The Brewing Storm of Tax-Exempt Status

Bill High

On the surface, life seems normal for Christian schools and organizations. But challenges lie ahead with a brewing storm.

There’s a growing movement to label Christian schools and organizations as hate groups, affecting their tax-exempt status and funding.

Few people know that in September 2019, in Washington, D.C., the House Ways and Means Committee in the House of Representatives held a hearing, “How the Tax Code Subsidizes Hate.” Representative John Lewis, who later passed away in July 2020, presided as chairman over the subcommittee. Lewis defined hate groups as organizations that “promote hate based on race, gender, religion, sexual orientation, or ethnic background.” 1 The committee heard witness testimony from various shootings such as the Pulse Nightclub shooting in Orlando and the Walmart shooting in El Paso. They then discussed whether the IRS should grant tax-exempt status to groups with discriminatory viewpoints, and ultimately whether tax-exempt status should be removed.

However, none of the discriminatory groups the shooters were involved in had tax-exempt status. So why is the Ways and Means Committee focusing on tax-exempt groups?

Reporter Nihal Krishan, writing for the Washington Examiner, explains the move is a cover to target “socially conservative organizations, anti-immigration entities, and religious groups.” In his article, “House Democrats call for stripping tax-exempt status from 60 ‘hate groups,’” he describes their list of hate groups as follows: “Some of the bigger organizations on the list include the fundamentalist Protestant group American Family Association, which opposes gay rights, the anti-immigration organization Federation for American Immigration Reform, the conservative think tank the Center for Security Policy, and the socially conservative group the Family Research Council.” 2

Stated succinctly, a “hate group” would include any group that holds a biblical view of marriage and sanctity of life.

If you think this view is far-fetched, consider that in January 2020, Christianity Today published a cover-story by Paul Matzko titled “The Hidden Cost of Tax Exemption.” There, Matzko cited a Democratic town hall where then-Congressman Beto O’Rourke was asked whether religious institutions should lose their tax-exempt status if they oppose same-sex marriage. O’Rourke responded: “There can be no reward, no benefit, no tax break for anyone, or any institution, any organization in America, that denies the full human rights and the full civil rights of every single one of us.”

Will Christian Schools and Organizations Lose Funding?

This is not a trivial conversation. Loss of tax-exempt status will mean the loss of funding. As part of these overall tax-exempt strategies, the Amalgamated Foundation started a campaign called “Hate Is Not Charitable.” The campaign encourages donor-advised fund (DAF) entities like Schwab, Fidelity, and Vanguard to stop giving to these so-called “hate groups.”