What Is a 501(c)(4) Social Welfare Organization (504 c)?

An organization classified under section 501(c)(4) of the Internal Revenue Code is a nonprofit entity established to promote social welfare. These social welfare organizations are civic leagues or similar groups operated to further the common good and general welfare of a community. Their purpose is broad, encompassing activities like operating community centers, maintaining public infrastructure, or advocating for civic betterment.

Unlike some other tax-exempt organizations, the scope of a 501(c)(4) allows for a unique level of engagement in public policy and advocacy. This distinction shapes their operational requirements and their role within the nonprofit sector.

Core Requirements and Permitted Activities

To qualify for 501(c)(4) status, an organization must primarily engage in activities that promote social welfare. This “primary purpose” test means the promotion of the common good must be the organization’s main focus. Social welfare activities are broadly defined and can include actions like developing programs to address juvenile delinquency, constructing public parks, or publishing educational materials on environmental conservation. The work must benefit the community as a whole, not a select group of private individuals or members.

A characteristic of 501(c)(4) organizations is their ability to participate in lobbying and political activities. They can engage in an unlimited amount of lobbying, which involves attempting to influence legislation, as long as it relates to their social welfare mission. This differs from 501(c)(3) charitable organizations, which are strictly limited in their lobbying efforts.

These organizations can also intervene in political campaigns, such as by endorsing or opposing candidates for public office, but this cannot be their primary activity. The organization must balance its political campaign intervention with its broader social welfare work to maintain its tax-exempt status. A 501(c)(4) that spends money on political activities may be subject to tax on those expenditures.

A prohibition exists against private inurement, meaning the organization’s net earnings cannot benefit any private shareholder or individual. All funds must be dedicated to charitable, educational, or recreational purposes. This rule ensures the organization operates for public benefit rather than for the financial enrichment of its founders or directors.

Notifying the IRS and Applying for Recognition

An organization must notify the IRS of its intent to operate as a 501(c)(4). This involves electronically submitting Form 8976 within 60 days of the organization’s formation.

After the initial notification, the organization can seek an official determination letter from the IRS by filing Form 1024-A, Application for Recognition of Exemption. The application requires foundational documents, such as signed articles of incorporation and bylaws, a detailed narrative of all activities, and financial data. For established organizations, this includes financial statements for the current and three preceding years; new entities must provide a two-year projected budget.

The application package must be submitted electronically through the Pay.gov portal, as paper submissions are not accepted. An authorized representative must create an account, upload the completed Form 1024-A with all attachments, and pay the non-refundable $600 user fee. After submission, the IRS reviews the application, which can take several months and may involve requests for additional information before a final determination is issued.

Tax and Filing Obligations

Upon receiving a favorable determination letter from the IRS, a 501(c)(4) organization is exempt from federal income tax on revenue related to its exempt function. This means income generated from activities that directly support its social welfare mission is not taxed.

A distinction for these organizations is the tax treatment of donations. Unlike contributions to 501(c)(3) charities, donations made to a 501(c)(4) are not tax-deductible for the donor as a charitable contribution. Social welfare organizations are required to inform potential donors of this fact in their fundraising solicitations.

Maintaining tax-exempt status carries ongoing compliance responsibilities. All 501(c)(4) organizations must file an annual information return with the IRS. The specific form required—Form 990, Form 990-EZ, or Form 990-N—depends on the organization’s annual gross receipts.

Beyond federal requirements, most organizations also have registration and filing obligations at the state level. These commonly involve an initial registration with a state charity official and subsequent annual financial reporting. Organizations must understand and adhere to the rules in the jurisdictions where they operate or solicit funds.