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Sharon Wrobel reports in The Algemeiner that “US Representatives Rashida Tlaib (D-MI), Alexandria Ocasio-Cortez (D-NY) and five other Democrats have called for the US Treasury to stop granting tax exemptions to American charitable organizations active in the West Bank and eastern Jerusalem.” Once the government gets in the act, it’s going to start looking at all charitable organizations, sweeping in BDS activities as well.
I am sure that Squad members Ocasio-Cortez, Tlaib, Pressley, along with Cori Bush and Jamaal Bowman, believe sacrifices must be made for the Cause, as long as others make the sacrifices. I cannot give legal advice, but I suspect that it is civilly and perhaps even criminally unlawful to use the Internal Revenue Service, or any other Federal agency, to harm somebody with whom you disagree. This means that were Secretary Yellen to act on this incitement, her career (but not those of the aforementioned Democrats) might be at serious risk.
This is far from an isolated incident when it comes to leftists sacrificing others in their efforts to destroy Israel. Ben & Jerry’s acceded to pressure to end sales of its ice cream in what it calls the Occupied Palestinian Territories and is now losing business wholesale. Numerous states are invoking anti-boycott laws to disqualify the company from doing business with them, while a Forbes article implies a breach of fiduciary duty:
But Unilever has a fiduciary duty to its shareholders. It is now time for Unilever to find ways to terminate that old arrangement that takes Unilever shareholders, hostages, by Ben & Jerry’s independent board.
I am sure Students for Justice in Palestine and similar entities will fight to the last Unilever stockholder and Ben & Jerry’s employee to make the Middle East Judenrein. Nonetheless, the Democrats in question do have a good idea provided that we modify it a bit and in ways not to their liking.
Nonprofit organizations such as 501(c)(3) entities (professional and religious) and 501(c)(5) entities (labor unions) must understand something up front when they get involved in Middle Eastern politics. There is a war in the Middle East between Israel and terrorists. Running parallel to that war, there is a nonviolent civilian theater here in the United States.
Before a nonprofit organization gets in involved in the civilian theater in America, it had better realize that it is customary during wartime to harm the enemy by whatever lawful means are at hand. That nonprofit’s status will be targeted whenever lawfully possible for reasons related or unrelated to BDS. It is easy enough to search the Internet for legitimate reasons to file Form 13909 complaints against nonprofits that support Boycott, Divest, Sanction (“BDS”), a movement to delegitimize and sanction Israel. These searches would have never occurred had the organizations remained neutral.
The Internal Revenue Service has some very explicit rules for 501(c)(3) tax-exempt organizations, and some may even apply to 501(c)(5) unions, although I do not know and cannot give legal advice. The IRS is not going to revoke the tax-exempt status of pro-Israel groups or, for that matter, anti-Israel groups that comply with the rules. However, should you be looking at a Form 13909 (which can be downloaded here), you’ll see why the IRS might in fact revoke a tax exemption. In the context of the BDS movement, the Form 13909 factors most likely to be applicable are as follows:
- “Organization is involved in a political campaign.” 501(c)(3) tax-exempt organizations, including churches, are absolutely forbidden to try to influence elections. At least one 501(c)(3) professional organization and one church that have joined the BDS movement published derogatory remarks about Donald Trump on their official websites before the 2020 election.
- “Income/Assets are being used to support illegal or terrorist activities.” Rev. Rul. 75-384 makes it unequivocally clear that “illegal” includes nonviolent but unlawful civil disobedience. Illegal actions by individuals who act on their own do not count but act that an organization orchestrates do. One major 501(c)(3) BDS supporter has published on its own website several accounts of civil disobedience in which its members, including those in leadership roles, were arrested.
- Form 13909 does not include a check box for ultra vires acts, which means acts outside the organization’s scope as defined by its articles of incorporation, bylaws, charter, and mission as reported to the IRS on Form 990. There is however a place on the form for “other” facts supporting a complaint. Again, I cannot give legal advice but “Ultra Vires Acts: Why Nonprofits Must Follow Their Articles & Bylaws” warns that, among other things, Directors and Officers insurance might not cover directors who involve their organizations in ultra vires activities.
The following actions by left-leaning organizations might qualify as ultra vires acts:
First, the Modern Language Association considered a boycott of Israel which drew this response from the Louis Brandeis Law Center:
The Brandeis Center letter informed the MLA President and Executive Director in writing that the proposed resolution is ultra vires – that is, outside the legal framework by which the MLA has been established – and as an organization that is incorporated in the state of Maryland, likely illegal under Maryland corporate law. Further, the proposed resolution is inconsistent with the mission and programs that the MLA reports to the Internal Revenue Service.
The MLA rejected the boycott, and some members who wanted it quit as a result, but they are no great loss because their success would have put their organization at risk for the reasons described by the Brandeis Law Center. Also note, “…the boycott’ of Israeli academic institutions, as called for by Palestinian civil society…” I am sure “Palestinian civil society” is fine with putting the MLA’s existence at risk because, after all, sacrifices (by anybody other than “Palestinian civil society”) must be made for the Cause.
Second, the American Studies Association was sued unsuccessfully for ultra vires acts, as (I understand) the court decided that their charter and mission gave them enough leeway to join the BDS movement, and the plaintiffs could not show $75,000 in damages. It should go without saying, although it apparently doesn’t, that allowing one’s members to bring an acrimonious political controversy under one’s roof, to the extent it leads to litigation, is nonetheless bad for morale, cohesion, and membership retention. Cornell Law School Professor William Jacobson filed a complaint (probably a Form 13909) against the ASA over this issue as well.
Third, some 501(c)(5) teachers’ and teaching assistants’ unions joined the BDS movement even though their charters and/or Form 990 tax returns cite only collective bargaining as their reasons for existence.
Representatives Ocasio-Cortez, Bush, Pressley, and Tlaib let the genie out of the bottle and they cannot put it back. I encourage Israel’s supporters to research every single 501(c) nonprofit organization that has joined the “Palestinian” cause to see whether the group (1) uses 501(c)(3) resources to influence an election, (2) engages in unlawful civil disobedience, or (3) engages in ultra vires activities beyond the scope of activities the organization has reported to the IRS.
Remember, that the IRS is a federal agency that is responsible for meeting a highly professional, non-partisan, and impartial accounting standard. In this, it’s distinct from the partisan weapon the Squad would like it to be, and it probably takes a dim view of those who provide it with inaccurate information. Any Form 13909 complaint must be supported with objective evidence that the IRS can verify for itself, as opposed to having to take the complainant’s word for it. Copies of web pages can be attached to the form to support the complaint.