What the Georgia Senate Runoff Taught Us About Charity and Politics

From an op/ed in the Chronicle of Philanthropy:

With democratic Sen. Rafael Warnock’s victory, another contentious Georgia Senate race is over and, with it, the attention focused on nonprofits for their role in registering, educating, and mobilizing voters and monitoring the fairness of the electoral process.  Millions of dollars flowed into the state over the past year, and much of it went to nonprofit groups.  This outpouring of support may have ensured a robust turnout in both the November general election and the runoff, but it also raises serious questions about the increasingly blurred boundary between charitable and political giving. Of particular concern is donors’ ability to transfer money to 501(c)(4) organizations from other tax-exempt groups — and, in the process, avoid paying capital-gains taxes on the gift. In the past two decades, election-related activities have become increasingly common in the nonprofit world, with millions of dollars going directly to 501(c)(3) groups — organizations that can’t do much lobbying — and 501(c)(4) organizations, which can pursue more advocacy.  Foundations have given more than $2 billion to activities focused on elections since 2011, according to data compiled by Candid, an independent research group. Very wealthy donors often donate appreciated assets, such as stock, thereby avoiding capital-gains taxes. If the recipient is a 501(c)(3), they also receive a charitable deduction. These contributions are undoubtedly legal, but they also stretch and bend the core framework separating charity and politics.

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