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."
Education or Extremism?
The SPLC list includes several white-nationalist organizations that civil-rights groups say have been emboldened by the election of Donald Trump.
Two such nonprofits — the New Century Foundation, which produces the online publication American Renaissance, and the National Policy Institute — "see themselves as primarily dealing with research and education around race, immigration, and other issues affecting European-Americans," said Marilyn Mayo, a research fellow in the Anti-Defamation League’s Center on Extremism.
National Policy Institute leader Richard Spencer, who gained notoriety when he hailed President-elect Trump's victory with a Nazi-style salute at a recent meeting of the group, said being included on the "hate list" has had no major repercussions for the institute and that its revenue has tripled in the last year. The group’s 2012 Form 990 reports more than $125,000 in revenue but it hasn’t filed a 990 since then.
The IRS grants tax-exempt status to organizations that exist for purposes that are most commonly educational, charitable, or religious. Essentially, a tax-exempt organization is considered educational if it produces materials that are factually supported and which allow people to make up their mind about a particular viewpoint. Distorting facts, providing only unsupported opinions, or using inflammatory or disparaging terms based on emotions rather than facts may influence the IRS determination.
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."
Potential for Abuse
"Hate group" designations are invariably going to be controversial, said Brian Levin, director of the Center for the Study of Hate and Extremism at California State University at San Bernardino and a former Southern Poverty Law Center employee. Though he believes the SPLC’s list is "principled," Mr. Levin said it is incomplete — leaving out, for example, groups viewed as far left.
And there’s potential for abuse both by the government and independent watchdog groups like the SPLC, he said. Mr. Levin’s center also monitors hate groups and bigotry but does not produce a public list because, he said, doing so can stifle public debate.
"What happens when others start labeling other people who bring up legitimate parts of a public-policy debate that might not be popular?" he said.
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.
Some tax experts say that standard is not easy to apply, especially in the current political moment.
"We used to have the idea that somehow we could look at ‘facts and circumstances’ and determine whether something was ‘educational’ or ‘political,' " said Frances Hill, a professor of constitutional, election, and tax law at the University of Miami. "The more I think about it, the more concerned I am that there just are no standards at all."
Though tax exemption is intended to be available to groups espousing a wide range of views, Ms. Hill worries that the concept of a nonprofit organization has become too malleable. "The idea of tax-exempt organizations devoted to hate speech is just corrosive of everything that the tax-exempt sector says it stands for."
Yet the IRS is in an impossible position, she said. Still shaken by the revelation that agency leaders had singled out conservative advocacy groups’ applications for tax-exempt status for extra scrutiny, the IRS has little incentive to investigate organizations based on the content of their messages.
Mr. Gorovitz, the lawyer with Adler & Colvin, said it shouldn't be left to a taxing agency to decide who can say what. "If this is to change, Congress needs to write a clearer policy," he said.
He also worries that the IRS’s lack of guidance for groups carries a risk.
"When people don’t know where in the fog the electric fence sits, they stay out of the fog," he said. "What you really want to do is spotlight the fence, so they can walk right up to it."
The List’s Impact
Mr. Potok expects the SPLC’s 2017 watch list will be slightly smaller when it’s released this spring. But experts like Mr. Owens say they wouldn’t be surprised to see even more tax-exempt groups on future versions of the list, "particularly now with the tenor of current politics seemingly bringing out people who might have proclivities in the direction of extreme views."
Peter Brimelow, editor of the white nationalist website VDARE, which is supported by nonprofit VDARE Foundation, said he saw no impact in terms of fundraising or traffic to his site from his group’s inclusion on the watch list, and he’s not worried about damage to its reputation.
The rise of the internet and social media have made it easier for groups to define themselves, said Mr. Brimelow, who characterized the SPLC as "lying swine." Other nonprofits say the label has had a negligible — or even positive — impact on their operations.
ACT for America, which the SPLC calls the "largest grass-roots anti-Muslim group in America," is one of eight 501(c)(4) groups on the list. It coordinates much of its work with another nonprofit, the Center for Security Policy, a Washington think tank that raised almost $4.6 million in 2015 and is also on the SPLC’s list.
Brigitte Gabriel, ACT for America's founder and CEO, said the SPLC label has led to an uptick in donations. "People who know what we do and educate about national security stepped up to support us because they were upset by the SPLC labeling," she said in an email to The Chronicle.
Although most of the nonprofits on the "hate" list are tiny, the roster includes several prominent conservative Christian organizations with Washington offices that raise tens of millions of dollars a year.
In 2012, an armed man named Floyd Lee Corkins walked into the Family Research Council's Washington headquarters with the intent to shoot and kill as many of its employees as possible. He was apprehended, but not before wounding the nonprofit’s business manager. Mr. Corkins later told the FBI that he had seen the nonprofit listed as an antigay hate group on the SPLC’s website.
In the wake of the incident, Tony Perkins, the council’s president, said the SPLC’s designation of his group gave Mr. Corkins "a license to shoot."
The Southern Poverty Law Center rejects that charge. "We are utterly opposed to political violence," Mr. Potok said. "What we had done is tell the truth."
