As a nonprofit philanthropy, the Open Society Foundations is required by law to operate within clear boundaries to keep its tax-exempt status. Like any nonprofit, it cannot use funds for purposes that run contrary to its stated mission, especially if those purposes are illegal. The George Soros-founded and funded operation has given indications of doing both, and on a grand scale. The case for the Internal Revenue Service to revoke its tax-exemption is compelling. Some members of Congress, along with the Treasury Department, believe the time for action is now.
For at least a year and a half, House Ways and Means Committee Chairman Jason Smith, R-Mo., has led a probe of Leftist nonprofits who appear to have violated tax laws. One group in particular, the Tucson-based Alliance for Global Justice, has raised giant red flags. In a letter to then-IRS Commissioner Daniel Werfel last November, Chairman Smith insisted that the IRS revoke the Alliance’s tax-exempt status. He had a good reason, too. The Alliance is the official fiscal sponsor of Samidoun, a nonprofit that raises money for a Middle East terrorist group, the Popular Front for the Liberation of Palestine (PFLP). Samidoun, headed in this country by the wife of a deported PFLP leader, held public rallies celebrating the October 7, 2023 Hamas attacks that killed 1,200 unarmed Israeli citizens and kidnapped about 250 more. The Soros network, if indirectly, may have bankrolled these rallies assuming there was leftover money from its $250,000 donation to the Alliance in 2020.
Rep. Jim Banks, R-Ind., though not a member of the Ways and Means Committee, also has voiced objections. In a June 27, 2024 letter, he alerted the IRS to what he termed “a network of activists and media outlets that had helped organize many of the violent anti-police riots during the summer of 2020, and that, more recently, have organized many of the ongoing anti-Israel protests and encampments on college campuses.” He cited the Alliance for Global Justice and the Westchester People’s Action Coalition (WESPAC) as coordinators of these activities. Banks concluded: “Safeguarding America requires a thorough examination of the 501(c)(3) or 501(c)(4) status of organizations affiliated with anti-American terrorist groups. It is therefore critical that the IRS take decisive action to ensure these organizations’ compliance with all applicable laws.”
The executive branch has taken action. In October 2024, the Treasury Department’s Office of Foreign Assets Control, acting on a request from Ways and Means Committee Republicans, designated Samidoun “a sham charity that serves as an international fundraiser for the Popular Front for the Liberation of Palestine (PFLP) terrorist organization.” Ways and Means Chairman Smith followed up with his November letter. If Samidoun is enabling terrorism, he argued, then so is the Alliance for Global Justice:
This case is not complicated, which makes the failure to revoke the Alliance’s tax-exempt status both concerning and confusing. As you know, if a nonprofit organization conducts substantial activities that do not further its exempt purposes, such activity may result in the organization’s tax-exempt status.
Additionally, the IRS has found that conducting illegal activity is inconsistent with tax exemption. and the agency has stated that “planning and sponsoring such activities are incompatible with charity and social welfare.” Furthermore, and of utmost importance in this case, under Section 501(p) of the IRC [Internal Revenue Code], organizations designated as terrorist organizations cannot maintain tax-exempt status.
These words could apply to many beneficiaries of OSF largesse. The following are updated summaries of selected groups cited by NLPC.
Indivisible. If one wants to know who was behind the nationwide “Tesla Takedown” on March 29, an event that triggered arson at selected Tesla motor vehicle dealerships, look no further than this Washington, D.C.-based radical network Indivisible. Formed in the wake of “fascist” Donald Trump’s 2016 presidential election, Indivisible disavows violence and property destruction during protests. Yet its rhetoric can be incendiary. The “grassroots” group has relied on billionaires Reid Hoffman and the late Herbert Sandler for financial support, but the Open Society Foundations remains its main source. During 2017-23, OSF donated $7.26 million directly to the 501(c)(4) nonprofit Indivisible Project on top of the $350,000 in seed money it routed through Tides Advocacy in 2017.
Working Families Organization. This Brooklyn, N.Y.-based nonprofit network sponsors the Working Families Party (WFP), a self-described “multiracial party of working people to transform our country.” It specializes in placing “fusion” candidates on the ballot in states that allow the practice. In New York City, the WFP was part of a corrupt web of fundraising that boosted the profile of Zohran Mamdani, the victorious Democratic Party candidate in the recent mayoral primary. The Soros network helped make this possible. Of the $16 million raised by the WFP during January 2023-August 2024, $2 million came from the Soros-run Democracy PAC, part of the Fund for Policy Reform, which in turn is part of the Open Society Foundations. All told, OSF donated a staggering $25,445,000 to the Working Families Organization, affiliates and conduits during 2016-23.
