{"id":39449,"date":"2025-05-10T11:45:00","date_gmt":"2025-05-10T11:45:00","guid":{"rendered":"https:\/\/www.lifeandnews.com\/articles\/?p=39449"},"modified":"2025-05-11T05:57:30","modified_gmt":"2025-05-11T05:57:30","slug":"can-trump-strip-harvard-of-its-charitable-status-scholars-of-nonprofit-law-and-accounting-describe-the-obstacles-in-his-way","status":"publish","type":"post","link":"https:\/\/www.lifeandnews.com\/articles\/can-trump-strip-harvard-of-its-charitable-status-scholars-of-nonprofit-law-and-accounting-describe-the-obstacles-in-his-way\/","title":{"rendered":"Can Trump strip Harvard of its charitable status? Scholars of nonprofit law and accounting describe the obstacles in his way"},"content":{"rendered":"\n

Philip Hackney<\/a>, University of Pittsburgh<\/a><\/em> and Brian Mittendorf<\/a>, The Ohio State University<\/a><\/em><\/p>\n\n\n\n

President Donald Trump has repeatedly threatened to revoke Harvard University\u2019s tax-exempt status<\/a>, and some media outlets have reported that the Internal Revenue Service is taking steps<\/a> in that direction.<\/em><\/p>\n\n\n\n

Harvard President Alan Garber says this would be \u201chighly illegal<\/a>.\u201d Several U.S. senators, all Democrats, have urged the IRS inspector general<\/a> to see whether the IRS has begun auditing Harvard or any nonprofits in response to his administration\u2019s requests or whether Trump has violated any laws with his pressure campaign.<\/em><\/p>\n\n\n\n

The Conversation U.S. asked Philip Hackney<\/a>, a nonprofit law professor who previously worked in the office of the chief counsel of the IRS, and Brian Mittendorf<\/a>, an expert on nonprofit accounting, to explain what it would take for the federal government to revoke a university\u2019s tax-exempt status.<\/em><\/p>\n\n\n\n

Can Trump order the IRS to strip Harvard of its tax-exempt status?<\/h2>\n\n\n\n

No.<\/p>\n\n\n\n

First, the IRS rarely revokes<\/a> an organization\u2019s charitable tax-exempt status for failure to operate for a charitable purpose.<\/p>\n\n\n\n

Before the IRS can do that, tax law<\/a> requires that it first audit that charity. And it\u2019s illegal<\/a> for U.S. presidents or other officials to force the IRS to conduct an audit or stop one that\u2019s already begun. Even doing either of those things indirectly is a crime. The punishment can include fines and imprisonment.<\/p>\n\n\n\n

Congress strengthened constraints on presidential power after Richard Nixon resigned in the midst of the Watergate investigations<\/a>. At the time, evidence indicated that he had used the IRS as a weapon to punish his perceived political enemies<\/a>.<\/p>\n\n\n\n

Worried that future presidents or officials might abuse the IRS, a Republican-led Congress later passed Section 7217<\/a> of the IRS Restructuring and Reform Act of 1998.<\/p>\n\n\n\n

That provision prohibits presidents and vice presidents, as well as other officials and their staff, from instructing, \u201cdirectly or indirectly, any officer or employee of the Internal Revenue Service to conduct or terminate an audit or other investigation of any particular taxpayer with respect to the tax liability of such taxpayer.\u201d<\/p>\n\n\n\n

\"Nixon
President Richard M. Nixon holds a tax bill he signed into law in 1970, four years before he resigned. Part of his legacy is that it\u2019s now more clearly illegal for presidents to use the IRS as a political weapon. Bettmann\/Getty Images<\/a><\/figcaption><\/figure>\n\n\n\n

What does it take for a nonprofit\u2019s tax-exempt status to be revoked?<\/h2>\n\n\n\n

This can\u2019t happen on a whim. The IRS first has to audit the nonprofit<\/a>. If it obtains evidence of wrongdoing \u2013 and a court upholds that finding \u2013 the IRS can proceed.<\/p>\n\n\n\n

