• Many white supremacist groups qualify as tax-exempt non-profits. • Those organizations are not required to pay federal taxes, and donors are able to deduct contributions on their personal taxes.
• Some experts believe the IRS definition of “educational” activities should be limited to exclude advocacy groups.
In the eyes of the IRS, many white supremacist groups are on par with the United Way, American Cancer Society, or the Wounded Warrior Project — at least in terms of their tax obligations.
That’s because many advocacy groups, including white supremacist organizations, qualify for tax-exempt, non-profit status due to their engagement in activities that can be classified as educational by the IRS.
Most non-profit organizations in the US do not pay federal taxes, and donations from supporters qualify as a personal tax deduction.
According to the IRS, “an organization may be educational even though it advocates a particular position or viewpoint, so long as it presents a sufficiently full and fair exposition of the pertinent facts as to permit an individual or the public to form an independent opinion or conclusion.”
But, the extent to which organizations achieve this neutrality is not closely monitored. Applying for — and being granted — non-profit status in the United States is managed exclusively by the IRS. Only 54 of the 92,129 applications for tax-exempt non-profit status filed last year — 0.05% — were denied.
Americans donated a record $390 billion to US charities in 2016, according to philanthropy research fim Giving USA. Nearly $60 billion of that amount went to educational organizations, the second-largest category for donations after religious organizations.
Organizations such as Donors Choose and Teach for America fall into the education category, as do alt-right groups such as the New Century Foundation, which runs the website American Renaissance and claims to “encourage sensible public policy on race and immigration,” according to charity informational tool Guidestar.
But the Southern Poverty Law Center, which tracks extremist groups, describes The New Century Foundation, which has benefited from tax-exempt status for over 20 years, as a “self-styled think tank that promotes pseudo-scientific studies and research that purport to show the inferiority of blacks to whites.” In 2015, the most recent year for which data is available, charitable donations to the organization totaled $243,861.
“We are an educational organization, just as many other educational organizations take a particular point of view,” Jared Taylor, president of the New Century Foundation, told the Washington Post. “We have been scrupulously abiding by IRS regulations since 1994.”
But some experts take issue with the current definition of “educational” activities for non-profit status.
“This recognition not only results in potential lost revenue for government programs, but it also serves as a public subsidy of racist propaganda,” assistant professor of law and director of the Community Economic Development Clinic at the University of Tennessee, Knoxville, Eric Franklin Amarante wrote in a paper published earlier this year. “This is all due to an unnecessarily broad definition of ‘educational’ that somehow encompasses the activities of universities, symphonies, and white supremacists.”
Amarante goes on to propose limiting the definition of “educational” activities to mean “traditional schools, distance-learning organizations,” and “museums, zoos, planetariums, symphony orchestras, and other similar organizations.”
As it stands today, white supremacist groups are more likely to lose their tax-exempt status over administrative errors than other reasons.
The National Policy Institute, which is led by well-known alt-right leader Richard Spencer, lost its 501(c)3 tax-exempt status earlier this year after failing to file the appropriate paperwork, the Los Angeles Times reported.