August 28, 2020; CNN
One after another, nonprofits associated with operatives in or around the Trump administration have hit the news and the skids. Most recently, we covered the criminal complaint against We Build the Wall and a related nonprofit controlled by Steve Bannon. Less showy is the recent lapse in the tax-exempt status of the Urban Revitalization Coalition (URC) for not making the most minimal concession to following the rules in filing its 990 disclosure to the IRS.
This comes under the category of dog-bites-man in terms of news. Nonprofits, like other businesses, get started and fail all the times. Either they fall off the rolls permanently or apply for reinstatement. From mid-2010 through the end of 2017, the IRS revoked the tax-exempt recognition of more than 760,000 nonprofit organizations for failing to file Form 990 returns, according to NPQ research. And, indeed, the announcement that the Urban Revitalization Coalition, listed as a membership organization public charity, had its 501c3 revoked was barely noteworthy…except that the nonprofit was founded by two allies of the Trump administration. In fact, their website declares they were established by a president’s executive order.
The founders, Pastor Darrell Scott, co-chair of Black Voices for Trump, and Kareem Lanier, who works in business development and real estate, also lead the National Diversity Coalition for Trump. The address on the IRS determination letter for URC lists the building where Scott’s New Spirit Revival Center is located in Cleveland Heights, Ohio.
A spokesperson from the IRS told CNN it publishes a list of organizations that have had their tax exemption automatically revoked, and those organizations are “notified by mail with a CP-120A Notice.” Scott told CNN he was unaware of the revocation. He hadn’t received the letter because the office has been closed and they had halted events because of the pandemic. If no one is checking the mail at URC, they might miss donations, too.
Contributions made to URC after May of this year are not tax deductible. The organization’s status was revoked on May 15, 2020 for failure to file a Form 990/990EZ/990N/990PF for three consecutive years. While this organization may still appear on the Publication 78 and/or IRS BMF, further investigation and due diligence is warranted. Nonprofits with a calendar fiscal year normally file by May 15 unless on an extension. This year, because of the pandemic, that date to file Form 990s was moved to July 15, with the opportunity to request an extension until November 15. An extension would not have cleared up the previous two years when URC did not file at all.
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If the organization hadn’t lost its tax-exempt status by not filing its annual tax forms, it may have been on borrowed time because of blatant partisan political participation.
Under the Internal Revenue Code, all section 501c3 organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office. Contributions to political campaign funds or public statements of position (verbal or written) made on behalf of the organization in favor of or in opposition to any candidate for public office clearly violate the prohibition against political campaign activity. Violating this prohibition may result in denial or revocation of tax-exempt status and the imposition of certain excise taxes.
As Nonprofit Quarterly reported in January, URC did not follow nonpartisan nonprofit laws for public charities. Not only is the president spotlighted on their website, but Rev. Scott held an event in December in Cleveland where he gave away envelopes of cash totaling $25,000. It was billed as an “urban development event” to honor White House official Ja’Ron Smith, but the talking points centered on praise for President Trump’s policies and programs. Scott tweeted before the special event, “This is how Black folks’ Pro-Trump events begin.”
URC had planned to give away $30,000 on Martin Luther King Jr. Day this year at Virginia Union University, using the event to honor President Trump and other White House administration officials. VUU, a private nonprofit historically black college, cancelled the event in January.
Lanier denies that URC attempts to solicit support for the president from Black voters and insists they are funded by “private donors,” although a pro-Trump super-PAC group America First Policies provided a $238,000 grant to URC.
Nonprofit organizations working on any of the myriad health and human service functions—like the census, or immigrant issues, or SNAP—walk a careful line, advocating for their causes and their community with elected officials without appearing to support or condemn a candidate for those political offices. An organization with such a cavalier attitude towards tax regulations may wind up with an ending similar to Al Capone’s.—Marian Conway