Module 2: Reading the Map: Decoded

A plain-English field guide to every entity type in the nonprofit ecosystem — what each one can do, what it can’t, and why operators pair them

By the PMC Investigations Desk · Project Milk Carton · Module 2 of “The Game You Were Never Taught”

Why you need this article

Yesterday we told you where the rules came from. Today we give you the vocabulary.

Every module after this one assumes you know the difference between a 501(c)(3) and a 501(c)(4). Every case study assumes you know what a Donor-Advised Fund is and why it matters. Every financial-moves explainer assumes you know why an operator would pair an LLC with a PAC with a nonprofit.

This article is the decoder ring. Save it. Print it. Keep it next to your screen. You will come back to it every time you read a 990, every time you see a new entity in one of our case studies, and every time a news story mentions “dark money” without explaining what that actually means.

Nine entity types. One reference card. Here is what each one is, what it can and cannot do, what it reports to the public, and why operators stack them together.

1. The 501(c)(3) — Public Charity

What it is: A tax-exempt organization recognized by the IRS as charitable, educational, religious, scientific, or literary. This is what most Americans think of when they hear “nonprofit.”

What it can do:

• Receive tax-deductible donations (the donor writes off the gift on their taxes)

• Conduct charitable, educational, or religious activities

• Lobby on legislation, but only in “insubstantial” amounts (the IRS has never precisely defined “insubstantial” — generally understood as under 5% of total expenditures, or organizations can elect the clearer 501(h) safe harbor)

• Pay its employees, including executives, competitive salaries

• Accumulate assets and endowment without limit

• Operate programs nationwide and internationally.

What it cannot do:

• Participate in or intervene in any political campaign for or against any candidate for public office (the Johnson Amendment — Module 1)

• Distribute profits or assets to private shareholders or individuals (the “private inurement” prohibition)

• Operate for the primary benefit of its founders or insiders.

What it reports to the public:

• Form 990 (annual financial return) — revenue, expenses, executive compensation, grants paid, grants received, program descriptions, governance

• Schedule B (donor names and addresses) is filed with the IRS but is NOT public.

The public version of the 990 has Schedule B redacted. You will never see who gave money to a (c)(3) from the 990 alone.

Why it matters to operators: The (c)(3) is the foundation of every entity stack. It provides tax-deductible donations (the cheapest money in the system), credibility (“we’re a charity”), and donor anonymity (Schedule B is hidden). An operator who needs to raise money from wealthy donors who want a tax writeoff starts here. Then they build outward.

Key stat: There are approximately 1.8 million 501(c)(3) organizations in the United States, holding $6.8 trillion in total assets.

2. The 501(c)(4) — Social Welfare Organization

What it is: A tax-exempt organization operated exclusively for the promotion of “social welfare.” In practice, the most flexible political vehicle in the tax code.

What it can do:

• Engage in unlimited lobbying (unlike a (c)(3))

• Spend money on political campaigns, as long as political activity is not its “primary purpose” (the IRS interprets this as less than 50% of expenditures)

• Accept unlimited donations from individuals, corporations, unions, and other entities

• Run issue advertisements that are functionally indistinguishable from campaign ads

What it cannot do:

• Offer donors a tax deduction for their contributions (donations to (c)(4)s are NOT tax-deductible)

• Have political campaign activity as its primary purpose

What it reports to the public:

• Form 990 — same basic financial disclosure as a (c)(3)

• Schedule B is NOT filed at all (eliminated by IRS Revenue Procedure 2018-38). The public sees no donor information. The IRS sees no donor information. Nobody sees donor information.

Why it matters to operators: The (c)(4) is the dark-money vehicle. After Citizens United, it can spend almost half its budget on politics and never disclose a single donor. Pair it with a (c)(3) and you have a system: tax-deductible “education” money flows into the (c)(3), non-deductible political money flows into the (c)(4), and the same officers run both. The donor gives to whichever entity matches their tax strategy. The operator deploys the funds across both entities toward the same goal.

Key example you will see: In Module 4 (Entity Laddering), we will show you red-coded and blue-coded examples of the (c)(3)+(c)(4) pair operating with shared officers, shared missions, and shared donors — all legal, all invisible to the public without a 990-by-990 forensic comparison.

3. The 527 Organization (Political Organization)

What it is: Named after Section 527 of the Internal Revenue Code. Any organization operated primarily for the purpose of accepting contributions or making expenditures to influence elections. This includes party committees, candidate committees, and independent political groups.

