White supremacist organizations are facing new financial constraints, as payment processors, online stores, and fundraising sites increasingly bow to public pressure and prohibit these groups and individuals from making money off of their racist vitriol.
For at least seven organizations, however, a workaround remains: registering as a tax-exempt charity. As these white supremacists have discovered, taking advantage of a particular loophole enables them to continue earning millions of dollars in revenue from supporters happy to avoid taxes.
This registration has been a life-saver for these organizations, including some of the most prominent groups currently leading the resurgence of white supremacy in the United States.
These groups, like the VDARE Foundation, New Century Foundation, and Charles Martel Society — all of which consistently produce white nationalist material — claim to be “educational” pursuits, stating that they exist simply to pass along information and little more. Even when these groups mention race in their tax filings, they still claim to serve educational purposes; as the New Century Foundation wrote on its tax forms, it exists to “educate the public on matters of race, race relations, and immigration.”
Characterizing themselves as “educational” institutions allows these organizations to claim tax-exempt status, and it’s been a boon for their finances. All told, the combined revenue of these seven groups identified by ThinkProgress has reached more than $10 million since the mid-2000s — with over $5 million coming in the past two years alone.
And thanks to a combination of political cowardice and shrinking budgets, the IRS has been unable — or unwilling — to do anything about it. As such, these white supremacist groups are able to advertise that status to their followers, promising that donations can be deducted from supporters’ final taxes.
“These groups — especially white nationalist groups — have been using [charity structures] where they can, and for a long time,” Heidi Beirich, who leads the Southern Poverty Law Center’s Intelligence Project, told ThinkProgress. “They’re kind of savvy on this.”
Educating white supremacists
Few experts and academics have paid as close attention to the tax loopholes available to some white supremacist organizations as Eric Franklin Amarante, an assistant professor at the University of Tennessee College of Law.
Last year, Amarante examined the pattern of white supremacist groups gathering under this tax-exempt umbrella in a journal article for the Emory Law Journal Online, entitled, appropriately enough, “Why don’t some white supremacists groups pay taxes?”
“The most vital [thing] for the public to care about is the lack of funding for the IRS — and that is the core of all of this.”
He found several key factors that combine to create the gaping loophole. “The answer is a complicated mix of absurdly broad Treasury regulations, unconstitutionally vague tests, and budgetary constraints,” Amarante wrote.
Thanks to an “educational” status — and a lack of a real, discernible test for what counts as an educational institute in the eyes of the IRS — these white supremacist advocacy groups are able to claim that they are no different from universities or other degree-granting institutions.
“It affords their donors the same benefits that it affords me if I give money to the ACLU,” Beirich said.
The IRS has also granted wide leniency to all groups applying for tax-exempt status in the past; as Amarante found, in 2015, the IRS “approved about 93 percent of all tax-exempt applications.” As such, white supremacist organizations are almost certainly not the only groups taking advantage of the loophole.
But the white supremacists’ continued willingness to abuse the IRS loophole is taking place as the agency has been effectively gutted over the past few years. Thanks to a shrinking budget, a recent investigation from ProPublica found that the number of IRS audits had dropped over 40 percent since 2010.
“I think maybe the most important [thing] to note, and the most vital for the public to care about, is the lack of funding for the IRS — and that is the core of all of this,” Amarante told ThinkProgress.
The agency declined to discuss the loophole being exploited by white supremacist groups. “Federal law prohibits the IRS from commenting on or discussing any specific taxpayer information or case,” IRS spokesperson Cecilia Barreda told ThinkProgress via email.
There is at least some history of the IRS taking a closer look at white supremacist groups, however. For instance, the IRS refused to grant tax-exempt status to a pair of neo-Nazi groups, The National Alliance and The Nationalist Movement — but each of those decisions took place over 20 years ago, with nothing comparable since.
Nearly two years ago, the Associated Press investigated white supremacist groups claiming charity status, finding that a handful of organizations had managed to raise nearly $7.8 million in donations since the mid-2000s — all of it tax-deductible.
But as a ThinkProgress review of tax filings found, these racist organizations — including some the AP didn’t survey — have managed to raise over $5 million in the past two years alone.
“It affords their donors the same benefits that it affords me if I give money to the ACLU.”
One of the main groups examined by ThinkProgress, the New Century Foundation, is headed by Jared Taylor, who describes himself as America’s preeminent “race realist.” Taylor is an outright white nationalist, at one point saying, “We want a homeland where we are a majority.”
Based in Virginia, the group maintains American Renaissance, an online magazine that caters directly to white nationalists; as the Southern Poverty Law Center described, the magazine “regularly feature[s] proponents of eugenics and blatant anti-black racists.”
