Richard Spencer, the face of a white-nationalist group that gained notoriety and momentum after Donald Trump’s election, has been allowed by the federal government to operate his nonprofit organization in financial secrecy for the past three years.
Spencer’s think tank, the National Policy Institute, has not filed financial returns with the federal government since 2013, according to a database of nonprofit records. That has allowed the institute to avoid public scrutiny at a time when the alt-right — the term Spencer coined to describe a movement seeking a whites-only state — has garnered international attention.
The institute is a public charity that relies heavily on contributions. The Internal Revenue Service almost always requires organizations such as his, which are exempt from paying taxes, to file returns that detail where the money comes from and how it is spent.
But — for reasons the IRS has declined to explain — the organization has been categorized among those not obligated to file any returns whatsoever, according to an examination by The Washington Post. Tax experts asked to review the case by The Post said they believed the classification is erroneous and should be fixed.
“That’s absolutely a mistake,” said Chuck McLean, a senior research fellow at GuideStar, which collects millions of nonprofit records. “There is absolutely no reason to believe that’s correct.”
It remains unclear how this happened, but nonprofit analysts say the IRS probably made the error.
An IRS spokesman would not comment, citing federal privacy law.
Spencer said he did not know whether his organization had filed returns with the IRS in recent years, and he could not explain why the institute was not required to provide the documents, known as Form 990s.
“This whole idea that we don’t need to turn in 990s is definitely news to me. I give this responsibility to others,” he said. “Ignorance is not an excuse, but I am really ignorant about this stuff.”
Three white-nationalist nonprofits similar in size and mission — the VDare Foundation, the New Century Foundation and the Charles Martel Society — are all obligated to file returns with the IRS.
After being contacted by The Post, Spencer said he talked to his accountant, who is now preparing to release the missing records Monday, though it remains unclear when or if the institute will provide them to federal authorities for review.
Philip Hackney, who formerly worked in the IRS chief counsel’s office, said that even if the government made the mistake, Spencer’s organization is not free from responsibility.
“I don’t think the fact that the IRS improperly coded them should absolve them of a duty to file the Form 990,” Hackney, a Louisiana State University law professor, wrote in an email. “They certainly should have been able to make that determination on their own.”
Spencer would not discuss whether the institute had ever informed the IRS of the apparent error.
“I don’t want to jeopardize us in any way by saying something wrong,” he said.
Groups that monitor Spencer and other white nationalists were unaware that the IRS does not demand that his organization file returns, and they objected when they found out.
“If they’re going to claim tax breaks for their donors, we should know where the money is coming from and what the money is being spent on,” said Southern Poverty Law Center spokeswoman Heidi Beirich. “It’s important for the IRS to hold them to the same standard they hold the rest of us.”
Marilyn Mayo of the Anti-Defamation League echoed that opinion.
“It’s quite surprising,” she said, “that no one’s really brought this to the attention of the public . . . or tax authorities.”
The IRS’s master list of tax-exempt organizations, GuideStar said, indicates that since 2007 the institute has not been required to file returns, but it did so until three years ago, when it provided a record of its 2012 financial activity. The document noted the organization’s total revenue ($125,325) and where that money came from; a breakdown of its expenses ($123,219); its “program service accomplishments” (a conference in Seattle, the development of a website, the publication of a book and a journal). It also asked for answers to questions such as whether the institute had engaged in any lobbying or political campaigning.
Before this year’s presidential campaign, Spencer and his fellow alt-right members had promoted their pro-white ideals mostly in online obscurity.
But Trump’s rhetoric on undocumented immigrants, Muslims and political correctness deeply resonated with them — and helped introduce their cause to the mainstream. Though the president-elect denounced the alt-right last week, its adherents had celebrated his victory and his announcement that the chief White House strategist would be former Breitbart chairman Stephen K. Bannon, who once called his website “the platform for the alt-right.”
A recent conference hosted by the institute drew scrutiny when a video of Spencer shouting “Hail Trump!” — and the Nazi salutes it elicited — went viral.
The night before, at a private dinner for conference attendees, Spencer had joked that they should “party like it’s 1933,” referencing the year Adolf Hitler was appointed Germany’s chancellor.
The organization, Spencer said, has continued to generate about $100,000 a year in revenue, though the torrent of publicity over the past month has prompted an uptick in donations. The $80,000 cost of the conference, he said, was mostly covered by admission fees.
Spencer talks often of his goal to open an office in Washington, but the missing returns could at least temporarily disrupt the institute’s financial future.
Marc Owens, the former head of the IRS nonprofit division, explained that if the agency corrects the classification error, an automated system will see that the institute has not filed a 990 for three consecutive years, triggering the revocation of its tax-exempt status.
“They’d have to call back to complain,” he said.
Regardless of when the returns are filed, Owens added, the public may not see the IRS-approved versions for up to a year.
The incident, he asserted, further indicts his former employer, which he and others have long argued should not be in charge of supervising nonprofits.
“It suggests some real weaknesses in IRS oversight,” he said. “I think, frankly, it shows that the system is broken.”
If the IRS had for so long neglected to properly monitor an organization as extreme as Spencer’s, Owens wondered, what else might the agency be missing?