What it can do:

• Spend money to influence elections without limit

• Accept contributions (subject to varying disclosure rules depending on whether it files with the IRS or the FEC)

What it cannot do:

• Offer donors a tax deduction

• Coordinate directly with candidate campaigns (if it is an independent 527)

What it reports to the public:

• If registered with the FEC (as a PAC or Super PAC): detailed donor disclosure, including name, address, employer, and amount for contributions over $200

• If registered only with the IRS (a “527 organization” that is not an FEC-registered PAC): Form 8872 disclosing contributions and expenditures, but with less granularity than FEC filings

Why it matters: The 527 is the fully disclosed lane. It is the opposite of the (c)(4) — maximum political spending, maximum public transparency. Operators who want to influence elections openly use 527s. Operators who want to influence elections secretly use (c)(4)s. Both are legal. The choice between them is a choice about visibility.

4. The Super PAC (Independent Expenditure-Only Committee)

What it is: A political action committee created after Citizens United and SpeechNow.org v. FEC (2010) that can raise and spend unlimited amounts of money to advocate for or against candidates — as long as it does not coordinate directly with any candidate’s campaign.

What it can do:

• Accept unlimited contributions from individuals, corporations, unions, other PACs, and (c)(4) organizations

• Spend unlimited amounts on independent expenditures (ads, mailers, digital campaigns)

What it cannot do:

• Contribute money directly to a candidate’s campaign

• Coordinate its spending with a candidate or a candidate’s campaign (the “independence” requirement — which in practice is narrowly defined and widely criticized as unenforceable)

What it reports to the public:

• Full donor disclosure to the FEC: name, address, employer, occupation, and amount for every contribution over $200

• Full expenditure disclosure

Why it matters to operators: The Super PAC is the heavy artillery — unlimited spending, but the donor names are public. To preserve donor anonymity while funding a Super PAC, operators route money through a (c)(4) first. The Super PAC reports the (c)(4) as its donor. The (c)(4) does not report its donors. The original funder is invisible. This is one of the central mechanics of the entity stack.

5. The Donor-Advised Fund (DAF)

What it is: Not a separate organization. A DAF is a giving account held at a sponsoring public charity (Fidelity Charitable, Schwab Charitable/DAFgiving360, National Philanthropic Trust, community foundations, etc.). The donor deposits money into the account, receives an immediate tax deduction, and then “advises” the sponsoring charity on where to distribute the funds over time.

What it can do:

• Give the donor an immediate tax deduction at the time of deposit (even if the money is not distributed for years)

• Distribute grants to any 501(c)(3) at the donor’s recommendation

• Grow the deposited funds through investment while they sit in the account

• Shield the donor’s identity from the receiving charity (the grant arrives as “Fidelity Charitable” or “Schwab Charitable,” not as “John Smith”)

What it cannot do:

• Distribute funds to non-charitable organizations (no grants to (c)(4)s, PACs, or political candidates)

• Give the donor legal control — the sponsoring charity technically owns the funds and has final say (in practice, sponsors almost never override donor recommendations)

What it reports to the public:

• Nothing under the donor’s name. The sponsoring charity reports the grants on its own 990. The receiving charity reports the grant as coming from the sponsoring charity. The individual donor’s name appears nowhere in any public filing.

Why it matters: The DAF is the anonymization engine. In 2024, DAFs held $234 billion in assets and distributed $52 billion in grants. They are the single largest category of charitable giving vehicle in the United States. For the operator, a DAF solves the donor-identity problem completely: the donor gets their tax deduction, the recipient gets the money, and no public record connects the two. When you see a 990 that lists “Fidelity Charitable” or “National Philanthropic Trust” as a major grantor, you are looking at DAF money — and you have no way to determine who the actual donor was.

Key example you will see: Module 3 (DAF Stacking) will show you a specific grant from DAFgiving360 (Schwab Charitable’s rebranded DAF) that we traced to a recipient organization in a PMC investigation. The trail ended at the DAF. The IRS rules are why.

6. The Private Foundation

What it is: A 501(c)(3) that is funded primarily by a single donor, family, or corporation rather than by broad public support. Think: the Bill & Melinda Gates Foundation, the Ford Foundation, the Koch Foundation.

