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A Deal with the Devil: Nonprofits, Social Movements, and Your Taxes

We’ve just passed through tax time again. (Unless, like me, you live in one of several states ravaged by recent extreme weather events brought on by climate change. In that case, you can wait until October.) It’s also that moment when the War Resisters League — slogan: “If you work for peace, stop paying for war” — publishes its invaluable annual “Where Your Income Tax Money Really Goes” pie chart and publicizes a series of Tax Day events nationwide.

For many of the rest of us, it’s time to pat ourselves on the back for the charitable donations we made to tax-deductible organizations in 2022. Time to pat ourselves on the back for being clever and generous enough to “do well by doing good,” right? Time, perhaps, to wonder why, even when we give to organizations seeking radical change, the IRS still rewards us with a tax deduction. Do the feds really support organized opposition to, for example, the military-industrial complex? Or is there more to the story of what my students sometimes refer to as the “nonprofit-industrial complex”?


I teach at a college and, over the years, many of my justice-minded students have expressed a desire to change the world by founding their own non-profit organizations. In their minds and based on the models they see in their worthy community-engaged learning classes, non-profits are the sine qua non of social change and social movements. For most of them, working for social justice means working for a non-profit.

It wasn’t always this way. Before the 1954 U.S. tax code created the 501(c)(3) designation, charities existed, but mostly to provide direct aid to people in need. They certainly weren’t the main political vehicles for social change. In fact, many people organizing to improve their lives were far more likely to turn to unions, not only to improve wages and working conditions, but to address other issues in their lives like housing. It’s probably no accident that the rise of the non-profit sector in the second half of the twentieth century coincided with the reduced power of unions.

It was during the Civil Rights movement of the 1950s and 1960s that modern non-profits and foundations first played a significant role in attempts to bring about structural change in this country, even while also ensuring that such change, in the end, would be limited in nature. The giant among those philanthropic organizations was then the Ford Foundation, the largest collection of charitable wealth the world had ever seen.

A bit late to the civil rights fight, Ford turned its attention in that direction toward the end of the 1960s, after the passage of the Civil Rights and Voting Rights Acts. Under the leadership of McGeorge Bundy, a Cold War liberal and Vietnam War architect, Ford began to make huge contributions in the field of civil rights, mainly to the venerable National Urban League, but also to the NAACP. At the same time, it sought to reduce more militant activities, refusing, for example, to fund Martin Luther King’s planned Poor People’s March on Washington, scheduled for 1968. At the time when the Black Power movement was growing, Ford used its inaugural funding of Black organizations to moderate the influence of more radical voices.

University of Washington scholar Megan Ming Francis has labeled such attempts to use foundation money to control and channel a powerful social movement as “movement capture.” In a 2019 paper, she describes an early example of this process. During the 1920s and 1930s, she writes, funders, including the white-run Garland Foundation, used “their financial leverage to redirect the NAACP’s agenda away from the issue of racial violence to a focus on education at a critical juncture in the civil rights movement.” A decades-long fight for a federal anti-lynching law never succeeded. 

Read entire article at TomDispatch