By Peter J Reilly, Contributor

Sometimes large questions are buried in obscure pronouncements.  So it is with PLR 201313031 which raises the question of what it means to “promote social welfare”.  The issue was whether the anonymous “ORG” qualified for exemption under 501(c)(4).  Just for fun I am going to call ORG “Richistan HOA” in honor of the great book by Robert Frank  An organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community. An organization embraced within this section is one which is operated primarily for the purpose of bringing about civic betterments and social improvements. Richistan HOA was focused on taking care of the roads and common areas of a fenced community consisting of 426 homes and a golf course.  When Richistan HOA was recognized as a 501(c)(4), Richistan was not a gated community.  Apparently the 99% would from time to time wander in and even drive their decrepit vehicles through.  Richistan HOA decided to put a stop to that sort of thing.  Here is what the examining agent found: The organization spends an extraordinary amount of time and resources on security, which supports the examining agent’s position that the ORG is trying and, very successfully, keeping people out. The security costs incurred in 20XX were $ or % of their expenses, and $ or % in 20XX. They provide and maintain security systems, guards, and gates. According to the December 20XX newsletter, about $ was spent on an upgrade to the security system, specifically the guard’s computer, card readers and remote controls. This upgrade includes an alarm to the guard shack when a non-resident enters through the gates on a resident’s tail. This is a huge expense to gather such information. They are very serious about keeping people out.

From: http://www.forbes.com/sites/peterjreilly/2013/04/11/keeping-the-99-out-is-not-promoting-social-welfare/