Why Should The Partisan Southern Poverty Law Center Be Tax-Exempt?

Southern Poverty Law Center operates so far outside of any legal norms that the time has come for the IRS to pull the plug.

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That is the question that Senator Tom Cotton asked today in a letter to the IRS. The Southern Poverty Law Center is an arm of the Democratic Party whose stock in trade is defamation. What tax-exempt purposes do baseless, politically-motivated smears serve? Excerpts from Senator Cotton’s letter:

Dear Commissioner Rettig,

I am writing to urge you to investigate whether the Southern Poverty Law Center (SPLC) should retain its classification as a 501(c)(3) nonprofit organization. Recent news reports have confirmed the long-established fact that the SPLC regularly engages in defamation of its political opponents. In fact, the SPLC’s defining characteristic is to fundraise off of defamation.

This business model has paid well. The SPLC has accrued more than $500 million in assets. According to the group’s most recent financial statement, it holds $121 million offshore in non-U.S. equity funds. The SPLC uses these assets to pay its executives lavish salaries far higher than the comparable household average.

Further, CNN reported that the organization “suffers from a pervasive racist culture,” and the SPLC’s leader has “been disciplined after a prior investigation into inappropriate conduct.” The New York Times has charitably described the organization as “in turmoil” and cited employees’ claims that SPLC leadership is “complicit in decades of racial discrimination, gender discrimination, and sexual harassment and/or assault.”

Based on these reports, and in the interest of protecting taxpayer dollars from a racist and sexist slush fund devoted to defamation, I believe that the SPLC’s conduct warrants a serious and thorough investigation.

That is only the warmup.

While IRS guidance lists several examples of tax-exempt purposes, engaging in defamation as a business model is of course not one of them. The SPLC defames other organizations in several ways.

A nice summary of the SPLC’s disgraceful track record as a purveyor of partisan hate follows.

In addition to failing to have a tax-exempt purpose, the SPLC’s peculiar financial situation warrants your attention. Federal law prohibits tax-exempt organizations from inuring to the benefit of any private individual. Yet the SPLC has accrued more than $500 million in assets as of October 31, 2018. …

In 2017 alone, these funds were used to pay the organization’s founder and longtime leader, who was recently removed for unspecified inappropriate conduct, more than $400,000. … This is more than nine times the median household income for Montgomery, Alabama, where the SPLC is headquartered.

These shady financial practices have earned the SPLC a well-deserved “F” rating from Charity Watch, an independent organization that examines the financial abuses of nonprofit corporations.

As the president of a 501(c)(3) organization, I am naturally slow to question the tax-exempt status of another such organization, no matter how foul its conduct may be. But the Southern Poverty Law Center operates so far outside of any legal norms that the time has come for the IRS to pull the plug.

John Hinderaker
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