Nonprofit Political Engagement: The Roles of 501(c)(4) Social Welfare Organizations in Elections and Policymaking

2.2 Social Welfare Organizations

Researchers have not paid much attention to social welfare organizations, perhaps because it is difficult to identify and describe them. They consist of many membership groups, parent-teacher associations, sports and social clubs, seniors’ groups, and other organizations that would seem to be identical to 501(c)(3) charities (Koulish 2016). Social welfare organizations are sometimes freestanding and local organizations. They may be aligned with a national or state organization as affiliates or chapters. Other 501(c)(4)s are affiliated with related charities and or political action committees (PACs) (Schadler 2022). Most attention is directed toward the large policy advocates: the National Rifle Association, the AARP, the League of Women Voters, the NAACP, and other national organizations organized as stand-alone entities or membership organizations with state and local chapters. These groups and their leaders frequently make headlines for controversial activities or high-profile engagement in political campaigns and debates.

For example, in the summer of 2019, both Wayne LaPierre of the National Rifle Association (Hakim 2019) and Leana Wen, ousted president of Planned Parenthood (Bernstein, Cha, and Goldstein 2019) were featured in the national press for controversy about their leadership. Around the 2020 U.S. Election, several politically active, member-based (c)(4) organizations were highlighted in national news and social media accounts for their contributions to turning out the vote in communities of color and helping win key elections in battleground states. These include organizations such as Living United for Change in Arizona, Voces de la Frontera in Wisconsin, and Fair Fight Action in Georgia, founded by the well-known activist and former gubernatorial candidate, Stacey Abrams. Entities on both the right and the left also have been exposed for a “shadow political infrastructure” that has infused billions of new dollars from big money donors into partisan politics (Vogel and Goldmacher 2022).

These examples scratch the surface of the complex constellation of individuals, organizations, and networks at play. 501(c)(4) organizations are a widely heterogenous category that includes groups, on the one hand, that seek to avoid donor disclosure and disguise their agendas as they funnel money into political activities. On the other hand, many organizations fulfill their social welfare missions in service to their members through permissible, member-driven activities. This dynamic points to the necessity for clear categories and frameworks to understand and analyze three phenomena: (1) the shifting landscape of politically-oriented nonprofits and the growth of new political infrastructures; (2) the roles and relationships of member-based, politically active (c)(4) groups; and (3) the potential unintended impacts on membership groups of proposed laws and regulations designed to stem the flow of money from undisclosed dark money sources into the political process.

Some scholars characterize the 501(c)(4) category as a mélange of organizations that for one reason or other, could not qualify for charitable status. Others think of them as primarily advocacy organizations (Aprill 2018; Hill and Mancino 2002; Hopkins 2007), which has become the primary way of describing them, an inaccurate characterization as further research has revealed. The advocacy view of 501(c)(4)s was reinforced in the aftermath of the Supreme Court’s decision in Citizens United vs. Federal Elections Commission (2010). With the Citizens United ruling, (c)(4) organizations were able to engage in unlimited lobbying and significant campaign activities while shielding donor identities which made them the organizational form of choice for many types of political activities. As Jane Mayer (2016) documents, conservatives bankrolled a network of organizations that conducted political campaigns and lobbied on an unprecedented scale. More recent investigative reporting documents increasing use of these groups by liberal actors intent on influencing key electoral outcomes (Vogel and Goldmacher 2022).

Many smaller organizations have benefited from opportunities afforded by the (c)(4) status to expand their repertoire of engagement and advocacy activities, working to improve the material conditions of their members and communities (Axt 2019). In contrast, some (c)(4) entities have been established to direct money into partisan political campaigns. In the wake of Citizens United such organizations garnered high profile attention as wealthy donors and political elites created and funded (c)(4) organizations to conceal donors and infuse resources into politics. This dynamic elevates the importance of studying 501(c)(4)s so that policymakers considering regulatory reforms have a clearer understanding of the diversity of activities and types of engagement by such groups (Miller 2019).^[6]

3.1 Methodological Challenges

Developing the dataset of 12,000 politically active organizations revealed four relevant methodological issues that impact appropriate sampling approaches for future research. First, there is a significantly heterogeneous mix of organizational type, affiliations, ideology, issue focus, and approaches to advocacy and action among the organizations we identify. These include stand-alone organizations, related organizations, advocacy funds of philanthropy, chapters of national organizations, and national intermediaries that provide advocacy and political pathways for members. Second, the need to distinguish these groups from one another is a key issue, and with the wide diversity of organizations in the sample, it is challenging to draw conclusions about the entire group. Third, qualitative investigation is necessary to decipher the extent to which these groups engage in electoral and partisan policymaking activities. Only with qualitative inquiry such as web searches, textual analysis, and interviews can we differentiate among the heterogeneity of organizations and begin to understand the array of structures, activities, funding relationships, and outcomes of these organizations. Finally, our efforts to verify the data indicated the clear limits to the IRS data files and the NTEE classification system for this type of research. Small organizations, informal groups, those embedded in larger structures, and some affiliates of national organizations may not file IRS Forms 990, or they may provide little information. Some organizations are not properly classified or classified at all. These limitations must be addressed with technology for keyword searches of missions and program activities and qualitative inquiry.