The SPLC began adding anti-gay-rights groups to its list in 2010. It doesn’t list groups for saying that homosexuality is a sin or opposing same-sex marriage, Mr. Potok said; organizations must go further and "engage in really vicious and regular defamation of LGBT people with total falsehoods," like claims that gay men are more likely to sexually abuse children.
Chris Gacek, senior fellow for regulatory affairs at the Family Research Council, insisted his organization’s positions on homosexuality are "nuanced." He pointed to its briefing paper suggesting "that male homosexuality is a risk factor for child sexual abuse."
Aside from the 2012 shooting, Mr. Gacek said, it’s tough to say what impact the SPLC label has had on his organization. "In terms of our posture and the communities we work with and our relationships with people in the incoming administration," he said, "we’re probably doing better than we ever have."
Tax-Exempt Charities the Southern Poverty Law Center Lists as Hate Groups
|Abiding Truth Ministries||Anaheim, Calif.||$100,363|
|American Border Patrol||Sierra Vista, Ariz.||$930,541|
|American College of Pediatricians||Gainesville, Fla.||$88,991|
|American Family Association||Tupelo, Miss.||$29,790,357|
|American Freedom Defense Initiative||New York, N.Y.||$729,031|
|American Freedom Law Center||Chandler, Ariz.||$1,022,916|
|American Immigration Control Foundation||Monterey, Va.||$511,557|
|American Vision||Powder Springs, Ga.||$303,936|
|Brother Nathanael Foundation||Priest River, Ind.||$233,897|
|Californians for Population Stabilization||Santa Barbara, Calif.||$1,181,416|
|Campaign for Children and Families, aka Save California||Sacramento, Calif.||$217,241|
|Robert Sungenis/Catholic Apologetics International Publishing||State Line, Pa.||$139,890|
|Center for Security Policy||Washington, D.C.||$4,562,641|
|Chalcedon Foundation||Vallecito, Calif.||$795,997|
|Christian Action Network||Forest, Va.||$1,055,190|
|Christian Anti-Defamation League||Vista, Calif.||$156,479|
|Christian Home Educators of Colorado, aka Generations With Vision||Parker, Colo.||$1,292,570|
|Citizens for Community Values||Cincinnati, Ohio||$460,366|
|Citizens for Community Values Foundation||Cincinnati, Ohio||$0|
|Conservative Citizens Foundation||Old Monroe, Mo.||$0|
|Coral Ridge Ministries Media, aka D. James Kennedy Ministries (formerly known as Truth in Action)||Fort Lauderdale, Fla.||$5,709,355|
|Council for Social and Economic Studies||Washington, D.C.||$40,114|
|David Horowitz Freedom Center||Sherman Oaks, Calif.||$7,532,891|
|Samanta Roy Institute of Science and Technology||Green Bay, Wis.||$970,378|
|Family Research Council||Washington, D.C.||$15,420,182|
|Family Research Institute||Colorado Springs, Colo.||$59,911|
|Federation for American Immigration Reform||Washington, D.C.||$8,594,856|
|Fitzgerald Griffin Foundation||Vienna, Va.||$41,090|
|Florida Family Association||Tampa, Fla.||$209,625|
|Friends of Intelligence Practitioners, aka Citizens for National Security||Boca Raton, Fla.||$114,053|
|Global Helping to Advance Women & Children, aka Family Watch International||Gilbert, Ariz.||$350,909|
|IHS Press||Norfolk, Va.||$0|
|Illinois Family Institute||Carol Stream, Ill.||$540,400|
|In the Spirit of Chartres Committee||Carrollton, Va.||$0|
|Israel United In Christ||Newburgh, N.Y.||n/a|
|Jihad Watch||Manchester, N.H.||$68,442|
|Legion for the Survival of Freedom, aka Institute for Historical Review||Santa Ana, Calif.||$39,021|
|Liberty Counsel||Orlando, Fla.||$5,572,566|
|Masjid Al Islam||Oakland, Calif.||$7,200|
|Nation of Islam Mosque 74||Indianapolis, Ind.||n/a|
|Nation of Islam of Atlanta Community Education Center||Atlanta, Ga.||n/a|
|National Policy Institute||Whitefish, Mont.||$125,325|
|New Century Foundation||Oakton, Va.||$243,861|
|Pacific Justice Institute||Sacramento, Calif.||$1,984,878|
|Pacific Justice Institute-Center For Public Service||Sacramento, Calif.||$0|
|Pass the Salt Ministries||Hebron, Ohio||$90,376|
|Probe Ministries International||Plano, Tex.||$651,324|
|Ruth Institute||San Marcos, Calif.||$262,113|
|Servant of Jesus & Mary||Constable, N.Y.||$4,873,280|
|Sharkhunters International||Hernando, Fla.,||$0|
|Tradition in Action||Montebello, Calif.||$231,586|
|Traditional Values Coalition Education and Legal Institute||Anaheim, Calif.||$67,728|
|United Families Foundation, aka United Families International||Gilbert, Ariz.||$0|
|VDARE Foundation||Litchfield, Conn.||$293,663|
n/a Not available
Note: Revenue figures are for the most recent year for which data are available, usually 2014 or 2015.
Source: Internal Revenue Service, Southern Poverty Law Center