Many people have told us they’re confused about what a 501(c)(4) is and how it works. It’s a good question and the answer can be confusing. First of all, a 501(c)(4) is a non-profit. In our case, a non-profit corporation that is permitted to engage only in certain kinds of activities. We operate primarily as an advocacy organization, but the law does allow us to participate in electoral politics (in ways similar to a political committee, but with enough differences that a 501(c)(4) is not classified as a political committee), as long as it is not our primary activity.
Attached to this post are two memos drafted by our counsel at Harmon Curran and addressed to our executive director, Dave Oberting. They detail the rules and regulations governing making contributions to a 501(c)(4) and the rules governing the political activity that a 501(c)(4) is generally permitted to engage in. To make it even more complicated, we also operate a 501(c)(3), the Economic Growth DC Foundation. The foundation operates only for charitable purposes — conducting education policy research and educational programming — and engages in very limited advocacy and no political activity.
The c4 and c3 share office space and personnel, but they are legally separate entities and their budgets are segregated. We try to make it as easy as possible for potential donors. You can contribute to the 501(c)(4) to support our advocacy and political activities on a non-tax deductible basis, or you can contribute to the 501(c)(3) to support our charitable work on a fully tax-deductible basis.