## Facts

- National Alliance, a Virginia nonprofit, published a monthly newsletter and membership bulletin, distributed books and leaflets, and organized lectures and meetings to advance a white racial-heritage message.
- The organization applied to the IRS on July 28, 1977 for recognition as tax-exempt under 26 U.S.C. § 501(c)(3) as a “charitable and educational” organization.
- On March 31, 1978, the IRS denied the application, concluding the organization was neither “charitable” nor “educational” under Treasury Regulation § 1.501(c)(3)-1(d)(2)–(3).
- The regulation stated that advocacy can be “educational” if it presents a “full and fair exposition of the pertinent facts” enabling the public to form an independent conclusion, but not if its principal function is the “mere presentation of unsupported opinion.”
- The organization’s published materials were characterized as portraying non-white people as inferior and dangerous, suggesting Jewish manipulation of public institutions, and using inflammatory rhetoric and calls to harmful action against disfavored groups.
- After exhausting administrative remedies, National Alliance sued in federal district court; the court ruled the “full and fair exposition” standard unconstitutionally vague under the First Amendment and granted relief.
- Both sides appealed, producing consolidated appeals in the D.C. Circuit.

## Issues

1. Whether National Alliance qualified as an “educational” organization under 26 U.S.C. § 501(c)(3) and the governing Treasury regulations.
2. Whether the IRS’s “full and fair exposition” standard for “educational” status was unconstitutionally vague under the First Amendment.
3. Whether denial of tax-exempt status could be sustained on objective, method-based grounds without requiring viewpoint-based judgments.

## Decision

- The D.C. Circuit reversed the district court’s grant of relief to National Alliance.
- The court upheld the IRS’s denial of § 501(c)(3) recognition, concluding National Alliance did not qualify as “educational.”
- While recognizing constitutional concerns with the “full and fair exposition” formulation as applied after prior circuit precedent, the court sustained the denial on grounds that did not depend on choosing between competing viewpoints.
- The court treated the organization’s communications as primarily unsupported, inflammatory advocacy aimed at agitation and incitement, rather than presentation of facts designed to develop understanding and independent judgment.

## Legal Principles

- An organization may advocate a particular viewpoint and still be “educational” under § 501(c)(3) if it employs methods that present pertinent facts in a manner enabling independent evaluation.
- Communications consisting principally of unsupported opinion, factual distortion, inflammatory language, or emotional appeals may fall outside “educational” purposes under § 501(c)(3).
- First Amendment concerns are reduced where the exemption decision rests on objective, method-focused criteria rather than assessments of truth, correctness, or ideological balance.
- Denial of tax-exempt status does not bar speech; it reflects refusal to confer a tax subsidy when statutory requirements are not met.

## Conclusion

The D.C. Circuit upheld the IRS’s denial of § 501(c)(3) status to National Alliance, holding that its materials and activities did not qualify as “educational” because they relied chiefly on unsupported, inflammatory advocacy rather than fact-based methods aimed at informing and enabling independent judgment.


National All. v. United States, 710 F.2d 868 (D.C. Cir. 1983)