501c Limitations

viscousmemories · #1 06-29-2005, 06:38 PM

In this post (at IIDB), Don Morgan says:

Quote:

The Secular Web and the Internet Infidels Discussion Forum are operated by Internet Infidels, Inc., which is a registered 501(c)(3) nonprofit educational organization; all contributions to Internet Infidels are tax deductible. As such, Internet Infidels cannot take a major, active role in politics. In fact, it is required to do just the opposite.

I never knew that that prohibition existed, and I wonder how/if it limits the activism-oriented fora there. Does anyone know why non-profit educational organizations are prohibited from taking an active role in politics and what (if any) impact that has on their ability to host certain content?

LadyShea · #2 06-29-2005, 07:16 PM

Quote:

Originally Posted by viscousmemories

In this post (at IIDB), Don Morgan says:

Quote:

The Secular Web and the Internet Infidels Discussion Forum are operated by Internet Infidels, Inc., which is a registered 501(c)(3) nonprofit educational organization; all contributions to Internet Infidels are tax deductible. As such, Internet Infidels cannot take a major, active role in politics. In fact, it is required to do just the opposite.

I never knew that that prohibition existed, and I wonder how/if it limits the activism-oriented fora there. Does anyone know why non-profit educational organizations are prohibited from taking an active role in politics and what (if any) impact that has on their ability to host certain content?

It doesn't affect their ability to host anything as far as forum posts, or even hold an opinion or express that opinion as a group. What they can't do is make large donations to political candidates in the name of the NPO, use their funds to campaign for anyone, or use their name to lobby. I believe this is true of all non-profits.

For example, many churches tested this by actively campaigning for Bush (from what I have heard anecdotally). Had anyone wanted to push the issue, I think more than a few could have lost their non-profit status.

viscousmemories · #3 06-29-2005, 07:21 PM

Interesting. Any idea why that is? I mean... for-profit corporations are allowed to do all that, aren't they? Why the limitations on NPO's?

LadyShea · #4 06-29-2005, 07:29 PM

Quote:

Originally Posted by viscousmemories

Interesting. Any idea why that is? I mean... for-profit corporations are allowed to do all that, aren't they? Why the limitations on NPO's?

Because NPOs don't have to pay taxes and oftentimes are partially funded by the government. I think the thinking is there could be a conflict of interest.

viscousmemories · #5 06-29-2005, 07:33 PM

Quote:

Originally Posted by LadyShea

Because NPOs don't have to pay taxes and oftentimes are partially funded by the government. I think the thinking is there could be a conflict of interest.

Okay that's what I was thinking, but for-profit companies reap tremendous benefits from tax laws, so why wouldn't there be a perceived conflict of interest there?

Crumb · #6 06-29-2005, 07:35 PM

Because they already own the politicians.

LadyShea · #7 06-29-2005, 07:37 PM

Quote:

Originally Posted by viscousmemories

Okay that's what I was thinking, but for-profit companies reap tremendous benefits from tax laws, so why wouldn't there be a perceived conflict of interest there?

Because their primary reason for existence is to make a profit. They are businesses, they pay taxes. Yes, there is corruption.

NPOs are supposed to be social type organizations, not businesses, offering charity, education, or aid to benefit us all. For example, the ACLU is not a 501c. Donations made to the ACLU are NOT tax deductible...because they are active in the political arena.

viscousmemories · #8 06-29-2005, 08:24 PM

Ahh... okay that makes more sense to me now. I didn't know the ACLU wasn't an NPO. Thanks, Brandi. :1thumbup:

LadyShea · #9 06-29-2005, 08:33 PM

Quote:

Originally Posted by viscousmemories

Ahh... okay that makes more sense to me now. I didn't know the ACLU wasn't an NPO. Thanks, Brandi. :1thumbup:

Well, that's not exactly the case either though. They have a separate foundation that allows tax deductible donations.

From their website

Quote:

The ACLU is comprised of two separate corporate entities, the American Civil Liberties Union and the ACLU Foundation. Although both the American Civil Liberties Union and the ACLU Foundation are part of the same overall organization, it is necessary that the ACLU have two separate organizations in order for the ACLU to do a broad range of work in protecting civil liberties. This Web site collectively refers to the two organizations under the name “ACLU.”

Although there is some overlap in the work done by each organization, certain activities the ACLU does to protect civil liberties must be done by one organization and not the other. This is primarily in the area of lobbying. The American Civil Liberties Union engages in legislative lobbying. As an organization that is eligible to receive contributions that are tax-deductible by the contributor, federal law limits the extent to which the ACLU Foundation's may engage in lobbying activities. Therefore, most of the lobbying activity done by the ACLU and discussed in this Web site is done by the American Civil Liberties Union. By contrast, most of the ACLU's litigation and communication efforts described in this Web site are done by the ACLU Foundation

I think the NPO and tax laws are incredibly complicated.

viscousmemories · #10 06-29-2005, 08:54 PM

Aha! Even more interesting. Hm. I wonder why more corporations don't keep a non-profit entity under their umbrella to help them skirt certain tax liabilities. Or do they?

LadyShea · #11 06-29-2005, 09:04 PM

Quote:

Originally Posted by viscousmemories

Aha! Even more interesting. Hm. I wonder why more corporations don't keep a non-profit entity under their umbrella to help them skirt certain tax liabilities. Or do they?

Perhaps they do, like the Bill and Melanie Gates Foundation, but there are laws and requirements for non-profit status.