3.2 Analytic Framework

Once we identified the dataset of politically active 501(c)(4) organizations, distinguishing among them was the next step. In politically active 501(c)(4) organizations, advocacy and civic action activities can be elements of organizational strategies that target members, public officials, and policy elites, as well as the general public to accomplish their goals. Organizations can incorporate these activities to achieve dual missions – to engage members in political action while also influencing policy outcomes. However, not all politically active 501(c)(4)s engage members or seek to expand their participation in politics and policymaking. Finding those that do this work is our goal.

The analytic framework focuses on providing conceptual boundaries for defining engagement activities and understanding the organizational form, characteristics, operating contexts, ecosystem connections, and outcomes of member-based, politically active 501(c)(4)s. We characterized the organizations based on how they engage members and constituencies in civic and political action. We also distinguished characteristics that facilitate engagement and desired political or policy outcomes, such as purpose, goals, and program structure. The framework provides an efficient approach for identifying and categorizing organizations that engage members in politics and policymaking and those that rely on their 501(c)(4) status for other permissible purposes such as providing a mechanism for funding policy initiatives and campaigns.

The four categories of politically active 501(c)(4) organizations include: (1) national advocacy organizations; (2) local and state member organizations; (3) (c)(4) funders; and (4) shell entities. As indicated above, this is a starting point to guide future research. They are broad categories that can be subdivided and refined with additional investigation. Organizations that are national advocacy organizations or local/state member organizations primarily have members and an issue agenda based on the interests of those members. 501(c)(4) funders and shell entities also have specific issue agendas but do not have a membership that they engage in advocacy and political action. Table 3 provides examples of those organizations that are member-based and politically active.

1. National advocacy organizations: Large organizations focused on specific policy issue agendas. These groups include member serving associations, issue advocacy and infrastructure organizations that support the work of state or local advocacy organizations as intermediaries and with technical assistance. Some have a large membership base of either individuals or organizations, others do not; some have local or state affiliates or chapter members.

2. Local/state member organizations: Heterogenous local and state organizations that include professional associations formed to support the interests and needs of a particular group, profession, or field; affiliates or chapters of national organizations; and community-based or grassroots, volunteer-led organizations formed around a particular geography, issue, concern, or identity.

3. 501(c)(4) Funders: Entities that are established as either institutional “action funds” or funding intermediaries that pool resources to support the activities of (c)(4)s. Both funder types typically support local organizations, advocacy agendas, or other policy or political campaigns.

4. Shell entities: Dark money groups that are established as pass through entities to advance and fund partisan political objectives. Their names often disguise their goals, and their documents obscure the interests behind their activities.

These categories clarify what makes politically active organizations distinct from one another, considering how they are structured, what purpose they serve in advancing a social welfare mission, and what types of activities they prioritize. The categories also support analyses that focus on those (c)(4)s that have members (national advocacy organizations and local/state member organizations) and those that do not (c4 funders and shell entities).

In the following discussion we provide an example application of the framework by exploring organizations that we characterize as “local/state member organizations.” It is within this group that we find the politically active, member-based grassroots organizations that are the focus of our research. While these organizations are typically connected to 501(c)(4) funders and other national organizations, the targeted focus on the local and state organizations enables us to describe and analyze those groups that are organized around a specific geography and draw their membership from specific constituencies. We apply the framework in the following discussion to illustrate how it can be used to explain one group of politically active, member-based 501(c)(4)s.

4.1 Engagement

Member and constituent engagement is a central activity that distinguishes politically active grassroots 501(c)(4) organizations from other (c)(4)s (Guo and Saxton 2010; Han 2014). Groups that are oriented to grassroots engagement are embedded in local communities. Local policy issues and community-identified needs and interests drive organizational mission and goals. Using community organizing strategies such as door-to-door, in-person canvassing, one-to-one meetings with new members, and house meetings focused on specific community issues, these organizations recruit and train members as leaders and spokespeople. The organizations we study use professional staff to train and support directly impacted people for citizen action and advocacy (Han, McKenna, and Oyakawa 2021), unlike organizations that typically have professional staff who serve as lobbyists and advocates for members and who speak on behalf of a constituency (Minkoff, Aisenbrey, and Agnone 2008; Skocpol 1999; Walker 2014).

