In Revenue Ruling 66-220, issued in 1966, the IRS determined that a non-profit broadcasting station, which disseminated music, literary productions, news reports, lectures, and discussions on subjects of interest to the community, qualified for a tax-exemption. The IRS reached this result by comparing the broadcaster's content to examples of educational organizations set forth in the Treasury Regulations (specifically, the example of an organization involved in offering "public discussions, forums, lectures, panels, and other similar programs broadcast on radio and television"). [FN1] Although the Treasury Regulations' specific definition of "educational" content was held unconstitutional in 1980, the examples of educational content contained in the Regulations are still informative.
Later the same year, the IRS distinguished these kinds of broadcasts from "the expression of opinion with little or no relevant factual material," in a "style...similar to that of newspaper columnists" with "topics rang[ing] over the entire field of current events." [FN2] In opining that an organization engaged in such activity would not qualify for an exemption, the Chief Counsel of the IRS wrote that such material "could hardly be said [to represent] the use of traditionally accepted methods of education," or "to be in substantial conformity with the standards observed by regularly established educational institutions[.]" [FN3]
In 1983, the U.S. Court of Appeals for the D.C. Circuit acknowledged that some evaluation of the plausibility of an organization's message might be necessary when considering whether the content of its publications are educational. Thus, in National Alliance v. United States, the Court of Appeals affirmed the IRS's denial of a tax exemption for the National Alliance, a white separatist political organization, stating that "[a]s the truth of [a] view asserted becomes less and less demonstrable, ‘instruction' or ‘education' must ... require more than mere assertion and repetition." [FN4] Although likely driven by the court's abhorrence for the National Alliance's message, this decision does indicate that a publisher can expect greater scrutiny when its content appears either to consist primarily of opinion or to contradict generally accepted fact.
The fourth factor of the Revenue Procedure 86-43 "methodology" test is also relevant in this context; namely, whether the "approach used in the organization's presentations is not aimed at developing an understanding on the part of the intended audience or readership because it does not consider their background or training in the subject matter." [FN5] The IRS has specifically considered whether methods claimed to be educational "provide an effective means for the increased diffusion and application of knowledge ... [through] analysis as well as imparting substantive knowledge[.]" [FN6]
The U.S. Tax Court held in 1988 that the publication of a magazine by a fraternity was not educational because, even if the content conveyed information or provided instruction to the fraternity's members, that was not the type of public benefit contemplated by Section 501(c)(3): "Whether a purpose is educational has been interpreted to be more than conveying information or providing instruction. ... An educational purpose is served only where a public interest, rather than a private interest of the petitioning organization, is the primary beneficiary of the educational activity." [FN7]
Considering decisions such as those collected above, the IRS's determination as to whether content is "educational" may consider the following factors:
- Format - is information conveyed in a method similar to the examples set forth in the Treasury Regulations ("public discussions, forums, lectures, panels, and other similar programs")?
- Support - is the information presented with factual support commensurate to the nature of the message being conveyed, or is it being presented as unsupported opinion (in a manner suggesting advocacy)?
- Instructional method - does the material include both factual information and analysis of the facts?
- Tailoring - does the presentation of the information take into account the audience's background or training in the subject matter?
- Targeting - does the education or instruction support a public interest, or does it primarily serve the members of the organization seeking the tax exemption?
The IRS has also recognized that some content not meeting these standards might be permissible if it assists an organization to reach an audience for other more educational content. In a 1987 Technical Advice Memorandum, the Office of the Chief Counsel stated that a non-profit organization operated to disseminate health and nutrition information would not lose its 501(c)(3) status after it acquired a magazine containing some non-educational content, because the magazine was used to promote the organization's educational mission:
It is our conclusion that the publication of [the magazine] ... does further the goals of [the non-profit], and that the magazine clearly assists [the non-profit] in its implementation of its educational and scientific programs. ... Admittedly, [the magazine] contains many features that do not further the health related goals of [the non-profit], but we believe that the mix of general material and health material serves the purpose of enabling [the non-profit] to reach that segment of the population that it desires to provide with health information. ... [O]ur examination of [the magazine] for the years involved indicates that the health and nutrition material presented is educational in content[.] [FN8]
Accordingly, inclusion of content that is not strictly educational in nature might still be held to serve an educational purpose. However, the IRS is unlikely to find that content is educational as a whole if opinion and entertainment content outweighs the educational content in a publication, or constitutes an independent, substantial purpose for the publication.
On several occasions, the IRS has also found organizations that serve as watchdogs over other publishers or broadcasters to be educational in nature.
1 Rev. Rul. 66-220, 1966-2 C.B. 209.
2 I.R.S. Gen. Couns. Mem. 33,325 (August 31, 1966) (available on Westlaw at 1966 WL 15713).
4 Nat'l Alliance v. United States, 710 F.2d 868, 873 (D.C. Cir. 1983).
5 Rev. Proc. 86-43, 1986-2 C.B. 729.
6 I.R.S. Gen. Couns. Mem. 38,845 (May 4, 1982).
7 Phi Delta Theta Fraternity v. Comm'r, 90 T.C. 1033, 1039-40 (1988).
8 I.R.S. Tech. Adv. Mem. 87-51-007 (September 14, 1987). Notably, the non-profit at issue also regularly donated space in the magazine to publicize and promote its other educational activities, used the magazine to conduct a series of medical surveys, and used responses to the surveys in part to help direct people to medical care.