How do you financially organize as an activist organization?

Factual Questions
1

I’ve been trying to figure this out but I guess I just don’t know the right keywords, and there’s a bad signal to noise ratio. Let’s say you’ve formed a new activist organization (political but nonpartisan) and everybody on the steering committee has, like, adjacent experience but not actual experience with this sort of thing.

You want to start asking for donations because you need supplies and bigger meeting rooms. You’ve put shirts up for sale on Zazzle but you don’t know where your cut is going to go.

Do you have to… do something? Register as a 50something? Can you just operate like your mom’s knitting club up until a threshold and what is that threshold? Can you get a bank account as just a political… club? Who’s gonna suck it up and be treasurer? We’re not trying to raise money to donate to campaigns, we need supplies and a printing budget and rooms and eventually maybe things like billboards. Permits. That sort of thing.

Does anybody know anything about the requirements here, or just point me in the right direction? I keep finding things that don’t really seem to apply.

2

First, get a lawyer. Seriously.

OK, you’re mixing a couple of different things. You don’t need a permit or an organization to raise donations or spend money. What you want is a legal way to account for that money to the IRS. That’s where 501(c) organizations come in. They are IRS classifications.

That sounds like what you want. But if not, there are lots of other possibilities on that page.

Now talk to the lawyer I told you to get.

3

I don’t think there’s any restrictions on how you organize … it’s a free country and you can use any of the normal types of business organizations …

Ah … you’re implying you want to be tax-exempt … get a lawyer to draw up an appropriate charter that complies with whichever “non-profit” code that would be applied here … then follow that charter and tax code to the letter …

ETA: Thanks for the link, Mapcase, looks like a 527 organization is what the OP wants …

4

Like all legal questions, the answer depends on the particular facts of your situation, your desires, and where you live. You should find a local lawyer who will chat with you about this pro bono.

That said, here’s some very general information:

There are two different legal steps that many activist groups take. One is to incorporate your organization, which is a process under state law, and it protects you from some forms of personal liability based on actions taken by or on behalf of the group. So, for example, if your t-shirts turn out to infringe a copyright (or someone just says they do and sues you), it’s not your house that’s on the line–it’s just the group’s meager resources.

The other step is to seek tax-exempt status as a 501(c) organization (usually (c)(3) or (c)(4)), and under state law. That allows donations to you to be tax exempt. And to the extent you have income (i.e., something other than gifts), to change your tax burdens. Additionally, to be eligible for lots of funding streams–like community grants–you’d need that status. Some states also require you to have corporate or tax-exempt status in order to make charitable solicitations, though some of these laws are unconstitutionally overbroad.

Generally speaking, there is no monetary threshold at which you are obligated to incorporate or register for tax-exempt status. Nor do you need to be incorporated in order to buy billboards, get protest permits, etc. You can operate as an unincorporated association indefinitely at any size. But as the money and activities ramp up, the tax implications can start to get complicated and the risk of liability increases. Balanced against that are the expense of going through all the steps, the required procedural framework (you’ll need operate with a board, officers, etc. and follow rules for corporations in your state), and ongoing reporting requirements.

Only you, in consultation with a lawyer, can decide whether the costs outweigh the benefits for your organization. So make finding a pro bono lawyer your first step.

5

Just as a small data point - I’m involved in two groups that collect money. One is the alumni association for my high school band, the other is a PAC started for a local election.

The alumni group collects money from performances. We got a few people together to be “the committee” Two of the members of said committee went to a local bank branch and opened a bank account, which has one member’s name on it and the other as a co-signer. We can put money in, take money out, write checks and accept checks. There is probably a debit card with it too. We didn’t file for 501(c)(3) status because it was too heavy of a process for our little group. We put about $500-600 a year into the bank account and spend $100 or so. That’s about all there is to it.