Members in politically active grassroots 501(c)(4)s learn the tools for democracy such as deliberation, shared decision making, power analysis, public speaking and communication, and collective mobilization.^[9] Typically in partnership with a 501(c)(3) related organization, leadership development and civic engagement trainings are regularly offered to constituents and members to prepare them for increasingly significant participation in public actions and interactions with public officials. As members develop and practice civic engagement skills, organizations activate members for action through campaigns. Campaigns are structured to involve members in voter registration, education, and turnout; public forums and press conferences; legislative advocacy (the “inside game”); rallies and protests (the “outside game”); and corporate or government accountability (Pekkanen and Rathgeb Smith 2014, 5–6). Most importantly, with 501(c)(4) status, organizations can participate in partisan activities as long as they are not the primary activities, enabling them to run partisan get-out-the-vote campaigns and also recruit, train, and endorse candidates. The member recruitment, leadership development, and public action functions of these organizations are essential elements of their pro-democracy role (Christens, Gupta, and Speer 2021; DeFillipis, Fisher, and Shragge 2010; Han 2014; Wood and Fulton 2015).

4.2 Organizational Characteristics

The use of organizational characteristics reported on IRS Forms 990 such as mission statements and financial records are useful for nonprofit research that investigates patterns of similarity and difference. We use a mix of quantitative and qualitative characteristics to explore the structure and programs of politically active grassroots (c)(4)s. High capacity politically active grassroots 501(c)(4)s employ fully the partisan and nonpartisan advocacy levers that the (c)(4) legal structure allows while also engaging their members in civic actions such as rallies, protests, public forums, and other tactics that target public officials (Post and Frank 2019). The (c)(4) structure permits them to exercise partisan policy influence in electoral campaigns, and other collaborations that help to achieve policy goals, along with core engagement activities including constituent participation in civic action, leadership development of members, and ongoing mobilization for electoral and legislative campaigns. Affiliated organizations and coalition structures offer organizations more options for increasing engagement in partisan politics and broadening their reach and influence in elections and the policymaking process (Schadler 2022).

Public charities may opt to create or affiliate with a (c)(4) legal entity to avoid the boundaries of permissible (c)(3) nonpartisan advocacy activities or to expand the scope of their advocacy strategies to include partisan undertakings. These organizations also may form PACs and join coalitions or alliances with peer organizations and labor unions. Grassroots organizing groups partner with other nonprofits with various tax statuses and engage in inter-organizational collaborations like formal alliances or temporary campaign coalitions as a core component of their social change strategies. These mechanisms help organizations achieve policy objectives through collaborative entities, pooling organizational and financial resources in ways that magnify impact and increase the likelihood that policy goals are achieved (Tattersall 2010; Van Dyke and McCammon 2010).

Organizations that have (c)(4) status can spend more on policy advocacy with fewer restrictions than (c)(3) organizations with similar goals. The (c)(4) structure gives organizations the flexibility of a wider range of political strategies to effect policy decisions and electoral outcomes, such as ballot measures to increase the minimum wage or local candidate elections for city council, county commissioner, and district attorney. Strategically, grassroots organizations seek to increase the civic power of their members and organizations. Organizing as social welfare (c)(4) entities, becoming affiliated organizations with other (c)(4) and (c)(3) legal entities, or joining coalitions provides organizations the structural and legal context for policy impact.

In sum, we have observed three trends among grassroots organizations. As noted, some grassroots (c)(3) organizations will establish a “sister” (c)(4) organization in which they develop resource sharing agreements that specify the staffing and financial relationships between the entities. Others form initially as a (c)(4), such as the organization behind the large-scale gun control mobilization in 2018, the March for Our Lives and The March for Our Lives Action Fund. Third, more recently established local and state grassroots organizing groups have been reorganized or merged from previously existing community-based organizations. For example, when ACORN organizations disbanded between 2009 and 2010 following a widely publicized scandal over the legality of their services and programs, new entities formed as leaders, community groups, and former ACORN organizers reimagined their missions, goals, and strategies for building civic leadership and winning progressive policy changes. Reorganizations and mergers of social movement organizations also have been the result of increased competition for financial resources and recognition as well as efforts by local leaders to create more durable structures for greater policy impact and political influence (Healey 2015). For example, Take Action Minnesota, New Virginia Majority, and Colorado People’s Alliance were established within the last decade as statewide organizations intended to produce sustainable policy wins that could directly address poverty and inequality.

In addition to their ability to create and align with complementary organizations, participate in alliances with other nonprofit advocates, and collaborate with unions, politically active grassroots (c)(4)s benefit from other organizational structures and capacities to achieve their goals. Findings from Post and Frank (2019) indicate that a mix of internally and externally focused capacities facilitate participation in politics and policymaking, and advance organizations’ ability to win campaigns and change policy. These include internal capacities common to healthy organizations such as executive leadership, well-articulated staff management structures, diverse fundraising capabilities, and financial and legal expertise, as well as externally focused capacities including the ability to build and maintain relationships with peer institutions, public decision makers, and policy elites. Also required are skills necessary for direct political action including the ability to recruit and train members and a high degree of proficiency in running and winning campaigns.

