expanding your advocacy and political reach: adding a 501 ......29 to view venable’s index of...
TRANSCRIPT
![Page 1: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/1.jpg)
1
© 2008 Venable LLP
PRESENTER: RONALD M. JACOBS, ESQ. TUESDAY, AUGUST 13, 2013
3:00 p.m. EDT
– MARGARET C. ROHLFING, ESQ.*
© 2013 Venable LLP
Nonprofit Organizations Committee Legal Quick Hit:
Expanding Your Advocacy and Political Reach:
Adding a 501(c)(4) to Your Nonprofit’s Org Chart
![Page 2: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/2.jpg)
2
© 2013 Venable LLP
Overview
Why we need affiliated entities
Controlling the 501(c)(4)
Corporate separation issues
Political activity options
© 2013 Venable LLP
![Page 3: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/3.jpg)
3
Why we need affiliated entities?
© 2013 Venable LLP
![Page 4: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/4.jpg)
4
© 2013 Venable LLP
Problem: Limits on 501(c)(3)s
No politics
Limited lobbying
Exempt purpose
![Page 5: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/5.jpg)
5
© 2013 Venable LLP
Solution: Create Related Entity
Unlimited lobbying
Limited political activity
Other exempt activities
![Page 6: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/6.jpg)
6
© 2013 Venable LLP
Political Activities of a 501(c)(4)
Primary purpose must be social welfare
Social welfare does not include political activity
No clear bright lines
– BUT: report from IRS provides some ideas
![Page 7: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/7.jpg)
7
© 2013 Venable LLP
Social Welfare
60%
Political 40%
Safe Harbors
• Include reasonable overhead allocations
Expenditures
• Paid staff and volunteers
Time
![Page 8: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/8.jpg)
8
© 2013 Venable LLP
Political Activity in the Safe Harbor
Public communications 60 days before general or 30 days
before candidate that reference a candidate
Events with only one candidate
Grants to organizations engaged in political activity
![Page 9: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/9.jpg)
9
What does it look like?
© 2013 Venable LLP
![Page 10: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/10.jpg)
10
Structural Options
501(c)(3)
501(c)(4)
PAC
501(c)(4)
501(c)(3)
PAC
![Page 11: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/11.jpg)
11
In Practice
Primary Org
Action Org
PAC
Primary Org
Foundation
PAC
![Page 12: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/12.jpg)
12
Controlling the 501(c)(4)
© 2013 Venable LLP
![Page 13: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/13.jpg)
13
© 2013 Venable LLP
Considerations
Sufficient control
Maintain corporate
separateness
![Page 14: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/14.jpg)
14
© 2013 Venable LLP
Control Options
Overlapping boards
• Self-perpetuating boards with common membership
Board appointment
• One board appoints the other board
One entity as member of the
other
• Member appoints the board of the entity
![Page 15: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/15.jpg)
15
© 2013 Venable LLP
501(c)(3) as Member
501(c)(3)
Member of 501(c)(4)
• Board of 501(c)(3) makes decisions as member
Member appoints
board
• Provides control of 501(c)(4)
Board controls 501(c)(4)
![Page 16: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/16.jpg)
16
© 2013 Venable LLP
Membership Considerations
If planning a PAC, members need to be solicited
Sole member cannot be the 501(c)(3)
Think about another class of members
– Must satisfy FEC rules
• Affirmatively accept membership
• Annual dues
• Say in management
• Other indicia
![Page 17: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/17.jpg)
17
Resources
© 2013 Venable LLP
![Page 18: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/18.jpg)
18
© 2013 Venable LLP
501(c)(3) Resources
No (c)(3) resources for (c)(4)
Fair market value
Contractual arrangement
Startup costs
Appearance
![Page 19: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/19.jpg)
19
© 2013 Venable LLP
Intellectual Property
Name
Logo
Website
Membership Lists
Mailing Lists
Software
![Page 20: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/20.jpg)
20
© 2013 Venable LLP
Websites
Political activity
– Additional separation
– Do not include 501(c)(3) logo on 501(c)(4)
pages
– Think about separate domains
PAC
– Member only log-in
– No direct link from 501(c)(3) page
![Page 21: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/21.jpg)
21
Staffing
© 2013 Venable LLP
![Page 22: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/22.jpg)
22
© 2013 Venable LLP
Staffing Options
• Less risk of wrong function
Separate staff
• Single employer
Leased staff
• Right hat important
Shared staff
![Page 23: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/23.jpg)
23
© 2013 Venable LLP
Shared
Time sheets
Written agreement
Include benefits
Titles
Multiple business cards
![Page 24: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/24.jpg)
24
Other Issues
© 2013 Venable LLP
![Page 25: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/25.jpg)
25
© 2013 Venable LLP
Primary Purpose
501(c)(3) does:
– Exempt activity
– Education
– Some lobbying
501(c)(4)
– Created for political work
– Must have 60% nonpolitical
– Move lobbying to (c)(4)
– Move some education
![Page 26: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/26.jpg)
26
© 2013 Venable LLP
527(f) Tax
Tax on the lesser of:
Net investment income
Political expenditures
![Page 27: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/27.jpg)
27
© 2013 Venable LLP
527(f) Tax
Unless all political expenditures are from
segregated fund
But, the only account that qualifies:
– PAC
– 527 registered with IRS—must disclose
donors
![Page 28: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/28.jpg)
28
Questions
© 2013 Venable LLP
![Page 29: Expanding Your Advocacy and Political Reach: Adding a 501 ......29 To view Venable’s index of articles, presentations, recordings, and upcoming programs on nonprofit legal topics,](https://reader034.vdocuments.us/reader034/viewer/2022052012/602858a43b3f717d7c53bda7/html5/thumbnails/29.jpg)
29
To view Venable’s index of articles, presentations, recordings, and
upcoming programs on nonprofit legal topics, see
www.Venable.com/nonprofits/publications,
www.Venable.com/nonprofits/recordings and
www.Venable.com/nonprofits/events.
Ronald M. Jacobs, Esq.
t 202.344.8215
www.PoliticalLawBriefing.com
Contact Information
© 2013 Venable LLP