Verify: Yes, some hate groups get tax exempt status

The VDARE Foundation, which advocates for limited immigration while extolling the virtues of the white race, is trying to raise money off the backlash its facing by asking supporters to make tax-deductible donations.

VERIFY – YOU’VE GOT QUESTIONS, WE’LL FIND ANSWERS

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THE QUESTION

The 9NEWS Verify team noticed something interesting about the white nationalist group that had its conference canceled by Cheyenne Mountain resort.

The VDARE Foundation, which advocates for limited immigration while extolling the virtues of the white race, is trying to raise money off the backlash its facing by asking supporters to make tax-deductible donations.

The phrase “tax-deductible contribution” on its website caught our attention and raised the question of whether supremacist groups can be nonprofits.

WHAT WE FOUND

The IRS classifies dozens of hate and white supremacist groups as 501c3 nonprofit organizations.

That means they operate without paying taxes and can accept tax-deductible donations. It also means their tax returns are public information.

VDARE, for example, received $240,000 in 2015.

Other white nationalist groups that enjoy a tax-exempt status are the Conservative Citizens Foundation, Fitzgerald Griffin Foundation, New Century Foundation and the National Policy Institute.

The Foundation for Economic Liberty and the Institute for Historical Review, both of which publish information denying the Holocaust, were classified as nonprofits in 2016, according to the Southern Poverty Law Center. 

It’s worth noting that the National Policy Institute lost its 501c3 status earlier this year due to an accounting error. Richard Spencer, the group’s founder, excepts to have it reinstated before the end of the year.

So, why does the government allow groups promoting the idea that white people are superior the advantage of not paying taxes?

The answer lies in how the Internal Revenue Service defines the word “educational” when it comes to nonprofits.

The educational classification is for entities like museums, orchestras, zoos and planetariums. But the IRS doesn’t focus on what that group is trying to teach. It focuses on whether the group wants to turn a profit.

The IRS rules state that groups "may serve an educational purpose even if the viewpoints or positions being advocated are unpopular or are not generally accepted."

That doesn't mean the IRS never rejects a group. It just doesn't happen often.

The IRS lost in court in 1980 when it denied nonprofit status to a publication called Big Mama Rag. The IRS claimed it was too political to be educational, but the U.S. Court of Appeals said the agency’s definition of educational was unconstitutionally vague.

The agency rewrote the definition and limited its rejections.

For example, the IRS rejected the application of a neo-Nazi group called the National Alliance. The group advocated for the violent removal of Jews and nonwhites.

And the agency revoked the nonprofit status of Bob Jones University because of a rule against interracial dating and its refusal to admit interracial students.

In 1994, a federal court upheld the denial of tax-exempt status for the Nationalist Movement, a Mississippi-based white nationalist group.

In its decision the court pointed the materials the group had published under the title “Cleanse This Ground of the Invaders’ Stain.”

The writings on VDARE's website don't overtly call for violence -- even though they promote the idea that white people are superior.

A recent article published on VDARE’s website claims that “Dallas, like America, is running out of white kids to solve its problems.”

A legal expert named Eric Franklin Amarante from the University of Nevada at Las Vegas published a paper in May where he argues that the IRS could change the educational definition “to refer only to traditional, degree-granting institutions, distance learning organizations, or certain other enumerated entities.”

That could eliminate First Amendment challenges by white nationalist groups, but a right wing research group called The Philanthropy Roundtable argues it could also knock groups like the Boy Scouts out of the educational classification.

BOTTOM LINE:

Some white supremacy groups do get tax-exempt status, and the IRS sparingly denies applications from nonprofit groups.

© 2017 KUSA-TV


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