New York, NY, June 25, 2021 … Extremist and hateful groups operating as “charitable”, 501(c)(3) or (c)(4) organizations may be abusing their tax-exempt status to further their violent objectives or enrich their leaders, according to a new report from ADL (the Anti-Defamation League). ADL’s Center on Extremism identified and reviewed filings of over 30 groups that are registered as tax-exempt organizations with the Internal Revenue Service (IRS), including groups associated with the Capitol insurrection.
A cursory investigation by the ADL found that a number of extremist and hateful groups may have misrepresented their actual purposes in their application for tax-exempt status or may be abusing their tax-exempt status for a variety of purposes, such as paying their leaders excessive salaries, or diverting funds to enrich friends or family at the expense of the tax-exempt entity itself. These activities may be grounds for immediate revocation of charitable status and potential financial penalties.
In a letter to the IRS issued last week, ADL urged the agency to take swift and meaningful action to ensure proper oversight and end these tax violations.
“Groups that advance hate and extremism have been far too successful at obtaining tax-exempt status, including by potentially misrepresenting the nature of what they do in their filings with the IRS,” said ADL CEO Jonathan Greenblatt. “Tax exemption is a privilege reserved for organizations that serve the public good, not for those that perpetuate hate and violence. The IRS must immediately review the tax-exempt status of these hateful organizations, and everyone, including major corporations that offer opportunities for individuals to make charitable contributions, must be more vigilant to ensure that they do not facilitate the funding of hate.”
In the days leading up to the U.S. Capitol insurrection, for example, Oath Keepers’ founder Stewart Rhodes appeared on a podcast to solicit donations to the Oath Keepers Educational Foundation, a 501(c)(3) whose stated purpose on its 1023-EZ filing is to “give veterans an opportunity for continued involvement in community service.”
To prevent future misuse of tax-exempt status by any organization, ADL is recommending that the IRS and relevant federal agencies:
- Review tax-exempt status of extremist and hateful groups; and
- Create a strategy to address fundraising for violent activities in the U.S.
ADL is also calling for better oversight by Facebook and Amazon over groups using “Facebook donations” and “Amazon smiles” features
For more information, please see the full report.