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Groups do not receive tax-exempt status though Indivisible when they’re formed. Groups may, on their own, choose to apply for tax-exemption directly with the IRS or remain unincorporated. You can find more information on groups and common legal structures below. This means that Indivisible cannot provide proof of nonprofit status for group events, meetings, or expenses.
Indivisible groups most commonly adopt one of the following legal structures: unincorporated, 501(c)(3), 501(c)(4), or PAC.
Many Indivisible groups have chosen to organize and remain unincorporated. However, we have included some information about other common group legal structures should your group wish to explore those options. Please note that this guidance only discusses federal regulation.
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:
- Have not adopted any formal legal structure;
- Have not sought any tax-exempt status (such as 501(c)(3) or 501(c)(4) status); and
- Are not registered as a PAC at the state or federal level.
For more info about engaging in electoral activity as an unincorporated group, see below.
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 must incorporate as nonprofit corporations under state law.
501(c)(3)s may engage in some limited lobbying but are nonetheless prohibited from engaging in election activity that supports or opposes candidates for office. For more info about engaging in electoral activity as a 501(c)(3), see below.
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 must incorporate as nonprofit corporations under state law.
501(c)(4)s may engage in unlimited lobbying and some partisan election activity provided that partisan election activity is not the primary activity of the organization. For more info about engaging in electoral activity as a 501(c)(4), see below.
Political Action Committee (PAC)
Political Action Committees (PACs) are organized for the primary purpose of raising and spending money to influence elections. PACs may be formed at the state or federal level and there are several types of PACs as well. The following descriptions are based on the PAC options at the federal level, however 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.
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 be if they were housed in separate entities. For instance, a hybrid PAC's contribution account would still be subject to contribution limits and prohibitions, 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, see below.
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.
My group is unincorporated. What kind of electoral work can we do?
For the purposes of this FAQ, "unincorporated" means groups that:
- Have not adopted a formal legal structure;
- Have not sought any tax-exempt status (such as 501(c)(3) or 501(c)(4) status); and
- Are not registered as a PAC at the state or federal level.
Groups that pass those three qualifications are generally free to engage in electoral work on either the coordinated or independent expenditure (IE) side on an election-by-election basis. This means that unincorporated groups can essentially choose each election whether they want to coordinate with or work independently of any candidates, campaigns, or political parties.
BUT unincorporated groups that are spending money on elections may still be subject to reporting requirements and/or contribution limits, depending on whether they have decided to coordinate or work on the IE side. Depending on their jurisdiction and activities, they may also be subject to reporting requirements for their state or local campaign finance laws. For more info on reporting requirements and contribution limits, click here.
How an unincorporated group reports its activity depends on how the money is being spent. If an unincorporated group's electoral spending is being paid for out of individual group members' accounts, not a group bank account, then that spending will be treated as individual spending, and each individual would be responsible for keeping track of their own spending with respect to any reporting thresholds or contribution limits that might apply. If an unincorporated group's electoral spending is being paid for out of a group bank account, then the group should report that spending as a group, not on an individual basis.
My group is a 501(c)(3). What kind of electoral work can we do?
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.
Unlike 501(c)(4)s, 501(c)(3)s can't engage in any partisan political activity -- i.e., activity that promotes or opposes candidates for public office or political parties generally.
However, 501(c)(3)s can engage in some nonpartisan work around elections, including: voter registration, voter education, and issue advocacy, including hosting nonpartisan candidate debates.
Note: Because 501(c)(3) status significantly restricts a group's ability to engage in electoral work, we generally do not recommend that Indivisible groups seek 501(c)(3) status.
My group is a 501(c)(4). What kind of electoral work can we do?
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.
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 promoting or opposing a candidate for public office or a political party -- 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 program spending (although the IRS has noted that 40% is a permissible amount).
- Corporations -- including any incorporated 501(c)(4)s -- are prohibited from making contributions to federal candidates or party committees.
- 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 must exclusively work on the IE side when engaging in federal election work.
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 speak with a lawyer to ensure that your group is fully complying with tax and campaign finance laws.
My group is a PAC. What kind of electoral work can we do?
A political action committee (PAC) is a group that is formed 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 type of PAC determines the type of political spending a PAC can do.
Contribution PACs (also known as Traditional PACs) are able to make contributions to candidates, but are subject to contribution limits. Traditional PACs cannot accept corporate or labor contributions, and permissible contributions to the PAC are subject to individual contribution limits.
Non-Contribution PACs (also known as IE-only or Super PACs) can only engage in election work via independent expenditures, but can generally raise and spend unlimited amounts of money on elections.
Hybrid PACs -- PACs that include both contribution and non-contribution accounts within the same PAC entity -- can use either account, subject to that account's restrictions, but can't cross over between the accounts with respect to a single election without an internal firewall. See the contribution limits above for the restrictions on contribution and non-contribution accounts.