What is a Social Welfare Organization?

There are many reasons to form an organization that is not expected to generate a profit.   Some are formed to do charitable activities (like universities or hospitals) and others a formed for more narrow purposes for example cemetery organizations (501 c 13) have a very distinct purpose which is different from state sponsored workers compensation reinsurance organizations (501 c 27).   It all fits into that category first described by Alexis DeTocqueville called voluntary organizations.  When DeTocqueville came to the US in the 1840s he was amazed at the American ability to form organizations to benefit the community.

The Social Welfare category(501 c 4)  of exempt organization is a catchall.  The IRS has two standards to qualify for this status the organization "may be performing some type of public or community benefit but whose principal feature is lack of private benefit or profit."   Clearly informing the public about civic issues, when such a large percentage of the economy is dedicated to government, would fit into the definition.  But should it also fit with all sorts of other organizations that are formed for exempt purposes but not ones designed to influence our roles as citizens?

The NYT argued in a column this morning that advocacy organizations should be filed under §527 - which is a newer category in the code designed to allow groups to form to "influence the selection, nomination, election, appointment or defeat of candidates to federal, state or local public office."   But are groups like the Tea Party doing something more than trying to influence who is going to be the next member of congress from the fifth district?   The major difference between a 527 and 501 c4 is the requirement in the 527 to disclose donors.

There are really a couple of questions here.   First, is it time to rethink how we allow citizens to form into groups not seeking a profit which want to inform the public process and should we continue to make a distinction between groups which want to elect candidates and those that want to influence civic debate?  Obviously, that is something we should do.  But the suggestion that limiting political speech should not be on the list.  Citizens should be able to unite to petition both the government and their fellow citizens. (That you may have noticed was a very bad pun.)

Second, is this (like so many of the other Obama problems right now) an example of an administration that does not understand the limits of authority?   The current administration is not the first to use these kinds of discretionary actions to move opponents or reward friends.   These kinds of breaches should not be tolerated.  Cleaning up the current problem(s) is not enough.

Third, how can we regain a sense of limited government where these kinds of outrages would not happen?   The most direct answer is to reduce the size of the fisc that goes to the federal government.  The GDP ratio of federal spending (which exceeded 25% at at the high end of the downturn) should be reduced significantly.

Former Clinton Aide Joe Klein commented "As in most presidencies, there have been an awful lot of political hacks populating the mid-reaches of this Administration.  In the Obama instance, these have shown an anachronistic, pre-Clinton liberal bias when it comes to the rules and regulations governing many of our safety-net programs, like Social Security disability. And now they have violated one of the more sacred rules of our democracy: you do not use the tax code to punish your opponents."   From my perspective that is true, but not enough.