Despite its public embrace of racist ideals, the New Century Foundation has retained tax-exempt status for years, allowing it to accumulate nearly $2 million in assets. According to the group’s 2017 tax filings, submitted in May 2018, the New Century Foundation also managed to amass over $425,000 in revenue in a single year, with expenses running about $360,000.
As the filings further indicate, the group’s revenue isn’t obtained through donations alone — a significant sum came from “conference revenue” (nearly $70,000) and online sales of books and DVDs (over $30,000).
The New Century Foundation makes sure to advertise its tax-exempt status to followers. As the “donate” page on the American Renaissance site reads, followers can easily “make a secure, tax-deductible donation” to the organization.
Fascist fellow travelers
Another organization taking advantage of this tax loophole is the VDare Foundation, a group steered by Peter Brimelow.
Like the New Century Foundation, VDare cloaks its racism in anodyne terms like “race realism” — although Brimelow has recently let the mask slip even further, such as when he claimed last year that Hispanics “specialize in rape, particularly of children.”
Brimelow has also admitted that he publishes “white nationalist” writers, and has claimed that the U.S. is a “white nation.” One of the writers published on VDare is Jason Kessler, the organizer of the violent 2017 “Unite the Right” rally in Charlottesville, Virginia, in which white supremacist James Fields killed one counter-protester and injured nearly 20 others with his car. Fields was recently sentenced to life in prison.
As with the New Century Foundation, VDare has accrued substantial tax-exempt revenue, with the group’s 2016 forms indicating that it brought in over $440,000 in annual revenue. (VDare’s 2017 filing remains unavailable, but the group did not say why.) And like the New Century Foundation, VDare highlights on its site how donations to the group are tax-deductible.
Brimelow even managed to redirect approximately $250,000 to his Happy Penguins LLC, claiming that company was being paid as an independent contractor providing “leased employees” for VDare.
A third group, the Charles Martel Society, has also followed suit. The organization publishes the white supremacist Occidental Quarterly, which regularly mixes racist and anti-Semitic tropes in its writing, and claims it only wants to broaden “understanding of the concept of the Nation-State in general and of the American Nation-State in particular.”
While the Charles Martel Society hasn’t brought in quite as much funding as other groups — its annual revenue was nearly $110,000, according to the most recent documents — that revenue is nearly double what the group was bringing in a few years prior. And all of it, again, is tax-exempt. As the donation page for the Occidental Quarterly reads, “contributions are fully U.S. tax-deductible.”
Other similar groups are also eager to obtain tax-exempt status. One, the blandly named U.S. Inc., is registered as a 501(c)(3), with its most recent filing indicating that the group earned over $2 million in revenue in 2017. The year before, the group pulled in nearly the same amount. The intake helps U.S. Inc. produce the Social Contract Press, which the Guardian describes as a “racist and anti-immigrant publication,” and which the SPLC noted “routinely publishes race-baiting articles penned by white nationalists.”
Even lesser-known white supremacist groups have gotten in on the action. Organizations like the Council of Conservative Citizens — a group white supremacist mass murderer Dylann Roof cited as inspiration — and the neo-Confederate League of the South have taken advantage of easily setting up tax-exempt entities. The League of the South said its Mary Noel Kershaw Foundation can help support the “educational work” of the white supremacist group.
Brimelow did not answer ThinkProgress’ questions, writing via email that VDare is “not a white nationalist organization, your questions are irrelevant.” The remainder of the groups did not respond to ThinkProgress’ questions.
Rags to Richard Spencer
Only one white supremacist organization has lost its tax-exempt status in recent years — but even then, it was only temporary.
Last year, the IRS revoked the tax-exempt status of the National Policy Institute, the white supremacist group headed by none other than Richard Spencer. The IRS’s decision to remove Spencer’s status added to a litany of other disappointments for the white supremacist, ranging from public humiliations to his transformation into a national laughingstock.
Unfortunately, the IRS’s decision to end the NPI’s tax-exempt status didn’t stem from a new crackdown on white supremacists, but for a reason far more banal: Spencer’s inability to file paperwork on time. Since NPI had failed to meet filing deadlines, his group was no longer able to keep donations tax-deductible.
But in October, reports revealed that the IRS had approved Spencer’s request to return to tax-exempt status. Spencer, who told the AP that the reinstatement had required a “long process,” did not respond to ThinkProgress’ questions.
All told, the NPI’s temporary removal was a small glimmer of good news in a far larger morass of similar groups taking full advantage of the IRS’s wide loopholes and continued inability to regulate registered charities. And that reality, regardless of how many millions these white supremacists keep raking in, shows little sign of changing anytime soon.
“I don’t see any silver lining here,” Amarante said, regarding the IRS focusing on white supremacist groups receiving tax-exempt status. “There’s no way to really fix this unless we support the IRS the way we’re suppose to and really, frankly, radically change way we deal with charities.”