CHAPTER THIRTEENSocial Welfare Organizations

The federal tax law provides tax exemption for “[c]ivic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare.”1

§ 13.1 CONCEPT OF SOCIAL WELFARE

A precise definition of the term social welfare for federal law tax exemption purposes does not exist.

(a) General Rules

The regulations amplifying the law concerning this category of tax-exempt organizations offer two basic precepts: (1) “Social welfare” is commensurate with the “common good and general welfare” and “civic betterments and social improvements,”2 and (2) the promotion of social welfare does not include activities that primarily constitute “carrying on a business with the general public in a manner similar to organizations which are operated for profit.”3 The regulations also include a prohibition on political campaign activity4 and state that an organization is not operated primarily for the promotion of social welfare “if its primary activity is operating a social club for the benefit, pleasure, or recreation of its members.”5 The conduct of social functions for the benefit of its members will not defeat ...

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