It’s a complicated legal area: how much do corporations, unions, the federal government and others get for their nonprofit contributions?
Federal funds are given out through federal programs. The money comes from the federal program, in some cases it comes from Congress appropriating the money, in other cases it’s state money that was supposed to make ends meet or to help certain specific businesses in specific situations.
The IRS makes donations as the result of a grant, the IRS does not make an individual donation because that doesn’t mean that’s going toward a specific organization when you could give to a foundation or a corporation, or any other name as opposed to a business.
For a corporation, the IRS considers donations made by its officers, directors and the officers and directors’ spouse and children to be donations to the corporation.
What does it mean for an individual doing things through a “non-profit corporation” or “indorsement organization”?
A non-profit corporation that has been accredited with the National Association of Tax-Exempt Organizations is considered a nonprofit corporation and is exempt from federal taxation. An organization that is a “political action committee” has been designated as being considered under the Federal Election Campaign Act (FECA) and exempt from taxation under the Internal Revenue Code, which are both federal laws. However, they are not exempt from state laws that may apply to a “political action committee” and may be subject to their state regulations. Additionally, individual people have been found to be 501(c)(3) organizations under federal law, so if you or your employer has some affiliation, you’re a “corporate person” exempt from federal taxes whether or not you’re an individual.
Are corporations legally permitted to contribute to political candidates?
Yes. In other words, corporations are allowed to give money, to go into political campaigns on behalf of or against any candidate for office that the corporation holds an interest in. However, corporations are allowed to donate and make political contributions. Some laws and regulations say:
For corporations that have stockholders, the only people who can sell and trade the stock are the board of directors. If the stockholders could not or would not sell their stock in order to participate in the political campaign, they might be liable for an IRS excise tax or other civil penalty on the amount of any political contributions made.
For corporations that are independent of their shareholders, the only people who can sell and trade the stock are the stockholders or their designated representatives.
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