Affiliated Organizations: Sharing Employees

It is becoming increasingly common to see 501(c)(3) organizations affiliated with 501(c)(4) social welfare organizations or 501(c)(6) business leagues. Such affiliations provide an ability to coordinate activities and share resources to further a common goal. But the affiliated organizations must maintain appropriate separation to mitigate against the risks of (1) liability ascending from one organization to the other and (2) attribution of one organization’s activities to the other. The 501(c)(3) organization must be particularly careful to ensure political intervention activities of an affiliated organization are not attributed to the 501(c)(3) organization due to its control of, or provision of resources to, its affiliate. Accordingly, the 501(c)(3) organization should generally make sure that it pays only its fair share for shared resources, including for costs related to “shared” employees, if such resources may be used by its affiliate to engage in…

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