June 01, 2011

Is Charity Status Becoming Irrelevant?

The nonprofit world has a big embrace.

But has it become too big?

Most people are unaware that Harold Camping, the California radio host who keeps predicting the end of the world, is employed by a charity. Until recently his working “calculation” concluded that May 21 would be the beginning of the end. He based that result on some byzantine mental process involving a formula originating from ancient Biblical days.

Aside from the fact that no such formula exists in the Bible, whatever did incite Mr. Camping’s imagination could not have taken into account that Julius Caesar and Pope Gregory XIII—in whose names calendars were tweaked—would come along someday and turn on its head any prediction of a date-specific Rapture. That Mr. Camping’s organization, Family Radio, is a charity means all Americans are paying for his lunacy.

And it is no small charity. According to its most recent informational tax return, Family Stations, which runs Family Radio and pays Mr. Camping’s salary, raised more than $18-million in 2009 and owned net assets of more than $70-million, a third of which are held in stocks.

Not only are the donations to this organization tax-deductible but the sales transactions within its investment portfolio are also conducted without tax payments.

Much of the $18-million donated to Family Radio, spent by Mr. Camping and subsidized by the American taxpayer, was spent on advertising the imagined Rapture. The message that the end was inevitable and time-certain was strong enough that many believers reportedly quit their jobs and ended their relationships with loved ones.

The issue is not just that the cause is controversial or that those who disagree, often vigorously, share the same planet. It is about whether we want to consider such organizations part of the nonprofit world and give them special privileges, like tax subsidies.

Many nonprofits have controversial perspectives. It is probably safe to say, for example, that the bell curves of the beliefs of those who support Greenpeace and those who support the National Rifle Association are not closely aligned. Those graphs are most certainly even less aligned for supporters of Planned Parenthood and National Right to Life.

Of the total supporters of Greenpeace or the National Rifle Association combined, the vast number who support only one probably feel the other group is dead wrong in the way it looks at the world.

But most of us can understand, or at least respect, opposing viewpoints and can live with the idea that when it comes to granting tax exemptions to charities, a wide spectrum of beliefs and understanding is a healthy thing.

The spectrum may be growing too wide, however. In the absence of the Rapture, we may be witnessing something as important—and much more real: a rupture. A rupture in the nonprofit world as it grows to accept anything-no matter how unintelligent or irrelevant to the advancement of society—and, as a result, a nonprofit world that begins to mean nothing.

The IRS denies only 2 percent of all applications for tax-exempt status each year. In 2009 Rob Reich, a Stanford University associate professor, and his students wrote a paper, called “Anything Goes,” which reported that, among the vast majority of applications that are approved, some interesting, and certainly questionable, charitable causes are subsidized by the rest of us. Of the 20 examples in the report of strange charities recently granted exemption, my vote for the weirdest is the Grand Canyon Sisters of Perpetual Indulgence, an international order of drag nuns dedicated, according to their Web site, to “the expiation of stigmatic guilt and the promulgation of universal joy.”

So it comes as no surprise that Project Veritas recently received the news that it, too, is now an official tax-exempt entity.

Project Veritas is the group that unfairly manhandled-through deceits and lies-such organizations as Planned Parenthood and National Public Radio.

Its founder, James O’Keefe, is a 26-year old who describes himself on his Web site as an “independent journalist.”

But words have been used so malleably in recent years that it matters not that he is no journalist and makes no pretense of being fair, unbiased, or independent.

The only stories he investigates are those that satisfy right-wing political goals. If the rest of the world can embrace sneak attacks and intentionally biased writing within the word “journalism,” why should the IRS, of all places, care to fine-tune that claim?

The confluence of the recent attention garnered by Harold Camping and James O’Keefe might itself be a warning-based not on an imagined ancient formula but on important and relevant facts of today: If the work of the nonprofit world is a reflection of our commitment to advancing society, and if we’re going to spread the cost of that advancement among all taxpayers, then at some point we’re going to have to infuse some common sense into the process of deciding what we mean by a nonprofit.

Doug White is academic director of the Heyman Center for Philanthropy at New York University and author of The Nonprofit Challenge: Integrating Ethics Into the Purpose and Promise of Our Nation’s Charities (Palgrave Macmillan).