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Q&A #75 – Are there advantages to 501(c)(4) status compared to 501(c)(6) status?
Both 501(c)(4) and 501(c)(6) organizations are permitted to engage in unlimited amounts of lobbying so long as the lobbying is consistent with the organization’s tax-exempt purposes. The main advantage of 501(c)(4) status as compared to 501(c)(6) status is that there is more flexibility with regard to the organization’s governance structure. However, there are some downsides that should also be considered.
Q&A #11 – Can my 501(c)(6) organization get in trouble for receiving a PPP loan?
Yes, there are risks for accepting a Paycheck Protection Program loan when the organization was not eligible to receive it. It is clear from the text of the CARES Act statute and from prior SBA guidance regarding eligibility for the “Section 7(a)” loan program (of which the PPP is one type) that the only nonprofit organizations eligible for PPP loans are 501(c)(3) and 501(c)(19) organizations. I do not see a credible argument that any other types of nonprofits (such as 501(c)(6) organizations) were ever eligible to receive a PPP loan.
Q&A #7 – Can my 501(c)(6) organization provide funds to help struggling businesses?
A 501(c)(6) organization is allowed to provide support to struggling businesses, but there are important restrictions and limitations to be aware of.