The government has to find that the nonprofit\u2019s operations have a \u201csubstantial nonexempt purpose<\/a>.\u201d That\u2019s because these tax exemptions are provided only to organizations that are organized and operated primarily for charitable purposes<\/a>, such as education, religion or scientific research.<\/p>\n\n\n\n

Any audit of Harvard would involve a large team of IRS agents familiar with higher education, which would work on this probe for months. The process could take years.<\/p>\n\n\n\n

If, after completing that audit, that team were to determine that Harvard violated the rules, the IRS would have to send<\/a> Harvard a proposed revocation letter. Harvard then would have 30 days to file an appeal with the IRS. Were the IRS to propose such a revocation, we would be shocked if Harvard didn\u2019t take that step.<\/p>\n\n\n\n

If the IRS Office of Appeals were to uphold the revocation, the IRS would send a revocation letter to Harvard. But Harvard would have the right to challenge that official revocation in court under Section 7428<\/a> of the tax code.<\/p>\n\n\n\n

How often does this happen?<\/h2>\n\n\n\n

Very rarely. Almost never for private schools. The only legal precedent the Trump administration could perhaps invoke is Bob Jones University v. United States<\/a>.<\/p>\n\n\n\n

That litigation got underway in the 1970s after the IRS had, following years of civil rights litigation<\/a>, stopped allowing private schools<\/a> to have charitable status if they discriminated on the basis of race.<\/p>\n\n\n\n

That policy put the small Christian university on the spot because it barred the admission of Black students<\/a> until 1971. At that point, it began to accept Black students but only if they were married to another Black person. The school justified this restriction by voicing its belief that the Bible forbids interracial marriage and dating. In 1970, the IRS had notified the university that it intended to cancel Bob Jones\u2019 tax-exempt status.<\/p>\n\n\n\n

The IRS issued a final revocation in 1976 after determining that Bob Jones University continued to discriminate with the ban on interracial dating and marriage. And in 1983, the U.S. Supreme Court upheld the IRS\u2019 action<\/a> in an 8-1 decision.<\/p>\n\n\n\n

The court\u2019s majority wrote that an institution should be denied charitable status \u201conly where there can be no doubt that the activity involved is contrary to a fundamental public policy.\u201d <\/p>\n\n\n\n

What\u2019s the Trump administration\u2019s rationale?<\/h2>\n\n\n\n

Many signs indicate the Trump administration would try to use the fundamental policy limitation to revoke Harvard\u2019s status. We\u2019re unaware, though, of what alleged violation of a \u201cfundamental public policy\u201d the IRS might invoke if it were to carry through on Trump\u2019s threat to strip Harvard of its charitable status. The Trump administration has signaled<\/a> that it might rest its case on Harvard\u2019s diversity, equity and inclusion programs.<\/p>\n\n\n\n

In a related case, a majority found in a 2023 ruling<\/a> that affirmative action admissions programs violated the Constitution<\/a>. The case, known as Students for Fair Admissions v. President and Fellows of Harvard College, also considered the University of North Carolina\u2019s policies.<\/p>\n\n\n\n

Harvard subsequently enrolled fewer new Black students<\/a>, indicating that it had changed its admissions policies. Regardless, there are many precedents<\/a> finding elements of diversity, equity and inclusion to be activities that do further a charitable purpose.<\/p>\n\n\n\n

We believe the Trump administration would be unlikely to prevail in the courts with an anti-DEI argument should it try to use one to justify stripping Harvard of its tax-exempt status.<\/p>\n\n\n\n

What happens if a big nonprofit loses its charity status?<\/h2>\n\n\n\n

Losing nonprofit status can do a lot of damage.<\/p>\n\n\n\n

An organization that loses its status, whether it\u2019s a university like Harvard, a food bank, a homeless shelter or any other kind of charity, is suddenly subject to federal income tax<\/a>. It also loses the ability to receive tax-deductible gifts<\/a> from donors who are eligible to make them<\/a>.<\/p>\n\n\n\n

Because many state and municipal tax breaks are tied to federal tax status, losing tax-exempt status can also lead to local tax penalties. One compelling local tax break afforded to many charities is an exemption from property tax<\/a>. Universities with large amounts of buildings and land \u2013 as Harvard has<\/a> \u2013 would especially feel the pain.<\/p>\n\n\n\n

