Can a 501(c)(3) Organization Change Into a 501(c)(4) Organization?

Is it possible for a 501(c)(3) organization to change into a 501(c)(4) organization? The short answer is no (Revenue Procedure 2017-5). But it may be possible for a 501(c)(3) organization to cause the creation of a 501(c)(4) organization and subsequently dissolve, leaving only the 501(c)(4) organization. This strategy has its own complications as we describe below. Before we get to that … Why Would a 501(c)(3) Organization Want to Change Into a 501(c)(4) Organization? Many people believe that it’s far more advantageous to be a 501(c)(3) charitable organization rather than a 501(c)(4) social welfare organization because only 501(c)(3) organizations qualify to receive deductible charitable contributions.* But 501(c)(4) organizations have more freedom to engage in activities that 501(c)(3) organizations either can’t engage in or can only engage in to a limited degree. For example, a 501(c)(4) organization can spend all of its money on lobbying so long as the…

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