What it can do:

• Make grants to public charities (and, with additional due diligence, to non-charities and individuals)

• Conduct its own charitable programs (“operating foundations”)

• Invest its endowment and grow assets over time

What it cannot do:

• Self-deal (transactions between the foundation and its substantial contributors or their family members are heavily restricted)

• Hold more than 20% of a business enterprise

• Make “taxable expenditures” including lobbying or political campaign activity

• Fail to distribute at least 5% of its assets annually (the mandatory payout rule)

What it reports to the public:

• Form 990-PF — more detailed than a regular 990

• Schedule F: every grant paid out, including recipient name, amount, and purpose. This is the critical difference from a DAF: private foundation grants are fully traceable.

• 1.39% excise tax on net investment income

Why it matters: The private foundation is the most transparent large-scale giving vehicle — and that is exactly why sophisticated donors avoid it. A private foundation’s grants are public, its investments are public, its self-dealing restrictions are stringent, and it must pay out 5% annually. A DAF has none of those requirements. The post-1969 migration from private foundations to DAFs is one of the most significant shifts in American philanthropy, and it is driven entirely by the desire for donor anonymity and operational flexibility.

7. The LLC (Limited Liability Company)

What it is: A state-registered business entity that provides liability protection to its owners (“members”). Not a federal tax classification — an LLC chooses how to be taxed (as a sole proprietorship, partnership, S-corp, or C-corp). The LLC is the Swiss army knife of American business law.

What it can do:

• Own property, hold bank accounts, sign contracts

• Be owned by any combination of individuals, corporations, trusts, or other LLCs

• Donate to Super PACs and (c)(4)s

• Be registered in any state regardless of where it operates (Delaware is the dominant choice — more on that in Module 7)

• In some states, provide complete anonymity for its members (no public ownership disclosure)

What it cannot do:

• Qualify for tax-exempt status itself (LLCs are not nonprofit entities)

• Receive tax-deductible charitable contributions

What it reports to the public:

• Varies by state.

• Delaware requires no public disclosure of LLC member names. Wyoming is similar. Other states vary.

• The federal Beneficial Ownership Information (BOI) reporting requirement under the Corporate Transparency Act was set to change this — but a March 2025 federal court ruling exempted most existing companies, and FinCEN’s enforcement posture remains uncertain.

Why it matters to operators: The LLC is the privacy layer. An operator who wants to donate to a Super PAC without personal disclosure forms an LLC, funds the LLC, and has the LLC make the donation. The Super PAC reports the LLC as its donor. If the LLC is registered in Delaware or Wyoming, the LLC’s owners are not public. The donor is invisible behind a corporate shield. When you see an LLC donating to a political entity, the question is always: who owns the LLC? And the answer, in many states, is: you cannot find out from public filings.

Key example you will see: Module 7 (Delaware LLC Opacity) will walk you through a specific cluster of LLCs from a PMC investigation — Victory Wave LLC, Black Manatee LLC, Haverford Valley LLC — and show you what we could and could not determine about their ownership from public records alone.

8. The Trust

What it is: A legal arrangement in which one party (the “trustee”) holds property or assets on behalf of another (the “beneficiary”). Trusts can be charitable (operating as a (c)(3) or private foundation) or non-charitable (private family trusts). In the political-money context, trusts matter because they can be used to hold and transfer assets with limited public disclosure.

What it can do:

• Hold assets (cash, securities, real estate, business interests) on behalf of beneficiaries

• Make distributions according to the terms of the trust document

• Charitable trusts can make grants like a private foundation

• Non-charitable trusts can fund LLCs, PACs, or (c)(4)s

What it reports to the public:

• Charitable trusts: Form 990-PF or 990, similar to foundations

• Non-charitable trusts: virtually nothing public. Trust documents are private. Trust assets are private. Trust distributions are private.

Why it matters: Trusts sit at the top of many entity stacks as the ultimate source of funds. When you trace money backward through a (c)(4) or an LLC and hit a trust, the trail typically ends. The trust’s governing document — which specifies who the beneficiaries are and how distributions work — is not a public record.

9. The 501(c)(6) — Trade Association / Business League

What it is: A tax-exempt organization operated for the purpose of promoting the common business interests of its members. Chambers of commerce, industry trade groups, and professional associations.

