The difference: Why ACK•Now is a 501(c)4, not a 501(c)3.

Good morning, Islanders.

This is the first in a series of weekly morning notes we will be sending our subscribers. Thank you so much for inviting us into your inbox. Today we thought we would give you some information on one of the things that sets ACK•Now apart.

One of the important distinctions between ACK•Now and other non-profits that the recent press coverage did not touch upon is a point key to the organization’s core beliefs — a difference that, for many, should make all the difference. We are a 501(c)(4) non-profit. And not a 501(c)(3).

So, what does this mean? First, it means we are organized to primarily promote public and social benefits. A garden variety 501(c)(3) can be an arts organization that caters only to people who love Strindberg, a church of any denomination, a private social club like the Wharf Rats, or a charity that addresses a specific need. But a public welfare non-profit — a 501(c)(4) — has to be run for the benefit of the many.

Some common examples of 501(c)(4) corporations include volunteer fire departments, Miss America and community service organizations like Rotary and Kiwanis clubs.

Here’s the definition from the IRS.gov web site:

To be tax-exempt as a social welfare organization described in Internal Revenue Code (IRC) section 501(c)(4), an organization must not be organized for profit and must be operated exclusively to promote social welfare.

The word exclusively is important there. An organization like ACK•Now is not here to entertain the whims of a small group or focus on a pet project. We are organized to do good in a general sense for the general population of the island.

Another thing about being a 501(c)(4): it means a donation made to ACK•Now is not tax-deductible. In other words, people who give to a 501(c)(4) do so because they believe in the mission and the work being done and are definitely not doing it because they want to lower their tax liability.

And speaking of donations, as a 501(c)(4) we are obligated to file a form 990 with the IRS and disclose our donations. While some non-profits choose to redact the names of their donors, it is our policy to maintain full transparency and disclose the names of those who support us. We dislike the idea of dark money in politics as much as anyone.

Given the restrictions of being a 501(c)(4), one might ask why we did not decide to be a plain old 501(c)(3) instead. The answer is, that 501(c)(3) groups are limited by the IRS in how they can participate in the political process.

Being a 501(c)(4) means we are free to do the hard work necessary to make change happen. Like participate fully in town meetings and lobbying the statehouse. It means we can hire subject matter experts and legal counsel to push ideas forward. We can work with government. But we can also operate independently as long as we keep public benefit in mind.

Sure, there are downsides to being a 501(c)(4). There’s extra reporting. Compliance can be more complicated. And it’s somewhat harder to fundraise. But, ultimately the benefits win out.

It all comes down to this: Meaningful change cannot happen without political participation, and the 501(c)(4) designation allows us to participate as a political organization as long as no more than 50% of our income is spent to impact the political process. (The other 50% will be spent on things like research, knowledge base creation, team building, and public awareness projects.)

We felt that the time for this idea is now. Hope you agree.

Have a great week.