When Tax Exempt Status is at Stake: Lessons from Harvard for Tax Exempt Public Charities


In April 2025, the U.S. Department of Education initiated a review of Harvard University’s IRC Section 501(c)(3) tax exempt and IRC Section 509 public charity status, citing concerns related to institutional governance, admissions practices, and diversity, equity, and inclusion (DEI) policies. The review also followed reports of antisemitism on campus and potential civil rights violations, prompting a temporary freeze on more than $2 billion in federal research funding.
A tax exempt designation provides key benefits to nonprofit public charity organizations, including exemption from federal and certain state and local taxes, eligibility for public and private grants, and the ability to receive tax-deductible donations. The designation also conveys public trust, offers limited liability protections, and supports long-term organizational continuity. While the U.S. Department of Education cannot directly revoke tax exempt status, the Internal Revenue Service has independent authority to do so if an organization is found to be in violation of public policy or legal requirements.
For nonprofits to safeguard their tax exempt public charity status, they must follow several guidelines that require consistency, care, and compliance:
For nonprofit leaders, understanding Harvard’s situation is more than a cautionary tale. Here are a few areas where being proactive and transparent can ensure stability and longevity:
Ultimately, preserving your organization’s tax exempt public charity status is about more than regulatory adherence. It’s about protecting the integrity of your mission and the trust of those you serve. Harvard’s current legal battle and overall status situation serves as a timely reminder that maintaining nonprofit status demands vigilance and integrity. As public expectations evolve and regulatory scrutiny increases, staying mission-aligned and legally compliant is not just a best practice. It’s vital.
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