501(c) distinctions
Definition
Different IRS tax-exempt categories carry different political rules. 501(c)(3) charities can't engage in partisan campaign activity at all. 501(c)(4) "social welfare" groups and 501(c)(6) trade associations may engage in politics as long as it isn't their "primary" activity, commonly read as under 50% of spending.
Why it matters
501(c)(4)s and 501(c)(6)s don't have to disclose donors, and the "primary activity" test is vague and rarely enforced. That lets groups shift money between affiliated (c)(3), (c)(4), and PAC entities to maximize both tax benefits and donor secrecy while still influencing elections.
Seen in the wild
The IRS's own inability to define "primary activity" precisely was central to litigation like Freedom Path v. IRS, where the Campaign Legal Center argued IRS rules let 501(c)(4) dark money groups avoid disclosure by keeping political spending just under half of total activity, a threshold groups routinely engineer around rather than genuinely limit.1