Question: Converting to a PTO

We are currently a 501(c)4 and we're thinking of transitioning to a PTO status. Can we remain a (c)4 or do we need to be a (c)3? Also, others in my area have transitioned and kept their current EIN, they just filed to change their name and all other status remained. What are the cons of not spending down our account prior to the conversion?

Asked by marylee

Answers:

Advice from PTO Today

Craig writes:
The biggest difference between 501c4 organizations and 501c3s is that donations to 501c3s are tax deductible while donations to 501c4s are not. This is a crucial difference if you run an auction -- it's very difficult to get companies to donate if the donation is not tax-deductible. That's also true of soliciting sponsorship and donations for other events -- businesses (and individuals) will be much more interested in contributing if the donation is tax-deductible.

My understanding is that you can make this change and keep the same EIN, and you do not need to spend down your account. However, I'd recommend talking to an accountant or tax attorney who is experienced in nonprofits before moving forward.