Chronicle of Philanthropy, Dozens of ‘Hate Groups’ Have Charity Status, Chronicle Study Finds:
The federal government has granted tax-exempt status to more than 60 controversial nonprofits branded by critics as "hate groups," including anti-immigrant and anti-gay-rights organizations, white nationalists, and Holocaust deniers, according to a Chronicle of Philanthropy analysis.
The issue is a thorny one for the Internal Revenue Service, which must balance First Amendment rights against concerns that it is essentially granting government subsidies to groups holding views that millions of Americans may find abhorrent. Complicating matters, the IRS is already under fire from critics who say the agency has discriminated against conservative political organizations.
The Southern Poverty Law Center has compiled a list of nearly 900 so-called hate groups, most of them on the far right (although the roster also includes radical Islamists, black separatists, and other fringe groups) and many with deceptively innocuous-sounding names. The Chronicle analysis found that 55 of those organizations are registered as charities and eight are 501(c)(4) "social welfare" groups, which also enjoy tax exemptions.
Many groups on the list vehemently dispute the "hate" designation and say the Southern Poverty Law Center — known as SPLC and itself a tax-exempt organization — is a left-wing attack group. And most of the groups on the list are relatively small, with less than $500,000 in annual revenue.
Still, some experts say organizations are increasingly pushing the boundaries of how far they can go and still meet the standard for tax exemption. "We want to be careful about what we’re requiring the public to subsidize through tax exemption and at the same time we want not to inhibit speech too much," said Eric Gorovitz, a lawyer with Adler & Colvin, a firm specializing in nonprofit law. "That's just hard to do."
The Southern Poverty Law Center defines hate groups as those which "have beliefs or practices that attack or malign an entire class of people, typically for their immutable characteristics." "We’re not proposing that these groups be thrown in prison for expressing their views," said Mark Potok, a senior fellow at the SPLC. Nor does the organization advocate for these groups to have their nonprofit status revoked. But Mr. Potok does see the issue as problematic.
"In effect, the American taxpayer is subsidizing false propaganda defaming minority groups," he said. Claims by watch-list organizations to be educational institutions are "simply a facade," he added: "There's a difference between education and propaganda."
Several groups on the list that were contacted by The Chronicle said the SPLC has unfairly demonized them and questioned the organization's legitimacy as an arbiter of what constitutes hate. Dan Stein, president of the Federation for American Immigration Reform, said the SPLC — which has labeled the federation an anti-immigrant hate group since 2007 — has done "nothing but demean, smear, and attack its opponents."
"They claim that they’re trying to promote tolerance when they’re completely intolerant of people with an alternative point of view," he said, adding that his organization plans to seek an IRS investigation of the SPLC’s own tax-exempt status over alleged illegal political activity before the presidential election. Mr. Stein declined to detail the specifics of the complaint, which he said will be filed after Mr. Trump takes office.
In 2010, several conservative groups, including the Family Research Council and the American Family Association, took out full-page ads in Politico and the Washington Examiner, signed by 22 members of Congress and other conservative leaders, accusing the SPLC of engaging in "character assassination." ...
Groups accused of espousing hate have been denied tax-exempt status in the past. In 1983, the IRS revoked Bob Jones University’s nonprofit status over its prohibition on interracial dating. That same year, the neo-Nazi group National Alliance was denied a tax exemption because its materials advocated for the violent removal of nonwhites and Jews from society.
But when the IRS denied charitable status to the radical feminist publication Big Mama Rag, claiming its stance was too "doctrinaire," the U.S. Court of Appeals for the D.C. Circuit ruled that the agency’s definition of educational activities was too vague. So the IRS issued a new guideline that remains the standard today.
"It’s fairly difficult for the IRS to deny or revoke tax-exempt status, unless there’s a call to violence," said Marcus Owens, a tax lawyer who ran the IRS office that oversees nonprofit groups in the 1990s.
The Surly Subgroup: White Nationalists Groups are Charitable? Apparently so According to IRS, by Phillip Hackney (LSU):
Sam Brunson and I discuss an AP story “White Nationalists Raise Millions with Tax-Exempt Charities,” by Michael Kunzelman on a Cooking the Books Podcast today on Sparemin. ...
Many might be surprised that these organizations that educate people about the righteousness of the superiority of the “white race” are operating openly under IRS approval as tax exempt organizations. It means that the US government effectively subsidizes the operation of these organizations through tax deductible charitable contributions and exemption for any income they earn.
How do they qualify? The primary argument must be that they are educational. ...
The point though is that the IRS had successfully denied similar organizations in the past. Why are they not applying these same principles to these groups? It is possible at least that a factual analysis of all the factors of each of these groups would lead to a conclusion that they are in fact educational. This seems hard to accept given that these groups are apparently espousing the same ideas as these other two groups. They should not be able to pass the IRS revenue procedure on education. There are two answers, but neither are satisfactory to me for a reason that Sam brought up.
Reason 1: As I say in the story the IRS reviews tens of thousands of organizations annually and does not have the capacity to review every case. ...
Reason 2: The IRS is afraid. This seems like a reasonable argument after all the Tea Party difficulties that the IRS experienced. ...
[W]ith a Trump administration in power, it is unlikely to be interested in pursuing such a group. Could anyone else? Nope. Under SCOTUS precedent, it appears no one else has the standing to challenge such an IRS determination.
Salon, White Nationalists Have Raised Millions Thanks to Tax-Exempt Charities:
Samuel Brunson, a tax law professor at Loyola University in Chicago, noted the nonprofit status gives these groups a veneer of legitimacy and respectability. “It should make people uncomfortable that the government is subsidizing groups that espouse values that are incompatible with most Americans,” he said. ...
Some tax experts said the IRS is still feeling the sting from conservative critics over its 2013 concession that it unfairly gave extra scrutiny to tea party groups seeking tax exemptions. “I don’t think they’re feeling very brave right now,” said Ellen Aprill, a tax law professor at Loyola Law School in Los Angeles.