query: 501(c)3 politics

Tue Feb 25 12:43:12 CST 2003

[ed:  thanks to Nathan, Adam, and Doug for responding to Jeri's 
query, reprinted below.]

From: "Nathan Henderson-James" <caacornres at acorn.org>

Politics of getting a 501(c)(3) designation aside, I sugget that the 
group take a hard look at becoming a tax-exempt organization. It 
will severly limit their ability to take part in many kinds of work with 
elected officials and issues that are being debated in elected 
legislatures. In fact, it makes working on public policy much more 
burdensome.  

Some questions to ask might be:  

Why go tax-exempt? Why not simply become a non-profit 
organization?  

If you choose to explore a non-exempt existence, is there a 
501(c)(3) group in the area that might be willing to act as a fiscal 
sponsor for events and fundraising purposes that require 501(c)(3) 
status?  

Will the group ever want to pursue public policy change, either 
through conversations with elected officials (what some might call 
lobbying) or by supporting and influencing specific pieces of 
legislation (say PATRIOT II)?  

Will the group ever want to engage in voter registration and 
education activities?  

These are simply a few of the kinds of question activists should be 
asking themselves. I personally think that a 501(c)(3) designation 
can often hinder pursuit of policy goals as much as help with 
fundraising efforts. If you raise enough money to survive, but you 
can only use 20% of it to influence decision-makers on specific 
pieces of legislation, then what have you gained? I would argue 
that everything else the group does can probably be done without 
the 501(c)(3).  

None of this, of course, deals with the IRS' denying status based on 
politics, but I would further submit to you that this is another reason 
not to have the tax-exempt designation: It limits the amount of 
Federal meddling in the organization. Not to mention the fact that 
you don't have to do as much reporting. This limits both your 
organization's expenses and your exposure to non-governemental 
sources of disruption who will not have public records to draw on to 
see your sources of support or the names of donors or members.  

Of course, there are probably some very compelling reasons to go 
with a 501(c)(3) and I'm not arguing against acquiring the 
designation just to argue against it. I simply think that often people 
do not see any option besides the 501(c)(3) and given how severly 
it limits a group's ability to participate fully in all aspects of 
American public policy decision-making, it is worth having a full 
discussion on the pros and cons of pursuing that course of action.  

Regards,  

Nathan
-----
Nathan Henderson-James, Development Director, California 
ACORN
510-436-5690 v   510-436-6395 f   510-773-8012 cell
3205 Farnam St. Oakland, CA 94601
caacornres at acorn.org     http://www.acorn.org
To receive updates on ACORN's work every two weeks
go to http://acorn.org/getinvolved

*********************************************

From: Adam Flint <flint at igc.org>

I'm not a lawyer, but my understanding is that non-profit exemption 
denials for 'political' causeis generally linked to
the % of resources spent on lobbying, not on the issues involved. 
All bets may be off in the current political climate,
but I would get council from an lawyer experienced in non-profit law 
and go to your local branch of the ACLU.

-Adam

***********************

From: "Doug Hess" <DHess at frac.org>

Hi,

Based on the information you gave it's hard to tell what happened 
(or is happening) in your case, but you should obviously seek legal 
counsel. If you're at the UofMI try the law scool.  

The Independent Sector and the Alliance for Justice are two groups 
that do a lot of work helping nonprofits understand their political 
rights. Check out their websites for free papers to download on this 
topic.  

Doug Hess
Senior Policy Analyst
Food Research and Action Center
1875 Connecticut Ave, Suite 540
Washington, DC 20009
phone 202-986-2200 ext 3004
fax 202-986-2525  email dhess at frac.org

Please join us for our 2003 National Policy Conference20
in Washington, D.C., February 23-25, 2003.  Check FRAC's20
website for conference information, www.frac.org.

> .
> [ed:  please feel welcomed to copy COMM-ORG with your 
> responses to Jeri's query.]
> 
> From: Jeri Schneider <jeris at icpsr.umich.edu>
> 
> Hi folks,
> 
> I recently filed a 501(c)3 application for a local group that has been 
> organizing for peace and civil liberties since Sept. 2001. I was told 
> today by the IRS that we are likely to be denied tax-exemption, 
> because we are "dealing with issues that are sensitive at this stage 
> of the game." I won't go into all the details here, but suffice it to say 
> that it feels like the civil liberties clamp down that has become 
> pervasive is affecting our small group here in Ann Arbor, Michigan.  
> 
> I'm wondering if anyone knows of similar situations, where peace 
> organizations (or other progressive groups) have had trouble 
> gaining tax-exempt status, primarily due to the nature of the issues 
> with which they deal. I have access to information about groups 
> that have already been granted tax-exemption and are doing 
> similar work, I'm mostly in need of groups that have had difficulty 
> gaining 501(c)3 status.  
> 
> Thanks.
> 
> Jeri Schneider
> jeris at umich.edu
> 
> 
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