Every time election season rolls around, FIRE is called on to clear universities’ lingering confusion over the political speech and activity rights of students, which are frequently, and unconstitutionally, restricted by colleges suddenly fearful that allowing such expression might put their tax-exempt status at risk. As we can never seem to say enough, students are strongly presumed to speak only for themselves on matters of politics. So long as this is clear, the risk student political speech poses to their universities in this regard borders on zero.
But what about college newspapers—many of which are incorporated as nonprofits? Are they a different case?
In the United States, nonprofit organizations that are exempt from paying federal taxes under the Internal Revenue Code are prohibited from intervening in political campaigns, “includ[ing] the publishing or distributing of statements.” A nonprofit that expresses support for a certain candidate endangers its tax-exempt status. And for almost every nonprofit, that would amount to a death penalty. (While many colleges are instruments of their state government, state and federal rules impose similar limitations on the use of public money for political activity, and many public universities also have tax-exempt status to make donations deductible.)
At the same time, nonprofit educational institutions frequently have student newspapers, and student newspapers, like many newspapers, often endorse candidates for office.
There was a time when this was a novel question. When the Internal Revenue Service (IRS) investigated the Columbia Spectator in 1970 over endorsements of Nelson Rockefeller in 1966 and Eldridge Cleaver in 1968, among others, there was an open question about whether these endorsements were part of the Spectator’s nonprofit mission or an impermissible foray into partisan politics.
The enforcement action was never formally resolved; the Spectator refused to agree not to endorse candidates and the IRS never pursued the matter further. But the question of editorial endorsements in student publications led to questions about the nonprofit status of universities supporting these publications.
The universities did not have to wait long for clarification. In 1972, IRS Rev. Ruling 72-513 held that a student newspaper receiving funding and other resources from an educational institution does not endanger the institution’s tax-exempt status by endorsing a candidate. A revenue ruling is an anonymized opinion released by the IRS that can be used as precedent by all taxpayers.
There were two main rationales offered for the ruling. First, student newspapers have long been considered an integral part of the educational mission of a university, and the expression of editorial opinion on political candidates is a commonly accepted feature of journalism. Second, the resources that go to support the newspaper are provided independently of the position the newspaper takes on the issue being reported. In other words, the tax-exempt institution provides support to the newspaper, which is free to adopt any political view; students working on the newspaper create the endorsement in the ordinary course of their duties on the newspaper staff.
To clarify the IRS’ opinion, it’s helpful to view the ruling immediately preceding this one. In IRS Rev. Ruling 72-512, the IRS found that a university did not participate in political campaigns by offering a political science course that gave credit for participating in political campaigns. That ruling noted that the school “does not influence the student in his choice of candidate or control his campaign work,” just as, in Columbia University’s case, the institution did not influence the publication’s choice of candidate.
Recently, The Daily Caller revived the debate over the rights of nonprofit campus publications, arguing that the Yale Daily News (YDN) may have violated its exempt status by endorsing Hillary Clinton for president. The article focused on the distinction that the YDN is a separately incorporated tax-exempt entity. Because YDN, as a tax-exempt nonprofit, is prohibited from intervening in campaigns, the reporter argued, it seemingly violated tax law by its endorsement.
To many of us, this reasoning might make intuitive sense. Yet, there is substantial reason to think the YDN’s separate incorporation does not limit its right to endorse candidates. The IRS was asked to rule on that situation for Northwestern University’s student newspaper The Daily Northwestern in 1997. In its private letter ruling that same year, the IRS explained:
Student newspapers such as The Daily Northwestern have long been an established feature of university operation and have long been accepted as not only an integral part of the university life of students and faculty but also an extension of the formal instructional process itself. …
The publication and dissemination of the editorial statements in question are acts and expressions of opinion by students occurring in the course of bona fide participation in academic programs and academic-related functions of the educational institution. Cf., Rev. Rul. 72-513.
The substantive phrases from the letter come directly from Rev. Rul. 72-513, suggesting the IRS did not, and does not, intend to draw a distinction between independent student publications and student publications sponsored by schools.
Unlike revenue rulings, private ruling letters are not binding on IRS actions (except for the actions and party described in the letter). They are, however, intended to show how the IRS interprets a set of facts.
The IRS seems to have set out a test that looks like this: If an educational nonprofit entity (either a school or a separate corporation) supports an educational activity without dictating its political content, and the educational activity would ordinarily involve some political expression, the nonprofit entity’s tax status is not threatened when students engage in that expression.
Unless the IRS takes steps to settle the issue permanently (perhaps by issuing a revenue ruling directly on point), we’ll probably be talking about this again in December of 2020, when the next round of endorsements comes along.