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There is a really good reason why we give tax exempt status to charitable institutions: we as a nation have decided that we want to ease the way for organizations whose sole purpose is to do good for our needy and make it attractive for citizens to support these organizations.
There is a really good reason why most of our educational institutions are not taxed: we as a nation have decided that education is a really good thing and we want to support and encourage the education of our kids.
There are museums, hospitals and many more kinds of organizations that are tax exempt because their sole purpose is to do good for all of us. Our laws are structured to protect that do-gooding and they are strictly enforced, right? Turns out, not so much.
For example, Karl Rove’s Crossroads GPS is a 501c(4) organization, so by IRS definition its raison d’être is to operate exclusively for the promotion of social welfare. But Crossroads GPS spent nearly $71 million “electioneering” during the 2012 general election cycle. That’s money that was spent primarily on negative TV and radio ads designed to trash opponents of candidates whom Rove’s contributors supported. What seems to be missing from their actions is any social welfare, even as Crossroads GPS is exempt from federal tax.
And that’s just Rove’s 501c(4). There are many more 501(c) organizations enjoying tax avoidance benefits, all the while flaunting the law. And the story gets worse.
Donors to 501c(4) organizations can remain anonymous. That means that you and I don’t know who is contributing millions of dollars to these secret organizations and using their money to construct a government that is, let’s say, “friendly” to them.
All of that comes to us courtesy of the lame-brained Supreme Court decision that was crammed by Chief Justice John Roberts into a case that had nothing to do with political contributions, expenditures by non-profit organizations or public do-gooding. The distorted finding of the Citizens United case legitimized rule by the rich and remains one of the most democracy killing actions in U.S. history.
How’s that working for you?
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Ed. note: There is much in America that needs fixing and we are on a path to continually fail to make things better. It is my goal to make a difference – perhaps to be a catalyst for things to get better. That is the reason for these posts. To accomplish the goal requires reaching many thousands of people and a robust dialogue.
ACTION STEP: Please offer your comments below and pass this along to three people, encouraging them to subscribe. Thanks! JA
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4 Responses to 501c(4) Organizations and You
Jim Altschuler June 7, 2015
Your point about “Crossroads GPS” is accurate and well-taken but I’d like to suggest that, beyond the schools, hospitals, etc., not all tax-exempt organizations should be painted with that brush.
I live in the Los Angeles area and work with many such organizations here. There are neighborhood associations (each covering modest-sized local areas) and neighborhood councils (each covering larger areas including multiple neighborhood associations). Each of these groups is tax-exempt, either 501(c)(3) or 501(c)(4). A major difference between these 2 designations is that donations to a 501(c)(3) are tax deductible under Federal law for the donor while those to a 501(c)(4) are not. Each and every one of these groups exists for the purpose of “education and enhancement of the quality of life in the neighborhood (or area for councils) for public and charitable purposes”.
There are many other organizations whose efforts have a similar design and intent. Almost all of these organizations are 501(c)(3) or 501(c)(4) — not-for-profit statuses. Whether a (3) or a (4), these organizations spend their donated funds to educate their members and neighbors, to fight legal battles when necessary, to advertise and run fundraisers, etc. None of their funds are used for campaigning either for or against any city, county, state or Federal candidate or any of their causes, something that is specifically stated in their Articles of Incorporation or in their By-laws.
These efforts and actions need to be painted with an entirely different color than the “Crossroads GPS’s” of the world.
JaxPolitix June 7, 2015
Thanks for the correction regarding the deductability of contributions to 501(c)4 organizations. The post has been updated.
JaxPolitix June 7, 2015
Thanks for your correction regarding the tax deductable nature of contributions to 501(c)4 organizations. The post has been updated.
Joni Lindgren June 7, 2015
Last Wednesday evening, I was on a conference call with 450 other people from around the U.S. who are working to get Bernie Sanders elected. Bernie chimed in and said that he will overturn Citizens United by appointing two justices who will share our need to get rid of corporations and wealthy donors from buying our politicians, elections and our democracy!
One of Bernie’s campaign managers said during that call is that he has been doing this for 10 years and he’s never seen excitement and hope for a candidate than he has for Bernie, not even for Obama! They said that they are being bombarded with requests to volunteer.
I am working to get Bernie to come to Pinstripes at the Arboretum of Barrington to speak as soon as I can get him!