## Facts

- A nonprofit organization was formed to promote world peace and disarmament through nonviolent direct action, including acts of civil disobedience.
- The organization stated it sought to educate and inform the public on pacifism and nonviolent action, including civil disobedience.
- Its primary activity was sponsoring protest demonstrations and nonviolent action projects opposing war and preparations for war.
- Demonstrations occurred at military establishments, federal agencies, and industrial companies involved in defense operations, and included marches and protests about tax expenditures for war.
- To obtain publicity and pressure government authorities, demonstrators were urged to commit civil disobedience.
- Demonstrators deliberately blocked vehicular or pedestrian traffic, disrupted government work, and impeded movement of supplies.
- These acts violated local ordinances and breached public order.
- Leaflets presenting the organization’s views were distributed in connection with demonstrations, but this was incidental to the protest activity.
- The organization sought IRS guidance on exemption under I.R.C. § 501(c)(3) or, alternatively, § 501(c)(4).

## Issues

1. Whether an organization whose primary activity encourages and involves intentional violations of law can qualify as “organized and operated exclusively” for charitable or educational purposes under I.R.C. § 501(c)(3).
2. Whether such an organization can qualify as operated exclusively for the promotion of social welfare under I.R.C. § 501(c)(4).

## Decision

- The IRS concluded the organization did not qualify for exemption under either § 501(c)(3) or § 501(c)(4).
- The IRS reasoned that exemption is unavailable where an organization’s purposes or primary activities are illegal or contrary to public policy, including where activities tend to induce the commission of crime.
- Because the organization’s primary activity urged and involved violations of local ordinances and breaches of public order, the organization failed the operational requirements for both provisions.

## Legal Principles

- For § 501(c)(3), “charitable” is understood in its generally accepted legal sense, informed by trust-law principles that disallow charitable purposes that are illegal or contrary to public policy.
- An organization is not operated “exclusively” for exempt purposes if its primary (and thus substantial) activities consist of, or are designed to induce, unlawful conduct.
- Repeated and intentional law violations as a primary method of operation are incompatible with exemption under § 501(c)(4) as well as § 501(c)(3).

## Conclusion

The IRS ruled that a nonprofit cannot receive exemption under § 501(c)(3) or § 501(c)(4) when its primary activity is organizing demonstrations that urge and involve deliberate violations of law and breaches of public order, even if the organization’s stated aims include peace and public education.


Rev. Rul. 75-384, 1975-2 C.B. 204 (1975)