For the PAC I volunteered to be treasurer. I went to the county BOE and got the paperwork (and subsequent Folder Of Rules) and filled it out and got it stamped and was set. I also took 5 minutes and got an EIN from the IRS by filling out a form online. Then I went to a local bank branch and got a bank account under my name for this PAC. I was all set, and could collect contributions, write checks and use the debit card. I had to file paperwork and keep track of everything before and after the election. The election is over but my PAC is still active and we can use it for more stuff.

So…if your group is focused on affecting elections, you may want to start a PAC or at least look in to PAC rules for your state. If nothing else, the amount of paperwork you do and the rules that you follow can make you feel better, personally, about taking other peoples’ money. Otherwise, you could just go with another organizer and talk to a friendly local banker and get a bank account set up and there you go.

I do agree that consulting a lawyer is never a bad first step.

6

We need to see if one of our (many, but largely silent, probably because people joined a lot of stuff November 9 and then stopped notifications) members is an attorney who can counsel us a bit.

I was under the impression that a PAC is specifically created to raise money, as opposed to being an organization that may raise money but largely exists to do other things (march, call, have events, etc). Is that not the case?

7

Also, I am aware that that incorporating as any kind of nonprofit is a Thing. It takes time and money; we don’t want to do that if we don’t have to at this juncture. We just want to buy postcards and stamps and rally permits, and, you know. Poster board.

8

Check out this article: http://www.localvictory.com/fundraising/your-own-political-action-committee.html

Our PAC was created as a way to officially be able to raise money for and electioneer for a specific campaign. We wouldn’t have been able to pool money and put up “Vote for…” signs or send out “Vote for…” literature without having a PAC. And as I said we don’t need to dissolve our PAC because the election is over, we can continue to use it to electioneer for other issues.

There’s no requirement that a PAC collect money and as far as I know there’s no requirement that a PAC use their qualifications to post signs and send out literature. But if you want to do either of those things, having a PAC makes it easier.

But, each state is different about their rules so you’ll need to check out what your state says about PACs when you’re trying to decide.

9

You might not need a lawyer, but one is useful. You also might go talk to similar groups in your area who have good reputations and have been around for a while to talk to them about how they organized.
Also, the IRS seminars and information on the tax issues. (They used to do free live seminars, but they may have moved all to the web.)

As for it being a Thing - once you’re gathering money together to begin influencing politics, you’re doing a Thing. It makes sense for there to be hoops and for you to go through them correctly.

10

Maybe nitpick, but this is not quite correct. Someone who makes a contribution to a 501(c)(3) may claim that as a charitable donation tax deduction for their personal income taxes, but they may NOT do so for a contribution to a 501(c)(4). [On the other hand, 501(c)(4) organizations are allowed to more lobbying and election-related activities]

Both (c)(3) and (c)(4) organizations do not have to pay corporate income tax on the income to the organization; there are other possible non-profit organization types that are also exempt from corporate income tax.

It’s up to you and your circumstances, but if at this point all you’re really buying is postcards, stamps and poster board (assuming not thousands of dollars worth of poster board), I don’t see a whole lot of benefit to a formal corporate structure.

However, if you’re getting permits for events, there could be a point where liability concerns are a thing. Bigger the event, the more it’s a concern.

11

Adding - I just found this handbook on starting a non-profit for Washington. Your state may have something similar (and it is likely that the rules in your state are similar - looking through that might give you an idea the types of things you’ll need to do even if it isn’t exactly the same).

I love how chapter 1 is “Are you sure you want to do this?” if I knew then what I know now, the answer would be “Hell No.”

12
  1. It really doesn’t take that much time & money to incorporate. Not compared to the time & money to do mass mailings or orghanize rallies!
  2. The point of incorporating is to legally separate all of you individuals from the group. Un-incorporated, those of you involved are personally responsible for any damages or injuries caused by the activities of the group. Like if a spectator falls down & is hurt at your rally – they could sue all of you for their injuries, and if they win, collect by seizing your bank account, your car, or your house. You don’t want all your personal assets at risk that way, especially if your organization is a political one, unpopular with soome people.