United We Dream. Enabling illegal immigration is a federal crime. And the nonprofit United We Dream Network, along with a related lobbying outfit, United We Dream Action, are proud offenders. United We Dream activists regularly block Immigration and Customs Enforcement agents from carrying out deportations; pass out fliers instructing illegals on how to refuse to cooperate with ICE; and distribute a guide, Undocupeers, through which educators, students and staff can work with “undocumented” students. Outrageously, United We Dream issued a statement in June supportive of anti-ICE riots in Los Angeles which injured over 50 LAPD cops. The Open Society Foundations helped make this possible, chipping in a combined $5.8 million to the two organizations during 2016-22.
These and other like-minded 501(c)(3) and 501(c)(4) organizations claim they are targets of a right-wing witch hunt. “Every one of our clients is concerned about being arbitrarily targeted by the Trump administration,” says Ezra Reese, political law chair at the Washington, D.C.-based Elias Law Group, which represents Indivisible, ActBlue and other Democratic Party-connected fundraising operations. “We are going to great lengths to help clients prepare for or defend themselves.” This statement misrepresents the issue. These groups are being targeted because of their likely violations of tax law, not because of their political views. A tax exemption is a privilege, not a right.
For decades, the IRS has held firm that a nonprofit group may receive financial support so long as its activities are legal and related to the group’s mission. This policy rests on the “illegality doctrine.” Derived from English common law, the doctrine holds that charitable trusts that engage in illegal activity, or are formed for an illegal purpose, do not qualify for a tax exemption. A trust must serve a definable and legitimate public purpose.
The courts consistently have upheld this principle. The leading case in our own time, Bob Jones University v. United States (1983), exemplifies the high legal bar. The U.S. Supreme Court ruled 8-1 against Bob Jones University, a Christian fundamentalist four-year institution established by a private trust, concluding that the religion clauses of the First Amendment could not be used to justify overturning a prior IRS decision to revoke the university’s tax-exempt status. At issue was the university’s overt discrimination against blacks, a violation of Title VI of the 1964 Civil Rights Act. That the university is private, concluded the High Court, does not insulate it from the law.
The IRS must consider many factors when deciding whether to revoke a nonprofit organization’s tax exemption. Was a violation of the law a major or minor one? Was it repeated often or just a one-time occurrence? Were the group’s executives and/or board members aware of the illegal activity or was it solely carried out by lower-level employees? How much money was transferred? Reviewing these and other subjective issues can be costly and time-consuming. And the more complicated these factors are, the more likely they will work to an accused nonprofit’s advantage.
All this applies to the Open Society Foundations and the many nonprofits it subsidizes. However obvious the Soros network’s support for criminal acts under the guise of promoting social or political reform, it is entitled to the benefit of the doubt. To remove the network’s tax-exempt status requires removing any doubt that it knowingly violated federal tax law.
“Substantiality,” to use the legal term, has two components: quantitative and qualitative. Quantitative evidence refers to the degree of time and attention the organization engaged in the illegal activity. Here, to prove the nonprofit entity violated its mission, the IRS must show that the violations were part of a consistent pattern of behavior that went well beyond “one and done.” Qualitative evidence, by contrast, refers to the degree of seriousness of the alleged offense or offenses. Conspiring to set off a bomb in a public place or setting fires to cars parked at a dealership might be a singular act, but the act is of such extreme nature that it renders irrelevant the vast time the nonprofit had spent on legal activities.
Given today’s political climate, any attempt by the IRS to revoke the tax-exempt status of the recipients of Open Society Foundations financial support, to say nothing of the Open Society Foundations itself, is going to be protracted. The effort must prove substantiality, preferably both types. Putting forth an airtight case requires an information-gathering process that can translate into many interviews, testimony, letters, emails, text messages and other forms of documentation.
Remember, too, that Leftist nonprofits have lawyers, and some of those lawyers play very rough. The aforementioned Elias Law Group, headed by Hillary Clinton’s 2016 presidential campaign consigliere Mark Elias, is notorious for its bulldog tactics. Given that George Soros’ favored son and current OSF Chairman Alex Soros marriedHillary’s campaign fixer Huma Abedin in June may make going after the Soros network and its recipients that much more complicated.
Disqualifying nonprofits from tax exemption, however, is worth the effort. For too long, Congress, the courts, and a series of administrations have given philanthropies virtual carte blanche to build radical cadres in the streets and on university campuses. Such activities may or may not be illegal in themselves, but they may be illegal insofar as they appear to negate their presumably public purpose. If lawmakers such as Jason Smith and Jim Banks, along with the Trump administration, put this issue on the center stage, the next few years may be busy ones for the IRS.
Carl F. Horowitz is an NLPC senior fellow.
