Saturday, March 11, 2023
Lloyd Hitoshi Mayer, Notre Dame Law School, is publishing Nonprofits, Taxes, and Speech in volume 56 of the Loyola of Los Angeles Law Review. Here is the abstract.
Federal tax law is of two minds when it comes to speech by nonprofits. The tax benefits provided to nonprofits are justified in significant part because they provide nonprofits great discretion in choosing the specific ends and means to pursue, thereby promoting diversity and pluralism. But current law withholds some of these tax benefits if a nonprofit engages in certain types of political speech. Legislators have also repeatedly, if unsuccessfully, sought to expand these political speech restrictions in various ways. And some commentators have proposed denying tax benefits to groups engaged in other types of disfavored speech, including hate speech and fake news. These latter proposals have recently become more prominent as additional facts come to light about the role of nonprofits in supporting white supremacy and in disseminating misleading information about COVID-19 treatments. This Article explores the existing and proposed limitations on speech by tax-exempt nonprofits given the constitutional restrictions on such limitations and the policy justifications for existing nonprofit tax benefits. It explains why the existing limits on political campaign intervention and lobbying by charities are both justified given the subsidy provided to charities and their supporters under existing federal tax law and constitutional given existing and longstanding case law. It further concludes that any expansion of these limits on charities to cover other types of speech, including hate speech and fake news, would be inconsistent with the existing broad definitions of the purposes that charities can pursue as well as, in some circumstances, constitutionally suspect. It also concludes that limits on speech by non-charitable tax-exempt nonprofits, including the existing limit on political campaign intervention for some of these nonprofits, is both unwise as a policy matter and, in some circumstances, constitutionally suspect given the lack of a subsidy for such speech by these nonprofits.
Download the article from SSRN at the link.