The Law of Tax-Exempt Organizations, 12th Edition

CHAPTER THIRTEENSocial Welfare Organizations

• § 13.1 Concept of Social Welfare
  • (a) General Rules
  • (b) Benefits to Members
• § 13.2 Requirement of Community
  • (a) Community and Condominium Associations
  • (b) Broader Requirement of Community
• § 13.3 Conduct of Business
• § 13.4 Advocacy Organizations
  • (a) Legislative Activities
  • (b) Political Campaign Activities

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 ...