National Funding for the Arts and Internal Revenue Code § 501(c)(3)

Florida State University Law Review, Vol. 37

Sydney Law School Research Paper No. 10/27

35 Pages Posted: 1 Mar 2010 Last revised: 25 Mar 2010

Micah Burch

The University of Sydney Law School

Date Written: February 24, 2010


For the large number of U.S. arts organizations whose existence depends on private charitable donations, qualification for federal tax exemption under I.R.C. § 501(c)(3) is effectively a requirement for survival. The federal tax rules directly affect the vitality and direction of arts in the United States by determining which organizations qualify for exemption and life-giving tax deductible contributions. These tax rules are arguably the largest single component of U.S. national arts policy, but because they are tucked away in provisions of the federal tax code that do not even use the word “art,” they remain somewhat insulated from the otherwise vigorous public discourse regarding arts funding. § 501(c)(3) generally requires arts organizations to meet the definition of “educational” in order to qualify for tax exempt status. This is a problem because an exclusive focus on the demonstrably “educational” aspects of art undermines (or at least fails to address) the important democracy-enhancing justifications for publicly supporting art in the first place. In particular, the requirement that tax-exempt arts organizations meet the tax law’s definition of educational prevents the type of diversity - and subversiveness - that a successful arts policy should encourage and fosters the type of conservatism that renders direct support for the arts an incomplete policy. Part II of this Article discusses the justifications for public financial support for the arts and the two alternatives for delivering that support - directly (exemplified by the National Endowment for the Arts) and indirectly (as exemplified by the tax subsidy that is the subject of this Article). Part III examines the current interpretation of § 501(c)(3) as it applies to arts organizations and identifies its inadequacies in light of the reasons for publicly supporting art. Part IV recommends explicitly adding arts organizations to the list of those eligible for tax exempt status under § 501(c)(3). An explicit statutory identification of arts organizations as deserving of tax exempt status (by virtue of being artistic rather than educational) would better protect arts funding from changing political winds and free arts organizations to fulfill their role in our democracy - resisting the tyranny of the status quo and providing a counterbalance to headlong scientific and technological advancement. In this way, federal tax law can better do its part in implementing national arts policy.

Keywords: Taxation, Arts, Tax Concessions, Tax Exemption, Charitable Deduction

JEL Classification: K10, K30, K34

Suggested Citation

Burch, Micah, National Funding for the Arts and Internal Revenue Code § 501(c)(3) (February 24, 2010). Florida State University Law Review, Vol. 37; Sydney Law School Research Paper No. 10/27. Available at SSRN:

Micah Burch (Contact Author)

The University of Sydney Law School ( email )

New Law Building, F10
The University of Sydney
Sydney, NSW 2006

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