• Noah Maier

How to Give Political Money

Political giving is a brilliant way to have an impact on the causes most important to you. In fact, I'd argue that some political giving is the highest possible return on your giving. But it can seem like a mysterious world.

If you've given money away but had trouble with political giving, you're not alone.

First and most importantly, there's a series of three questions you should ask:

1. Do tax deductions matter to me?

2. Do I need to stay anonymous?

3. What geographic area is most important to me?

Three IRS designations matter for this discussion: 501c3, 501c4, and 527.

A 527 is what most people think of as political. For example, a political campaign is always a 527. Sometimes you'll hear about "SuperPACs or PACs." PAC stands for Political Action Committee, and it's a 527. If you give to your state's Democratic Party, that's a 527. 527 is the IRS designation for a "political entity."

Essential Notes on 527s:

They have to report their donors publicly.

Gifts are not tax-deductible.

There is a limit on how much people can give.

Next is a 501c3. This is also pretty easy; it's the designation for a regular non-profit. American Red Cross? Habitat for Humanity? Both are 501c3s.

501c3s are tax-deductible, and they cannot do partisan political work.

For example, Habitat for Humanity can't release a statement that says, "We hate Donald Trump and want him to lose." They will put their tax-deductibility status at risk. But (and here's the exciting part), 501c3s can work to further democracy. That means they can do things like register voters or file lawsuits. 501c3s also allow for anonymous donations, for excellent reasons that we won't get into here.

Essential notes on 501c3s:

There is no limit to how much money they can receive.

Gifts are tax-deductible.

They do not have to report their donors publicly.

A 501c4 is the most complicated because it's halfway between a 527 and a 501c3. It's a non-profit, but it is also allowed to do SOME political work. How much depends on some very nuanced rules that don't matter if you're a donor. Trust the organization (and their lawyers) to know their limits.

Essential notes on 501c4s:

Gifts are not tax-deductible.

Gifts can be anonymous.

There is no limit to how much money they can receive.

Here's a cheat sheet to answer the first two of those three important questions:

First, tax deductions: A 501c3 is tax-deductible. A 501c4 and a 527 are not.

Next, anonymity: Do you need to stay anonymous? If you do, you'll want to work with a 501c3 or a 501c4. A 527 will usually not allow you to be anonymous.

But what about the last question, geography?:

If you're international or giving internationally, you'll be working directly with a 501c3. The rest of this document applies exclusively to the United States. Here in the good ol' USA, folks have different objectives. Some people want to support their home state. Others want to work on national races like Senate and Congress.  Most famously, many people want to help their presidential candidate win the swing states. Whatever you do, decide which geographic location(s) matter most to you.

One final note

These organizations often can't work directly with each other (or "coordinate"). Otherwise, I could set up a 501c3, keep everyone anonymous and limitless, and the c3 could do all sorts of explicitly shady political work. No one would know who was funding it. That's terrible news. Campaign and non-profit workers are conscientious about how to talk with each other to avoid coordination. That's one of the reasons political money has a bad reputation. They can't always speak freely with each other, and it can come across as "shady".

But you won't have to worry about that most of the time. As long as you answer the three questions above (taxes, geography, and anonymity), you will be fine. Leave the rest to the campaigns and lawyers to muddle through.

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