you’ve read the news at all this week, you’ve likely read about the escalating controversy regarding the IRS’ seemingly selective scrutiny of certain organizations, including Tea Party organizations. Without delving into the motivations behind the IRS’ actions, the central question they were attempting to answer is whether the groups were operating in a manner consistent with the rules governing the activity of 501(c)(4) nonprofit organizations, the tax status for which they had applied (and were all ultimately granted, to the best of our knowledge). Given the increased attention on the topic, below is a brief overview of the permissible activities and characteristics of nonprofits that engage in political activities.
This is meant to be a basic overview, and there is a tremendous amount of nuance and detail not included here. If you need more detailed information, please see the references at the end and/or consult a specialist in nonprofit or political law. That said, there are three basic types of organizations that engage with the political system:
501(c)(3) Organizations – Public Charities
There are two types of 501(c)(3) organizations: Public Charities and Private Foundations. This section focuses exclusively on Public Charities, which are allowed to participate in the civic sphere in ways that are in line with their charitable mission.
- Permitted activities: Voter education, voter registration, policy analysis, issue education, and related nonpartisan activities. Allowed to conduct limited lobbying (defined as “insubstantial”) activities. Organizations have the option to choose an official test (501H election) that sets a concrete limit on lobbying expenditures.
- Advantages: Greater fundraising capacity through charity status. Can accept contributions of any size from individuals, corporations, and other nonprofits. Not required to disclose donors to the public, although the information is shared with the IRS on Forms 990.
- Disadvantages: Restrictions on allowable political activities. Cannot directly engage in elections. Cannot be involved in lobbying as a primary organization activity.
- Examples: National Resources Defense Council, The Urban Institute
501(c)(4) – Social Welfare Organizations; 501(c)(5) – Labor Unions; 501(c)(6) – Business Leagues
While many, if not most, 501(c)(4) organizations do not engage heavily in lobbying or political activity, the ones that do are supposed to exist in order to “promote the social welfare.” 501(c)(5) and 501(c)(6) organizations are membership-based associations capturing labor/agricultural entities and business entities, respectively.
- Permitted activities: Nonpartisan issue and legislative advocacy, lobbying, endorsement of specific legislation.
- Advantages: Not required to disclose donors to the public, although shared with the IRS on Forms 990. Can accept contributions of any size; the Citizens United decision allowed for unlimited corporate contributions. Can engage in nonpartisan election campaign-related activity, but that must not be the primary purpose of organization. Can endorse candidates in communication with members, although not with public.
- Disadvantages: Must be nonpartisan. Cannot publicly (outside of membership) endorse or overtly support or oppose political candidates. No contributions to 501(c)(4) organizations for lobbying or political activity are tax-deductible, by individuals or businesses. In 501(c)(6) organizations, the portion of membership dues used for lobbying and political expenditures cannot be claimed by members as a business expense and deducted from tax liability.
- Examples: AARP (c4), Crossroads GPS (c4), Tea Party Patriots (c4), SEIU (c5), Chamber of Commerce (c6)
527 Organizations – Political Action Committees
Section 527 of the tax code encompasses all forms of organizations engaged directly in electoral politics, including candidate and political party committees. This section focuses on independent Political Action Committees that are predominantly--though not exclusively--organized under Section 527, both “traditional” PACs and the newer SuperPACs that emerged following the 2010 Citizens United decision. There is another notable type of independent spending committee known informally as the “527” that can raise and spend money on elections in unlimited amounts without endorsing specific candidates, but these organizations are now significantly less prevalent and influential than they were around a decade ago.
- Permitted activities: Partisan-oriented activities to influence elections. Explicit support of or opposition to individual candidates.
- Advantages: “Traditional” PACs can engage in direct political activity and endorse candidates. SuperPACs can raise money in unlimited amounts from individuals or corporate/organizational donors.
- Disadvantages: Required to disclose donors to the public through the Federal Election Commission. “Traditional” PACs have $5000 contribution limits. SuperPACs are not allowed to coordinate with candidate committees. Lobbying activities are not necessarily tax-exempt.
- Examples: EMILY’s List (PAC), American Crossroads (SuperPAC)
Each structure serves a specific function within the political sphere, but reviewing applications of all politically oriented organizations to ascertain whether the proposed activities fit into the allowable activities of the organization type they have chosen seems prudent. However, many of the lines between these organizational types are blurry. Of particular relevance to the current controversy, 501(c)(4) social welfare organizations in practice run issue-based attack ads that look a lot like attempts to influence the outcome of an election. With little guidance from Congress, the IRS is left with the unenviable task of sorting out whether organizations engaged in such activities are merely toeing that blurry line or outright crossing it in some objective way.
If you want to learn more, here are some resources:
Illustration from Shutterstock
Filed under: Government |Tags: irs, nonprofit tax status, nonprofits, public charities, taxes, Urban Institute Add a Comment »