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. More on that here.
501(c)(4)s are permitted to engage in electoral activity, but that activity is subject to two key restrictions:
- Partisan political activity — i.e., activity supporting or opposing a specific candidate for public office — can’t be a 501(c)(4)’s “primary purpose.” The IRS has never defined the term “primary purpose,” but, at the very least, partisan political activity should not account for more than 50% of a 501(c)(4)’s total activity.
- Corporations — including any incorporated 501(c)(4)s — are prohibited from making contributions to federal candidates. Since coordinated expenditures are treated as in-kind contributions, this also means that corporations are prohibited from coordinating their electoral spending with candidates, campaigns, or political parties. This means that corporations can exclusively work on the IE side of federal elections.
In summary, 501(c)(4)s can’t spend more than 50% of their total activity on partisan political work and can’t coordinate their electoral spending with candidates, campaigns, or political parties. If your group has sought 501(c)(4) status or incorporated as a nonprofit with the intention of seeking 501(c)(4) status, you should be talking with a lawyer to endure you are fully complying with tax and campaign finance laws.