US Tax Code — 501(c)(3) and 501(c)(4) Organisations

Summary

IRC §501(c)(3) provides tax exemption and donor deductibility for charitable, educational, religious and scientific organisations that are prohibited from partisan political activity and substantially limited in lobbying. §501(c)(4) organisations (social welfare) can engage in political activity as their primary purpose and can lobby without limit, but donations are not deductible. The distinction governs diaspora advocacy organisational structuring.

Relevance to the diaspora

Tamil-American diaspora organisations structure as 501(c)(3)s for fundraising efficiency and as 501(c)(4)s or PACs for political lobbying and electoral advocacy; material support law applies to both types, requiring careful due-diligence on grant recipients and partnerships.

Key provisions

• §501(c)(3) — charitable exemption; no partisan activity; limited lobbying
• §501(c)(4) — social welfare exemption; political activity permitted
• §509 — private foundation vs. public charity distinction
• §4941 — prohibited transactions for private foundations

Primary source

Related entries

• → 18 U.S.C. §§ 2339A & 2339B — Material Support to Terrorism (US)
• → Income Tax Act (Canada) — Part I.1 Registered Charities (CA)