Advisory Opinion 2024-02: Contributions to and From 501(c)(4) Nonprofit Organizations

April 18, 2024

To all interested persons:

The Iowa Ethics and Campaign Disclosure Board issues this Advisory Opinion sua sponte pursuant to Iowa Code section 68B.32A(12) and Iowa Administrative Code rule 351-1.2(1).

We note at the outset that the Board’s jurisdiction is limited to the application of Iowa Code chapters 68A, 68B, Iowa Code section 8.7, and rules in Iowa Administrative Code chapter 351. Advice in a Board advisory opinion, if followed, constitutes a defense to a subsequent complaint based on the same facts and circumstances.

QUESTION POSED

Can a candidate’s committee make contributions to 501(c)(4) nonprofit organizations?

Opinion:

As an extension of an advisory opinion issued by the Board in 2012, we now consider whether 501(c)(4) organizations are “charitable organizations” for purposes of the allowable transfer of candidate committee funds as sanctioned by 68A.303(1)(a). While Iowa Code chapter 68A does not explicitly define “charitable organization,” in AO 2012-02, the Board opined that “charitable organizations” were limited to 501(c)(3) organizations as described by the Internal Revenue Code. 

501(c)(4) organizations include those created for the “promotion of social welfare.”[1] Though the IRS admits that “‘social welfare’ is inherently an abstruse concept that continues to defy precise definition,” it has determined that 501(c)(4) groups that fall under this category “primarily promote the common good and general welfare of the people of the community as a whole.” Examples include corporations “organized for the purpose of rehabilitating and placing unemployed persons over a stated age” or those “formed to provide a school district with a stadium.” 

The IRS offers a general comparison of “social welfare” and “charity” to juxtapose the 501(c)(3) and (c)(4) classifications[2] in an article that states plainly that 501(c)(4) groups 

[1] John Francis Reilly, Carter C. Hull, & Barbara A. Braig Allen, IRC 501(c)(4) Organizations, IRC (2003), https://www.irs.gov/pub/irs-tege/eotopici03.pdf. 

[2] See note 1, page I-25.

BY DIRECTION AND VOTE OF THE BOARD

James Albert, Board Chair
Elaine Olson, Vice-Chair
Jonathan Roos
Daniel Jessop
Leah Rodenberg

Submitted by: Zachary S. Goodrich, Executive Director and Legal Counsel