4.3 Context

Politically active grassroots (c)(4) and related organizations operate within contexts that we describe as “ecosystem embeddedness.” Whether stand-alone entities or hybrid structures, these organizations are embedded within broader networks and policy domains and operate as part of a larger field of action that supports them with financial and human resources, training, and capacity building (Fligstein and McAdam 2012; Stone and Sandfort 2009). They are connected to other entities like funders and policy coalitions while remaining grounded in communities in which they try to build and access power (Fung 2020). Position and reputation within the ecosystem impact their ability to leverage capacity, resources, and influence over the strategic direction of their policy campaigns (Barsoum and Farrow 2020; Post and Frank 2019). Connections beyond the local environment and out to state and national organizations and funders can provide avenues to resources. Being embedded within these relationships fuels organizations’ ability to fulfill their missions and achieve their goals.

Figure 2 depicts the context for the organizations featured in our research. While there is commonality in organizational structure and function, most politically active grassroots (c)(4)s and (c)(3)-(c)(4) related organizations exist within complex environments that are characterized by different collaborative and networked relationships. These inter-organizational relationships – and the ecosystems that form as a result – are contingent on local political context, personalities of local leaders and policy elites, dynamics of trust, cooperation, and collaboration, and relationships that extend beyond the local context.

Figure 2:

Ecosystems of politically active member based 501(c)(4) organizations.

Politically active grassroots (c)(4) organizations can be linked as chapters or affiliates of national organizations like America Votes, Planned Parenthood, the NAACP, and the Sierra Club organizations.^[10] They can rely on state and national intermediaries for training, technical assistance, strategic advice and funding. Collectives of donors can serve as important funding vehicles for these groups. For example, “donor tables,” a term coined by progressive activists, come together to support local and state campaigns and typically are comprised of individual donors, representatives from private philanthropy, and progressive elites that may orchestrate the flows of financial resources into and among campaigns (Hersh 2020). The California Donor Table is one such example. A project of the national intermediary, Tides Advocacy, The California Donor Table’s mission is to “build a strategic, diverse, powerful and permanent progressive movement in California supported by a network of committed donors” (californiadonortable.org).

Similar to the social justice funders described in Suárez (2012), donors in the (c)(4) space typically play a catalytic role, providing critical resources that help to launch and maintain the groups. Some evidence suggests that funding for progressive or liberal groups tends to be focused on episodic, outcomes-driven campaigns versus long-term organizational capacity and infrastructure investments, as has been a prominent feature of conservative groups (Barsoum 2019; Post and Frank 2019). The relationship between politically active (c)(4)s, individual donors, and philanthropic intermediaries is an especially salient area for future research.

4.4 Outcomes

Assessing organizational outcomes is multidimensional (Ebrahim 2019), particularly for grassroots advocates. Even when an organization does not achieve its intended policy change goals, it can be effective in advancing democratic practice (de Souza Briggs 2008; Han 2014; Sirianni and Friedland 2001). Grassroots (c)(4)s are successful when they elect the candidates they support and when they change the policies that have a direct impact on the lives of their members and within their communities. But winning elections and changing public policy is not the full story. These organizations are also successful when they advance community-driven interests by organizing members and constituent leaders for engagement in politics. Holding public officials accountable for their promises and influencing governing power are also aspects of their strategies (Healey 2015; Rahman and Russon-Gilman 2019).^[11] For example organizations may engage in public accountability campaigns. Barsoum (2019) documents how grassroots (c)(4) organizations were able to make demands of local sheriffs and district attorneys for accurate and thorough policy implementation (Barsoum 2019). These types of outcomes undergird the roles of such groups in strengthening democracy as both staff and members are engaged in civic and political activities.

Like the flow of resources, organizational leadership is an essential ingredient of an organization’s success and sustainability and building such leadership at the community level is an important outcome. Post and Frank’s case study research (2019) showed that executive leadership in high-capacity (c)(4) organizations is characterized by specific skills needed to achieve success and sustain effective (c)(4) political activities including strategic planning and political analysis to implement policy change strategies, the capacity to direct and manage different types of campaign operations, and the ability to facilitate collaborative efforts to realize a vision for social and political change rooted in the organization’s mission (Post and Frank 2019). Organizations benefit from leaders and staff who can inspire community members’ trust and involvement, be effective stewards of community resources, and establish models of shared governance and democratic decision-making with members. Achieving these leadership capacities are important outcomes for the long-term viability of politically active (c)(4)s.