Common Legal Structures for Indivisible Groups

Unincorporated

An unincorporated group is a group that has not adopted any formal legal structure. However, when we refer to “unincorporated groups” throughout this FAQ, we typically mean groups that:

1. Have not adopted any formal legal structure;
2. Have not sought any tax-exempt status (such as 501(c)(3) or 501(c)(4) status); and
3. Are not registered as a PAC at the state or federal level.

For more info about engaging in electoral activity as an unincorporated group, click here.

501(c)(3)

A group will be considered a 501(c)(3) if they have sought tax-exempt status as a nonprofit charitable organization under section 501(c)(3) of the Internal Revenue Code. Technically, a group does not have to be incorporated to seek 501(c)(3) status, but many 501(c)(3)s have incorporated as nonprofit corporations under state law.

For more info about engaging in electoral activity as a 501(c)(3), click here.

501(c)(4)

A group will be considered a 501(c)(4) if they have sought tax exempt status as a nonprofit social welfare organization under section 501(c)(4) of the Internal Revenue Code. Technically, a group does not have to be incorporated to seek 501(c)(4) status, but many 501(c)(4)s have incorporated as nonprofit corporations under state law.

For more info about engaging in electoral activity as a 501(c)(4), click here.

Political Action Committee (PAC)

Political Action Committees (PACs) are organized for the primary purpose of raising and spending money to influence elections. PACs can be formed at the state or federal level and there are several types of PACs to choose from. The following descriptions are based on the PAC options at the federal level, but most states offer similar PAC structures.

• Contribution PACs: PACs that can make contributions to candidates are subject to contribution limits — both in terms of how much the PAC can receive from an individual contributor and how much the PAC can contribute to an individual candidate. Since corporations are prohibited from making contributions to candidates, corporations are also prohibited from making contributions to PACs that make contributions to candidates (note: the only exception would be a corporation covering the operating costs of a Separate Segregated Fund — more on that here).
• Independent Expenditure PACs: PACs that only engage in independent expenditures — also known as non-contribution, IE-only, or Super PACs — can generally raise and spend unlimited amounts of money on elections. Corporations, just like any other type of contributor, can give unlimited amounts of money to IE-only PACs.
• Hybrid PACs: the FEC also recognizes a hybrid type of PAC — also known as a Carey Committee or Carey PAC — that has both contribution and non-contribution accounts living within a single PAC entity. Each of a hybrid PAC’s accounts is still subject to the same rules as they would if they were housed in separate entities. For instance, a hybrid PAC’s contribution account would still be subject to contribution limits, and its non-contribution account could only be used to pay for independent expenditures.

For more info about engaging in electoral activity as a PAC, click here.

Important Note

If your group is considering incorporating, seeking tax-exempt status, or forming a PAC, we strongly suggest that you consult an attorney who can recommend the best legal structure for your group based on your group’s size and activity.