I was at a talk recently expounding on why everyone should give money to Fyvoh Wonzy Fors and I got a lot of blank looks--that's when you know you've descended into jargon. This blog post is for anyone who gives money, and especially for those who give a lot of money. What I was referring to were organizations incorporated under section 50(1)(c)(4) of the tax code.

Basically, this is to urge you to give to PCCC and Public Campaign Action Fund and other similar groups, even though you're not going to get a tax break. I recognize my timing is way off--its not late December--but when I saw a lot of chatter about how the sequester is going to hurt (or not?) charitable giving, I wanted to add a few cents.

The tax code gives you a tax break for giving to certain organizations designated as "charitable", known by lawyers as 501(c)(3)s. If you go to a lawyer, or to a party with your friends, or talk to your parents, they will assume that if you give away money, it is to a 501(c)(3). This seems like a good deal for you: you get to donate to the policy or service charity of your choice, and some of that money comes back to you. If you middle class, a $100 contribution costs you about $80 after tax (this is complicated, but let me be general). That means that if you give $1000, it costs you about $800.

What they will tell you to avoid are (501(c)(4)s). These organizations has a significant political component. If you give to one of these, you will not get a tax deduction. If you give $1000 to a 501(c)(4), it will cost you $1000. Instead of giving $1000, you'll give $800.

But it turns out, in many cases, its worth it to give $200 less (or $20 less if its a possible $100 contribution). Instead of giving to a hamstrung organization, you can give to a group like Progressive Change Campaign Committee, that actually moves votes and scares people. (Ironically, I just joined to 501(c)(3) board of PCCC, but put that aside). You can give to groups that directly get involved in races like Cecilia Tkaczyk in New York, who won by NINETEEN votes, and changed the balance of power in the New York legislature.

The charitable groups can't have a significant political component. That means they can't deal in power. They can't punish politicians who behave badly, or reward those that do. And power, as we all know, is where policy is actually made. Its not exclusively political, but if there is no political threat or promise, it is unlikely that things are going to change.

There's a second problem: if you give to the charitable groups, you are supporting an entire public sector that is committed to not being political. When people graduate from college, full of fire, and look for jobs, odds are they are going to be with a Three, not a Four, because for several decades that's where the money has gone. Those firey students will learn how to come out with great policy papers, provide services, and by the time they are 35, maybe they can be an Executive Director or start something of their own. But they wont learn how to write ads that make Boehner squirm, because they aren't allowed to write ads that make Boehner squirm. If they learn how to organize protests, they will be generalized protests, not specific, targeted protests that will put fear into the heart of power. In short, they will learn everything about politics except politics.

Most charities know that you think you have to give to a 501(c)(3), and so some that would rather have the freedom to spend more money politically go through great contortions to make everything they do count as charitable for 501(c)(3) purposes. But those contortions cost money too--those contortions, and the fear of being busted by the IRS, create a cost and a second tax on your contribution.

I've asked several groups recently whether they would rather get $800 in political dollars or $1000 in charitable, and almost all say they'd rather get the former. Granted, I'm interested in structural change, so this isn't true for all charities, but it is true for some, and you should check with your own charity before deciding. But don't feel bad about giving less when you actually may be giving more.

I've simplified a very complicated area--the rules governing political activity of charities are quite complex. But that is in fact part of my point--the complexity of the rules has an impact on the political imagination of our nonprofit sector.

(edits in diary based on responses)

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