Teens Take Charge Likely Violating Federal Tax Law, Experts Say

Student activist group's tax-exempt status could be on the line

Teens Take Charge protesters at a June 2019 rally / Twitter screenshot
June 15, 2021

Teens Take Charge, the nonprofit student activist group pushing to end competitive admissions to New York City schools, may be violating federal tax law by opposing candidates for public office, a Washington Free Beacon analysis found.

The U.S. tax code allows nonprofits to lobby, provided that lobbying does not comprise a "substantial part" of their activities. What they cannot do is support or oppose any candidate for public office, a prohibition that includes "the publishing or distributing of statements."

Teens Take Charge appears to have violated that prohibition repeatedly, hosting rallies against local office-seekers and encouraging them on social media to "drop out." The group, which puts teens at the forefront of its campaign for radical education reform, is one arm of the nonprofit FJC and is therefore subject to all the rules and regulations that govern nonprofits.

Teens Take Charge's activities could imperil the tax-exempt status of the larger organization, legal experts told the Free Beacon, though the Internal Revenue Service has been somewhat lax about enforcement since the 2013 scandal surrounding its targeting of conservative groups.

Anna Massoglia, a researcher at the Center for Responsive Politics, said that Teens Take Charge's decision in January to call for a city council candidate to "drop out" of a race could prompt the IRS to "reevaluate" FJC's tax-exempt status. The candidate in question, Maud Maron, is running for New York City council. Teens Take Charge opposed her candidacy on Twitter with the hashtag "#DropOutMaud," which it tweeted from its official account.

The group's activities extend beyond cyberspace. In May, Teens Take Charge cohosted a rally against Maron and several candidates for New York City mayor, including Andrew Yang and Kathryn Garcia. "We say NO to Andrew Yang We say NO to Kathryn Garcia We say NO to Ray McGuire We say NO to Maud Maron," the event description reads. Teens Take Charge is listed as an organizer and promoted the rally on social media.

Such messaging is a "pretty explicit" violation of the law, Massoglia told the Free Beacon, and "potentially problematic for nonprofit status."

The campaigning complements Teens Take Charge's crusade against supporters of selective public schools, whom it decries as "segregationists." Maron, an outspoken advocate for competitive admissions, had already been targeted by the group in her capacity as a local parent leader. After she announced a run for city council, Teens Take Charge upped its attacks—some of which seem to have crossed the line between the sort of activism in which nonprofits can engage and the sort of campaigning in which they can't.

"This is campaigning, not issue advocacy, and it's facially unlawful," said a partner at a New York City law firm who has represented major nonprofits. "It's the kind of thing that could result in enforcement action from the Internal Revenue Service."

Teens Take Charge's finances will be at risk should the IRS open an investigation. The group is a program of "The Bell," which is a fiscally sponsored initiative of FJC. Fiscally sponsored initiatives are small charitable projects that operate under the tax-exempt status of a larger nonprofit. The fiscal sponsor receives donations earmarked for the fiscally sponsored project, which has no independent legal existence apart from the fiscal sponsor, and then gives those donations to the project in the form of grants. That setup allows The Bell to receive tax-exempt donations through FJC without applying for nonprofit status itself—but it also makes FJC liable for everything The Bell does, including any campaign activities prohibited by 501(c)(3).

Teens Take Charge is therefore risking FJC's tax-exempt status by campaigning against Maron, which could put pressure on FJC to end its sponsorship of The Bell. Without FJC, The Bell would no longer be tax-exempt and donations to it would no longer be tax-deductible, tightening Teens Take Charge's purse strings considerably.

FJC itself might face little more than a slap on the wrist. "Technically, [FJC] is risking its tax-exempt status and violating 501c3," said Philip Hackney, a law professor at the University of Pittsburgh. But in practice, the IRS "may be lenient" about holding FJC responsible for Teens Take Charge's actions, especially since the agency hasn't issued clear-cut guidelines for fiscal sponsorship arrangements. FJC likely "has a bit more room to maneuver than if their CEO had gone out and intervened in a campaign."

That said, Hackney added, FJC could still get hit with penalties, especially if the IRS finds evidence that FJC knew about the campaigning but didn't address it.

FJC did not respond to inquiries about its relationship with The Bell, which described Teens Take Charge's activities in detail. But FJC requires all of its fiscally sponsored projects to submit semi-annual reports on their operations, including "all proposed publicity or solicitation materials or public notices relating to the Project."

Paid employees of The Bell have also attacked Maron's candidacy from their personal Twitter accounts, which could strengthen an IRS case against the group. Last year, Teens Take Charge program manager Tajh Sutton sent at least five tweets explicitly encouraging the public to vote against Maron. "Manhattan, you cannot let Maud Maron become a council member," one of them reads. "DO NOT ELECT MAUD MARON FOR CITY COUNCIL," says another. While it's not clear the IRS would attribute these tweets to The Bell itself, Massoglia said they "could be part of a trend" that an investigation would take into account.

It could also take into account the fact that The Bell has violated the terms of its fiscal sponsorship agreement with FJC, which are written to ensure that The Bell does not get FJC into legal trouble. The agreement gives FJC the right to terminate its relationship with The Bell if The Bell does not "strictly observe" the agreement's terms, one of which is that The Bell may not attempt "to influence the outcome of any specific public election." If FJC does not avail itself of that right, it may have a harder time arguing that it is not responsible for Teens Take Charge's activities.

"FJC had every reason to know that Teens Take Charge was flouting the law," the nonprofit attorney said.  "My guess would be that FJC has remained silent for a simple reason: Merit-based admissions are politically disfavored, and Maron is a political enemy."