“We waited a long time to say this. We didn’t want to sound a false alarm. But now we know for sure: The Internal Revenue Service is out to get us.”
The year was 1983. Donald Trump was a 37-year-old developer still married to his first wife and busy trying to revive a football team. In Washington, conservatives were working on “defunding the left,” and the federal government was targeting a nonprofit news organization whose reporting powerful people didn’t like.
That nonprofit was the Foundation for National Progress, which published Mother Jones. To this day, so far as we know, we are one of only two newsrooms the IRS has ever sought to defund by taking their nonprofit status away. (The other was a now-defunct feminist newspaper called Big Mama Rag.) But we may not hold that distinction much longer, as now-President Trump has made it clear that he intends to use the government’s taxation power to harass organizations he doesn’t like. He has threatened to yank nonprofit status from Harvard University and the watchdog group Citizens for Responsibility and Ethics in Washington. For a few weeks this spring, rumors of executive orders targeting NGOs had the nonprofit world at a fever pitch. On Capitol Hill, the “nonprofit killer” bill keeps popping up in different guises, most recently as part of Trump’s tax-and-spend bill (it was removed before final passage).
None of this, of course, is new. Trump’s old pen pal, President Richard Nixon, was intensely focused on using the IRS to, as he put it, “go after our enemies and not go after our friends.” While deliberating about choosing an IRS chief, Nixon told his top aides, H.R. Haldeman and John Ehrlichman, “I want to be sure he is a ruthless son of a bitch, that he will do what he’s told, that every income tax return I want to see I see, that he will go after our enemies and not go after our friends.” Ultimately, these machinations became part of the articles of impeachment against Nixon, and Congress passed legislation prohibiting the president and vice president from interfering with the IRS — laws that may soon be tested.
The Mother Jones inquiry began as a run-of-the-mill audit in the waning months of the Carter administration. But as Editor-in-Chief Deirdre English later wrote, after President Ronald Reagan took office in 1981, “We watched the once-innocuous audit become increasingly repressive.” Eventually, the IRS sent a letter revoking Mother Jones’ tax exemption through the Foundation for National Progress, arguing that it was a “commercial” money-making enterprise.
This was laughable. Founded just five years earlier, Mother Jones had become the nation’s largest progressive magazine thanks to powerful reporting, compelling visuals and smart marketing. But it was also losing hundreds of thousands of dollars a year. Most magazines were sustained by advertising from car and tobacco companies. Mother Jones was investigating them.
The stakes were high. Without a nonprofit designation, Mother Jones would have to pay higher postage rates and donors wouldn’t be able to claim a tax deduction. The IRS also demanded nearly $400,000 in back taxes. As the fight dragged on, MoJo’s lawyers came to believe the audit “was definitely political,” wrote English, noting that Richard Viguerie, the godfather of the modern right and one of the key architects of Reagan’s election victory, had demanded in a New York Times op-ed that “defunding the left should be a principal priority of the Reagan administration.” English’s personal taxes were also audited three years in a row.
If the IRS were to go after a nonprofit newsroom (or any other NGO) today, we might expect other kinds of harassment, as well. A tax audit could well be accompanied by a public spectacle, with the president and his allies unleashing their followers’ fury on the targeted organization. They might seek not just an investigation but a show trial.
In the past few months, nonprofit organizations around the country have been wargaming these kinds of scenarios. Boards debated whether organizations should hide funds to avoid having them frozen. CEOs mapped out how to respond to a politically motivated audit.
But if there’s one thing worth taking away from Mother Jones’ past experience, it’s that destroying a nonprofit organization is not as easy as all that. Revoking tax-exempt status requires a finding that the organization violated its purpose, or the law. That determination can then be appealed within the IRS, and ultimately in court. A politically motivated attack on a nonprofit would likely rally public opinion — as it did with Mother Jones: The magazine turned to subscribers and donors to help pay its legal bills and held a fundraiser featuring the composer Philip Glass and the cult (aka stoner) film “Koyaanisqatsi.” The dispute made it all the way to a hearing of the Senate Commerce, Consumer, and Monetary Affairs subcommittee, where, in May 1983, chairman Doug Barnard (D-Ga.) warned IRS assistant commissioner Allen Winborne that “I hope that the IRS will continue to apply an evenhanded approach in judging the exempt status of such [nonprofit] publications.”
To be sure, this kind of pushback might not save a nonprofit — especially one that is already on the financial edge. Nonprofit newsrooms, for example, are vulnerable because many of them are fairly young and small — the sector has blossomed in the past 15 years as the commercial media ecosystem has collapsed. The median annual revenue for these organizations, which often are the only independent source of news in their communities, is less than a half-million. Losing, say, $100,000 of that in legal fees, penalties or both, could easily put them under. Many smaller news organizations also get a big chunk of their annual revenue from a single foundation or individual; if that one donor is intimidated by an investigation, there goes the journalism.
But there’s one thing worse than being put out of business: giving up on your mission, or your values. And for those organizations that can hold on in the face of threats, justice may ultimately prevail. In Mother Jones’ case, the IRS ultimately revised its determination, finding that the magazine “has never made a profit” and, in fact, “has frequently made editorial decisions that limit its ability to attract advertisers” — such as investigating tobacco and car companies. All this supported “a conclusion that profit is not a prime motivator in publishing the journal.”
I’ve pinned up on my wall a copy of the faded issue in which Deirdre English told readers about the IRS battle. In it, she quotes the magazine’s then lawyer, Thomas Silk (who went on to found the important nonprofit law firm Silk, Adler & Colvin), who told her, “’The political climate may not encourage a career civil servant to decide in your favor. You may be forced to take the matter to court. In my judgment, however, Mother Jones will win.”
“Naturally, we’ll win,” English continued. “If the IRS persists in trying to stamp us out, censorship will be the issue, and the First Amendment will be our defense.”
What to do if the IRS comes for you
- Be prepared. For the moment, odds are pretty slim that your particular organization will be targeted — but you need to acknowledge the possibility. Talk about it in a board meeting, with the staff, with key donors.
- Don’t leap to the worst-case scenario — such as having your assets frozen. Such a move is possible, under current law, only if the organization has been determined to support foreign terrorism. For that, notes a memo from the Washington law firm Sandler Reiff, the organization must have a foreign presence and must be found to have engaged in illegal conduct, including violence.
- Button up your financials. Your tax returns need to be audit ready, going back at least three years.
- Look at your other compliance issues. State labor law, charitable solicitation registration, etc. — this is no time to be fuzzy on any of that.
- Lawyer up. There are many legal resources for nonprofits out there, and they can help you identify defenses. There’s lots of case law saying that politically motivated tax decisions will not stand.
- Refresh your memory on what 501c3 nonprofits can and cannot do under current IRS guidance. You might be surprised (I was, by some of the items here.)
- Build alliances and solidarity. Get to know other nonprofit leaders, have Signal chats with them, vent to each other. It will save your sanity and create a network of mutual support if the worst happens.
- Finally, and most importantly, don’t obey in advance. It’s tempting to think about it (some, including PBS, have gotten rid of or changed their diversity language, and anecdotally, I’ve heard of particularly pointed stories being softened and spiked). But history will not be kind to those who compromise their values.
Monika Bauerlein is CEO of the Center for Investigative Reporting, which produces Mother Jones, Reveal, and More To The Story.
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