May 9 (UPI) — The U.S. Department of Education is stopping grant funding to the University of Harvard on the heels of President Donald Trump threatening its tax-exempt status.
The department informed Harvard of the decision to stop grants in a letter from secretary Linda McMahon posted on X on Monday. It is the latest development in a back-and-forth between the university and the Trump administration.
The president has threatened to block grants to several universities, mostly Ivy League schools. Harvard has become the administration’s primary target in recent weeks after it refused Trump’s demands for policy changes, resulting in a threat to remove the university’s tax-exempt status.
“It’s what they deserve,” Trump said when he made the threat on social media.
The executive branch, including the secretary of education, does not have the authority to unilaterally revoke a university’s tax-exempt status. That responsibility falls to the Internal Revenue Service, though it must first complete a lengthy investigation and determine that the entity meets at least one of six criteria that disqualifies it from being tax exempt.
The Tax Reform Act of 1976 was passed in response to President Richard Nixon’s abuse of authority in directing the IRS to investigate political opponents. Thus U.S. law prohibits the executive branch from using its influence to direct or encourage any member of the IRS to audit or investigate any taxpayer. Doing so is punishable by up to five years imprisonment and a fine.
According to the IRS, it may revoke a nonprofit’s tax exemption if it is found that its activities serve private interests, it is engaged in excessive lobbying, it is engaged in political campaign activity, its activities are drawing an income unrelated to its tax-exempt purposes, it fails to meet reporting obligations or it is not operating in accordance with its stated tax-exempt purpose.
The process of revoking tax-exempt status involves a monthslong investigation to determine whether an organization violated one of the six elements of its tax exemption. If the IRS finds that an organization is in violation, that organization is given the opportunity to make corrections.
Harvard President Alan M. Garber noted that the university has not been given the opportunity to demonstrate it has remedied complaints in his response to the Trump administration freezing grant funding.
“Before taking punitive action, the law requires that the federal government engage with us about the ways we are fighting and will continue to fight anti-Semitism,” Garber said in a statement. “Instead, the government’s April 11 demands seek to control whom we hire and what we teach.”
If the IRS remains unsatisfied by those remedies, the organization still has the opportunity to appeal to an independent investigator within the IRS.
“Based on everything that I’m aware of, I can’t see any sound basis for the IRS revoking Harvard’s tax-exempt status,” Steven Bloom, assistant vice president of government relations for the American Council on Education, told UPI. “I can’t believe and have not heard any evidence they violated any of those six elements. It seems to be about the weaponization of the IRS and tax-exempt status which is incredibly dangerous.”
“It’s not just dangerous for Harvard, which after all is one of the greatest universities in the world,” Bloom continued. “It would be dangerous for higher education in general.”
Bloom said that revoking a university’s tax-exempt status would be potentially devastating.
“They would be on the hook for a range of taxes, both federal and state-income tax, local property tax and other tax obligations, I’m sure,” Bloom said. “The burden on institutions would be significant. It would be devastating.”
Alongside introducing tax burdens, removing Harvard’s tax-exempt status would hurt its fundraising ability, Bloom added.
“One of the biggest things that would hurt them is donors would no longer be eligible to take a tax deduction from making contributions to the institution,” he said.
In the case of a research university like Harvard, often donors make contributions that are earmarked to support certain types of research, for instance, into diseases like cancer. Without those donations, research programs are also likely to suffer.
The president and secretary of education are also statutorily barred from meddling in the curriculum, instruction, administration and personnel decisions of any educational institution.
“Part of the greatness of American higher education is its partnership with the government,” Bloom said. “But it’s a partnership built on a sense of the important principles of academic freedom and institutional autonomy. The government doesn’t tell institutions what to teach, who teaches, who to admit. It just runs against basic concepts in American Democracy and our Constitution.”
The U.S. Supreme Court has supported the autonomy of universities historically. Justice Felix Frankfurter outlined his four essential freedoms of a university in a concurring opinion on Sweezy vs. New Hampshire in 1957.
According to Frankfurter, a university must be allowed “to determine for itself on academic grounds who may teach, what may be taught, how it shall be taught and who may be admitted to study.” It is a standard that has been recognized and cited in subsequent cases before the high court.
While Harvard is at the center of the Trump administration’s threat, other nonprofit organizations have voiced concern about the message being sent. The National Council of Nonprofits, Council on Foundations, Independent Sector and United Philanthropy Forum released a joint statement rebuking the Trump administration’s “intention to target Harvard University on ideological grounds.”
“While the immediate focus may appear to be a single academic institution, the implications of such threats and actions reach far beyond campus walls – striking at the very heart of American civil society,” the statement reads.
“This moment is about more than one institution. It is about how thought, knowledge and expression are essential to our freedom and to our national identity, and must be protected. Civil society – and the charitable nonprofit sector that gives it form and voice – must remain independent of government influence.”