Without charity status, organizations that rely on grants from local, state and federal government sources<\/a>, as well as private sources<\/a> such as other charities, will find many of those sources of funding largely cut off. This is because many grant providers require all recipients to have tax-exempt status.<\/p>\n\n\n\n

The Internal Revenue Manual<\/a>, which guides IRS agents in carrying out their work, indicates a number of other problems that would arise after revocation. For instance, an agent is required to consider the impact on the organization\u2019s deferred compensation plans and tax-exempt bonds.<\/p>\n\n\n\n

Does the government appear to have a strong case against Harvard?<\/h2>\n\n\n\n

There\u2019s been little concrete information about the basis for Harvard losing its status. Most of what we know comes from social media posts<\/a> and media interviews.<\/p>\n\n\n\n

The Trump administration has attacked Harvard for its efforts to increase its diversity<\/a> and its response to antisemitism on its campus. In response to concerns about these issues, Harvard has retooled its DEI office<\/a> and begun to roll out reforms<\/a> to combat both antisemitism and anti-Muslim bias.<\/p>\n\n\n\n

But it is hard to argue that these issues would be central to Harvard and its educational mission, let alone warrant it losing its tax-exempt status.<\/p>\n\n\n\n

What\u2019s the impact then?<\/h2>\n\n\n\n

Given the steep climb it would be to prove that the organization has strayed from its educational mission, and not just taken some actions the White House dislikes, we find it hard to imagine a viable path toward the IRS revoking Harvard\u2019s charitable status.<\/p>\n\n\n\n

That doesn\u2019t mean there will not be any consequences from the administration\u2019s campaign against Harvard.<\/p>\n\n\n\n

The daily onslaught<\/a> of public attacks coupled with the ongoing legal battles<\/a> are a drain on Harvard officials\u2019 time and energy.<\/p>\n\n\n\n

The administration has put Harvard and other universities on the defensive in many other ways too. It has cut federal funding for scientific research<\/a>, sought to revoke international student<\/a> visas, expressed an interest in reducing federally funded student loans and grants<\/a>, and floated proposals to increase what is today a small tax on the income some higher education endowments<\/a> earn.<\/p>\n\n\n\n

If there\u2019s a silver lining for Harvard, we think it\u2019s that Trump\u2019s attacks could spur giving to the nation\u2019s wealthiest university<\/a>, at least in the short run. Harvard\u2019s supporters stepped up their donations after the administration\u2019s initial efforts<\/a> to punish Harvard. And giving-as-activism<\/a> has been a frequent theme<\/a> in both of Trump\u2019s terms.<\/p>\n\n\n\n

Philip Hackney<\/a>, Professor of Law, University of Pittsburgh<\/a><\/em> and Brian Mittendorf<\/a>, Professor of Accounting, The Ohio State University<\/a><\/em><\/p>\n\n\n\n

This article is republished from The Conversation<\/a> under a Creative Commons license. Read the original article<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Philip Hackney, University of Pittsburgh and Brian Mittendorf, The Ohio State University President Donald Trump has repeatedly threatened to revoke Harvard University\u2019s tax-exempt status, and some media outlets have reported that the Internal Revenue Service is taking steps in that direction. Harvard President Alan Garber says this would be \u201chighly illegal.\u201d Several U.S. senators, all […]<\/p>\n","protected":false},"author":56,"featured_media":39450,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[5,8025,292,46,295,10,25,296,27,4],"tags":[1723,9339,479,11881,16383,1900,4763,2661,547,885,891,886,860,3436,3050,989,4333,1602],"_links":{"self":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/39449"}],"collection":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/users\/56"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/comments?post=39449"}],"version-history":[{"count":1,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/39449\/revisions"}],"predecessor-version":[{"id":39451,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/posts\/39449\/revisions\/39451"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media\/39450"}],"wp:attachment":[{"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/media?parent=39449"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/categories?post=39449"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lifeandnews.com\/articles\/wp-json\/wp\/v2\/tags?post=39449"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}