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501(c)(4) Organizations Are Back in the News With the Arrival of the New Gates Policy Initiative

Bill and Melinda Gates have started a new tax-exempt nonprofit called the Gates Policy Initiative, an organization separate from the well-known Bill and Melinda Gates Foundation. The Gates Policy Initiative is a 501(c)(4) social welfare organization, which means that it can engage in unlimited lobbying activities related to the organization’s tax-exempt purpose, as well as some political campaign activism, without jeopardizing its tax-exempt status.

According to The Hill, the first to report on this development, the Gates Policy Initiative will focus on “global health, global development, U.S. education and outcomes for black, Latino and rural students specifically, and efforts to move people from poverty to employment.” And of the two activities that characterize many 501(c)(4) social welfare organizations—lobbying and political campaign activism—the Gates Policy Initiative claims it will focus exclusively on lobbying because the organization sees the 501(c)(4) tax designation “as a potential to accelerate outcomes” and not “an avenue for politics … .”

That last remark is important, at least for the sake of the organization’s public optics, because in recent years the 501(c)(4) social welfare organization has garnered a bad reputation (deservedly or not) as a mere political vehicle in disguise. And so the Gates Policy Initiative’s emphasis on its bipartisan nature—its interest in policy over politics—might help it avoid getting grouped in with the numerous 501(c)(4) organizations that, statements of purpose aside, seem to exist mainly for the sake of supporting or opposing candidates for political office.

Indeed, Rob Nabors, the initiative’s executive director, has been about as clear on this issue as you could possibly expect from an organization of this kind. “In terms of political giving or statements in support of political candidates,” says Nabor, “Bill and Melinda have been very clear that we will not be doing that type of activity through the (c)(4)” (see Alex Gangitano’s “Bill and Melinda Gates launch lobbying shop,” published by The Hill, for more details).

Why does any of this matter? Because the Gates’s are trend-setters, and because the formation of the Gates Policy Initiative arrives as one more addition to an increasingly large wave of 501(c)(4) organizations founded by individuals and groups that, at least traditionally, might have favored the 501(c)(3) tax designation instead. It’s fairly clear that we’re entering a new period in the history of philanthropic giving—one that emphasizes lobbying and direct political action over passive donations, litigation, and other forms of the less overtly political influence embodied by the 501(c)(3) charitable organization—a period in which the 501(c)(4) social welfare organization is likely to play a crucial role.

Want to learn more about 501(c)(4) social welfare organizations, 501(c)(3) charities, and nonprofits corporations more generally? Check out these Northwest articles and pages on the following subjects:

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