What it can do:

• Lobby without limit on behalf of its industry

• Engage in political campaign activity (same “not primary purpose” test as (c)(4)s)

• Accept dues and contributions from member businesses

What it cannot do:

• Offer donors a tax deduction for contributions earmarked for political activity

• Have political activity as its primary purpose

What it reports to the public:

• Form 990 — financial disclosure similar to (c)(3)s and (c)(4)s

• Schedule B is NOT filed (same 2018 IRS elimination as (c)(4)s)

Why it matters: The (c)(6) is the corporate dark-money vehicle. A company that wants to influence legislation or elections without its name appearing in any public filing pays dues to a trade association. The trade association spends the money on lobbying or political ads. The company’s name never appears. The most prominent example is the U.S. Chamber of Commerce, which has spent more than $2 billion on lobbying since 1998 — the most of any organization in America — funded by member dues that are not publicly disclosed.

The Reference Card

Why operators pair them

No single entity does everything an operator needs. The (c)(3) raises the cheapest money but cannot do politics. The (c)(4) does politics but cannot offer tax deductions. The Super PAC does unlimited politics but discloses donors. The DAF anonymizes donors but can only grant to (c)(3)s. The LLC hides ownership but cannot receive tax-deductible gifts.

So the operator builds a stack.

The simplest stack: a (c)(3) for education + a (c)(4) for political spending + shared officers + shared donors. Legal. Ubiquitous. Invisible unless you read the 990s side by side.

The intermediate stack: a DAF anonymizes the donor → grants flow to the (c)(3) → the (c)(3) does “education” → the affiliated (c)(4) does politics. The donor’s name never appears anywhere.

The advanced stack: a trust funds an LLC → the LLC donates to a Super PAC → the Super PAC runs campaign ads → the (c)(4) runs “issue ads” → the (c)(3) runs “voter education.” Same mission. Five entities. Five filings. One operation. Zero public visibility of the original funder.

Every combination is legal. Every combination is in use. Both sides of the aisle use them. Foreign-aligned operators use them. Domestic advocacy organizations use them. Mega-donors use them. Small-dollar grifters use them.

The eight financial moves we will map starting in Module 3 are the specific techniques operators use to build and operate these stacks. The entity types you just learned are the building blocks. The moves are the plays.

Now you can read the map. Starting tomorrow, we will show you what is on it.

What comes next

Tomorrow: Module 3 — “The Anonymous Donor” (DAF Stacking). The first of the eight financial moves. How Donor-Advised Funds anonymize the donor, how operators exploit the anonymization, and two case studies — one red-coded, one blue-coded — showing the same move in action on both sides.

The decoder ring is in your hand. The game is about to get specific.

Project Milk Carton is a nonpartisan 501(c)(3) public charity (EIN 33-1323547). All entity descriptions in this article are sourced from the Internal Revenue Code, IRS publications, FEC regulations, and state corporate law as cited below. This article has passed SKEPTIC verification (Grade A), THEMIS legal review (cleared), and MINERVA OPSEC review (cleared). Evidence vault hash: see pinned comment.

Read the series: Module 0 “The Game You Were Never Taught” · Module 1 “The Tax Code That Became a Battlefield” · Visit projectmilkcarton.org

Sources

• Internal Revenue Code §§ 501(c)(3), 501(c)(4), 501(c)(6), 527, 4940-4945, 4966 (DAF provisions)

• IRS Publication 557, “Tax-Exempt Status for Your Organization”

• IRS Revenue Procedure 2018-38 (Schedule B elimination for (c)(4)/(c)(5)/(c)(6))

• Citizens United v. Federal Election Commission, 558 U.S. 310 (2010)

• SpeechNow.org v. FEC, 599 F.3d 686 (D.C. Cir. 2010)

• Americans for Prosperity Foundation v. Bonta, 594 U.S. 595 (2021)

• FEC Advisory Opinions re: Super PAC donor disclosure

• Delaware Limited Liability Company Act, 6 Del. C. § 18-101 et seq.

• Corporate Transparency Act, 31 U.S.C. § 5336 (BOI reporting)

• National Philanthropic Trust, “2024 Donor-Advised Fund Report” ($234B assets, $52B distributed)

• OpenSecrets.org, U.S. Chamber of Commerce lobbying data (1998-2024)

• IRS Statistics of Income, Exempt Organizations (2024 data year)

• Congressional Research Service, “Political Activities of Tax-Exempt Organizations” (R40141)

• PMC CivicOps Database — Form 990 aggregate analysis

CIVIC ACTION CARD: Module 2