Most people are familiar with 501(c)(3) non-profit organizations.  These are entities that perform charitable work that is mostly (though not necessarily completely), devoid of political content.  Generally speaking, donations to such entities are fully deductible for tax purposes.

However, many people are unaware that there are a series of additional types of entities under section 501(c) of the Internal Revenue Code (“IRC”).  Those entities can engage in far more issues oriented political advocacy.  Generally speaking, donations to those entities are not necessarily deductible.  An example of such entities are 501(c)(4) organizations that are often specifically organized for the purpose of political advocacy.

One of the critical changes to this scheme has occurred as a result of Citizens United v. Federal Election Commission, 558 U.S. 50 (2010).   In that case, the Supreme Court held, among other items, that a 501(c)(4) entity could donate unlimited amounts for an issue oriented campaign.

One of the more interesting questions is whether this will allow donors to shield themselves from being identified.  While the Federal Election Commission has approved that anonymity, recent court decisions have called that into question.  We expect that this will become an issue on appeal in the months and years to come.


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