Working Together: Affiliation and Coalition Basics


Team work makes the dream work.  While nonprofits normally have their individual policy agendas and platforms, sometimes working with an affiliated organization, most also join in coalition with others in order to more effectively drive policy change.  This episode addresses the differences between 501(c)(3) and 501(c)(4) organizations so that coalitions can think more strategically about how to use both within a campaign.

Our hosts for this episode:

Leslie Barnes Ronnie Pawelko Jen Powis

The Different Types of Nonprofits That We’ll Be Talking About Today

Tax lawyers are not creative when it comes to naming conventions. 501(c)(3) refers to the Tax Code provision that defines the creation of a nonprofit public charity.

That’s right, there’s 501(c)(1) through (c)(29).

    • 501(c)(3) organizations are those typically referred to as nonprofits: and are designed to be tax-exempt so long as they are organized and operated for religious, charitable, scientific, literary, or educational purposes. We’ve linked to the law in our show notes so you can see the long-winded version.
    • Organizations that are also tax-exempt but found under 501(c)(4) of the Tax Code are referred to as social welfare organizations.
      • A social welfare organization is defined as a civic league or an organization operated exclusively for the promotion of social welfare.
      • These 501(c)(4) organizations will look a lot like public charities and are often referred to as nonprofit.

The key takeaway is that there are lots of different types of nonprofits — organizations that do not pay a federal income tax on the money they collect at the end of the year. And because these organizations are under different sections of the tax code, different rules apply.

That’s why tax lawyers are very creative when it comes to strategy — you can find all sorts of ways to craft language to meet what an organization can do, and to use money to its fullest extent possible, even when it is restricted in use.

Lobbying and Partisan Work

  • A (c)(3) can lobby and do advocacy but is expressly prohibited from engaging in partisan work, anything that supports or opposes candidates running for public office.
  • A (c)(4) must have as its primary purpose the same types of activities that a (c)(3) can do (advocacy and lobbying) but can also engage in partisan candidate work during elections so long as it is only a secondary activity for the organization

Secondary Purpose

What is secondary? Well, generally that means less than 50% but conservative attorneys often recommend that partisan candidate work is less than 40% of the organization’s total activities.

    • So (c)(4) can do everything the (c)(3) can do but can also hold candidates accountable, endorse candidates, compare candidates to the org’s issues.

Affiliated Structures

A (c)(3) and (c)(4) can also be related organizations and share employees and resources.

    • Common paymaster, grants, and resource agreements are the behind-the-scenes details that make affiliated organization relationships work — with really only the common paymaster visible to the staff as it results in one paycheck.
      • So the code provides 4 different ways for common paymasters to be supported, and one of the easiest is that the (c)(3) and (c)(4) have at least 50% overlap on the board. Another one of the tests is that the organizations share 30% of its employees.

When it comes to engaging in advocacy, affiliated organizations face many of the same issues when deciding what activities to engage in. The primary issue is always how to ensure the (c)(3) is following the rules that apply to its tax structure.

Example of Coalition Work with (c)(4)

Sometimes the back office flow of money needs to be discussed in coalition when talking about a coalition where the groups need to be more strategic in who pays what. Because a (c)(3) coalition member has to be clear about how its money and name are being utilized.

For example, sometimes the coalition members agree to work together on a policy issue but recognize that each member is going to do different types of activities. Always be clear with your brand and where your dollars are being used. Or like a loose coalition, mostly acting under your own name but strategically trying to stay together and pull different levers. The goal is to not work at cross purposes or undermine each other.

    • Pledge Cards by the (c)(4)
      • A (c)(4) organization can compare its mission to whether the candidate agrees with its mission. A (c)(3) cannot.
        • Example: Vote for ProChoice Candidates Like Candidates x.
      • When there’s a flyer that uses logos, the (c)(3) logo cannot appear on a coalition flyer that is partisan.
    • Knocking on Doors
      • A (c)(4) organization could wear the nonprofit’s shirts and provide volunteers to specific campaigns with their issue.
      • For example, there is a pro-immigration candidate and the (c)(4) organization provides refugee services. The (c)(4) can walk with flyers saying this candidate supports refugees.
      • In coalition, the (c)(3) has to think about the political perception issues when working in coalition with (c)(4) organizations that do this type of work.
    • Sharing Resources
      • When a (c)(4) organization works with a (c)(3) organization, sometimes the (c)(3) organization will provide a grant for lobbying purposes to the (c)(4). The (c)(3) has to count that money on its 990 as lobbying, as does the (c)(4), but in this way, the (c)(3) can sometimes more easily account for policy work since it is providing a lump sum. Sort of like a contractor relationship. Similarly, if the dollars aren’t all going to lobbying, the (c)(3) and the coalition must know where the money is going. The budget for the coalition has to be understood by all the parties. For example, the coalition could issue the “dues request” or “funding request” outlining how much is lobbying, education, etc.
    • Websites
      • A shared coalition website has to remain nonpartisan and cannot have the endorsement slate. The two click idea — that the (c)(3)reference to the (c)(4) website land on something (c)(3) permissible. Or even use a pop-up window.

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