Read: The liberal Millennial Revolution
Together with affiliated political-action committees (PACs), conservative social-welfare organizations such as Americans for Prosperity and Crossroads GPS spent massive amounts over the past several election cycles. Liberals initially responded with alarm at the “politicization” of the 501(c)(4) category. Now they are following suit.
Federal tax law allows social-welfare organizations to be affiliated with public charities as well as with PACs. So while anti-Trump start-ups are setting up shop as 501(c)(4)s, long-standing civil-liberties and civil-rights groups are reallocating resources to (c)(4) arms. In fiscal year 2017, for example, total assets of the American Civil Liberties Union’s (c)(3) grew 17 percent. Total assets of its (c)(4), on the other hand, grew 89 percent. This past June, the Southern Poverty Law Center spun off a (c)(4), the SPLC Action Fund. The NAACP went further and transformed itself entirely last year from a 501(c)(3) into a 501(c)(4). This restructuring was necessary, the incoming president explained, for the NAACP to “have the collective voice and impact that a civil-rights organization in 2017 and forward should have.”
The Republicans’ recent overhaul of the tax code will likely push more nonprofits in the 501(c)(4) direction. Under the “Tax Cuts and Jobs Act,” most taxpayers will not itemize their deductions and so won’t be able to get any tax benefits from donating to a 501(c)(3), which means that public-charity status is now less relevant to fund-raising. Giving to public charities declined immediately following the tax bill’s enactment, and tax lawyers are starting to steer super-wealthy philanthropists to social-welfare organizations. The 501(c)(3) golden handcuffs have become a little less golden.
Meanwhile, “alt-labor” groups are moving into the 501(c)(3) category that others on the left are fleeing. Traditional unions that engage in collective bargaining on behalf of dues-paying members are classified as “labor organizations” under the tax code. With that category squeezed by right-wing legislatures and courts, worker centers and industry-wide nonprofits such as the National Domestic Workers Alliance, Restaurant Opportunities Center United, and Retail Action Project are operating as 501(c)(3)s and picking up some of the slack through innovative methods of organizing and advocacy.
Read: Obama’s plan to crackdown on political dark money
As the legal architecture of campaigns for racial, social, and economic justice continues to evolve, public charities will remain core pillars. Their numbers alone assure this. Even so, the shift toward 501(c)(4)s, PACs, and hybrid legal structures represents more than just a temporary adaptation to Trumpism. It signals the possible emergence of a distinct brand of legal liberalism for the 21st century—one less oriented around lawsuits and tax-subsidized donations and more closely connected to partisan politics and grassroots organizing. Well before the Kavanaugh-confirmation fight, liberal activism’s center of gravity was already tacking away from the courts.