Is it 'Charitable' to Discriminate?: The Necessary Transformation of Section 501(C)(3) into the Gold Standard for Charities

63 Pages Posted: 27 Mar 2008 Last revised: 7 Apr 2008

Nicholas A. Mirkay III

Creighton University - School of Law

Date Written: July 3, 2007


With federal subsidies to charitable organizations exceeding $232 billion for fiscal years 2007 to 2011, the public benefit conferred by such organizations is an increasingly hot topic for Congress, the Internal Revenue Service and the entire nonprofit sector. Despite the national debate over nonprofit versus for-profit hospitals and excessive executive compensation, and the call for stricter governance and regulation, one recurring activity of charities appears to fly under the radar of reformers - discrimination. As illustrated in real-life occurrences contained in pages 3 and 4 of the article, seemingly widespread discrimination by charities exists not only with respect to employment, but more importantly in providing services or engaging in activities for which the organization was originally granted tax-exempt status (e.g., education). The primary bases for such discrimination are currently sexual orientation and marital status.

This article contends that these instances of discrimination are intrinsically incompatible with such organizations' "charitable" purpose and mission, and with society's notion of what constitutes a charity. This article contends that such organizations should not continue to enjoy the benefits of tax-exempt status if they engage in discriminatory practices or maintain discriminatory policies. To combat such discrimination, this article proposes the inclusion of an expansive nondiscrimination requirement within Section 501(c)(3). Such a requirement ensures that the stream of tax-deductible dollars (generated by the charitable contributions deduction) received by charities is not used to discriminate against any member or segment of society. The proposal transforms Section 501(c)(3) into the "gold standard" for all tax-exempt organizations, ensuring that their beneficiaries are as diverse and all encompassing as the taxpaying public from whom such organizations draw their support.

Keywords: charitable organizations, taxation, tax exemption, discrimination, charities

JEL Classification: K34

Suggested Citation

Mirkay, Nicholas A., Is it 'Charitable' to Discriminate?: The Necessary Transformation of Section 501(C)(3) into the Gold Standard for Charities (July 3, 2007). Wisconsin Law Review, Vol. 2007, No. 1; Widener Law School Legal Studies Research Paper No. 08-33. Available at SSRN: or

Nicholas A. Mirkay III (Contact Author)

Creighton University - School of Law ( email )

2500 California Plaza
Omaha, NE 68178
United States

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