A primary purpose of 501(c)(4) organizations is to serve as "civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare," according to the IRC. These organizations may have a wide range of social welfare aims, from teaching literacy to helping the homeless.
Employee associations may also be designated as 501(c)(4) organizations under the IRC. In order to receive 501(c)(4) tax-exempt status, the employee association must be limited to employees of a particular business that is within a particular location and be "devoted exclusively to charitable, educational, or recreational purposes," according to the IRC.
Some organizations choose a 501(c)(4) designation rather than a similar designation, like 501(c)(3), because 501(c)(4) organizations are allowed to engage in political activities in ways that other tax-exempt organizations are not. For example, a 501(c)(4) may spend as much money as it wants on lobbying activities. It may also endorse or oppose any political candidates of its choosing, and participate in campaigns by offering money, time or the use of its facilities.
A 501(c)(4) must be able to demonstrate to the Internal Revenue Service that its activities benefit the community in some way, even if they are not accessible to all community members. For example, a 501(c)(4) that offers low-income housing to its members may be able to show that it benefits the community as a whole by making it possible for its members to find safe and sanitary housing, which they could not do otherwise. A 501(c)(4) that does not have any public benefit as part of its purpose may lose its tax-exempt status.