By: Stephen J. Caldeira
Wall Street Journal Opinion
Scott Hodge condemns 501(c)(6) organizations as tax-avoidant “special interests” while ignoring their critical role in advancing public safety, innovation and the economy (“‘Nonprofits’ Circle the Wagons to Fend Off Taxes,” op-ed, March 5). By bringing together common industry interests, associations provide infrastructure that government can’t.
Associations function as specialized knowledge hubs across sectors, pooling expertise from thousands of industry professionals to solve complex problems. These groups safeguard food quality and set the best standards for cybersecurity practices, among other endeavors, without draining government resources. I have seen firsthand how associations drive innovation, ensure public safety and support economic stability. Such nonprofits as the Alzheimer’s Association, So Others Might Eat, Hiring Our Heroes and the Boy Scouts of America have outsize influence in our nation’s communities beyond mere lobbying.
Proposed tax reforms threaten this ecosystem. Legislative proposals to tax nondonation revenue—including membership dues, educational programs and certification fees—would diminish associations’ ability to reinvest in their missions. The result would be fewer industry standards, reduced workforce training and a loss of critical support services for businesses.
Put differently, this tax treatment would hamper engines of progress. Mission-driven associations employ 1 million Americans, generate $27.4 billion in annual taxes and contribute more than $71 billion in wages. They are transparent and don’t enrich shareholders. Taxing their nondonation revenue would erode their financial foundations and cripple their operations, forcing government bureaucracies to replace their expertise. Contrary to Mr. Hodge, preserving 501(c)(6) status isn’t shielding lobbyists. It is defending partnerships that drive American competitiveness, public safety and the economy.
