National Association for the Advancement of Colored People (NAACP)
In March 2019 the National Association for the Advancement of Colored People (NAACP) changed its tax status from a 501(c)(3) public charity to a 501(c)(4) social welfare organization. One downside of this change is that donations to the NAACP are no longer tax deductible. An upside is that the NAACP now has more flexibility to not only advocate for causes and propositions as public charities do, but also, with some restrictions, to endorse specific candidates for political office and fund political campaigns.
As part of this change the NAACP updated its mission statement. According to its 2018 IRS tax Form 990, “The NAACP was organized to eliminate social injustice, including racial discrimination by assisting in legal cases and by affirming legal action in establishing the principles of law.” Whereas, the mission of the NAACP, as published in its 2021 IRS tax Form 990, is reported more broadly as “To insure the political, educational, social, and economic equality of rights for all persons to eliminate racial hatred and racial discrimination.”
According to the National Association for the Advancement of Colored People (NAACP) audit of December 31, 2021 (Note 1 re: Organization):
“On March 6, 2019, the legal and tax status of NAACP was changed from a 501(c)(3) to a 501(c)(4). In addition, certain program activities were designated specifically for the 501(c)(4) entity. Remaining program activities were designated to a new 501(c)(3) entity called NAACP Empowerment Programs, Inc. NAACP’s principal objectives continue to include to improve the political, educational, social and economic status of minority groups; eliminate racial prejudices; keep the public aware of the adverse effects of racial discrimination; and to take all lawful actions to eliminate such discrimination. NAACP performs its objectives nationwide through a network that includes seven (7) regions, representing over 2,000 branches (units), including approximately 400 youth council chapters. These [audited] financial statements reflect the activities of the NAACP entity as a partner in mission with NAACP Empowerment Programs, Inc. and NAACP Foundation. … The [audited] financial statements herein are of NAACP only and are not the financial statements of the consolidated financial statements of NAACP and affiliates.”
CharityWatch’s current rating of the NAACP (as of the publication date of this article) is based on our analysis of its audited financial statements and IRS tax Form 990 for the fiscal year ended 12/31/2021. The nonprofit earns a “B+” rating on our “A+” to “F” rating scale for spending $6 to raise each $100 of cash public support, and for spending 68% of its annual cash expenses on its programs, with overhead comprising the remaining 32%. Visit CharityWatch’s complete profile on the NAACP for our most up-to-date information.
NAACP Empowerment Programs
According to the NAACP Empowerment Programs audit of December 31, 2021 (Note 1 re: Organization):
“The NAACP Empowerment Programs, Inc. (‘NAACP EPI’ or ‘NAACP Empowerment’) was established on March 6, 2019, and was previously known under the name of the National Association for the Advancement of Colored People (‘NAACP’). Also, effective March 6, 2019, the former NAACP was established as a 501(c)(4) entity.
“NAACP EPI is a not-for-profit organized as described in Section 501(c)(3) of the Internal Revenue Code… NAACP EPI was created to work with NAACP to ensure the political, educational, social, and economic equality of rights of all persons and to eliminate racial hatred and racial discrimination. The [audited] financial statements herein are of NAACP EPI only and are not the financial statements of the National Association for the Advancement of Colored People taken as a whole.”
CharityWatch’s current rating of NAACP Empowerment Programs (as of the publication date of this article) is based on our analysis of its audited financial statements and IRS Form 990 for the fiscal year ended 12/31/2021. The charity earns a “D” rating on our “A+” to “F” rating scale for spending $9 to raise each $100 of cash public support, and for spending 48% of its annual cash expenses on its programs, with overhead comprising the remaining 52%. Visit CharityWatch’s complete profile on NAACP Empowerment Programs for our most up-to-date information.
How to Sort Out Nonprofit Pairs
CharityWatch separates our ratings of 501(c)(3) and 501(c)(4) organizations due to their differing treatments under the IRS tax code. Since related nonprofits often conduct financial transactions between them, donors may want to consider the grades of both nonprofit entities before making a contribution.
Nonprofit pairs often have very similar names that differ only in suffix: Foundation, Education Fund, Action League, Trust, etc. While some donors may think of the related entities of a nonprofit as being the same organization, the related entities are legally separate, and donors must therefore direct their donations to a specific nonprofit by name rather than to a combined organizational pair.
While related nonprofits may share resources, they often conduct very different programs that serve different purposes, such as research versus lobbying, within the combined pair’s overall mission. Therefore, donors should always check a nonprofit’s full name to ensure that their donations are being directed to the types of activities they are intending to support. Generally, donations to 501(c)(3) public charity nonprofits are tax-deductible while donations to 501(c)(4) social welfare nonprofits are not. Since there are some exceptions, before giving, donors that are concerned about tax-deductibility should check with the charity or the IRS to verify a charity’s tax-deductibility status.
For more information on this topic, please see our sections on Types of Non-Profits, Tax Status, and Treatment of Related Organizations, which can be found on CharityWatch’s Our Process page. For more information about things to consider when donating to organizations that have related public charity and social welfare entities, read “Sorting Out Nonprofit Pairs.”