President Donald Trump announced on Friday that he plans to take away Harvard University's tax-exempt status amid a spat between his administration and the Ivy League institution.
The announcement comes weeks after Harvard said it would not agree to a list of demands made by the Trump administration which included calls to change its admissions and hiring policies, end all diversity, equity, and inclusion programs, and audit programs and departments that the administration alleges "fuel antisemitic harassment or reflect ideological capture."
Non-profit organizations must follow certain guidelines in order to maintain tax-exempt status, such as avoiding political activity.
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Harvard's $53.2 billion endowment would potentially be subject to millions in taxes every year if the Trump administration is successful in stripping Harvard's tax-exempt status. However, such a move could be fought in court.
"We are going to be taking away Harvard’s Tax Exempt Status. It’s what they deserve!" Trump wrote Friday morning on Truth Social.
According to the Association of American Universities, most universities are given tax-empty status "because of their educational purposes—purposes that the federal government has long recognized as fundamental to fostering the productive and civic capacity of its citizens."
"Income from activities that are substantially related to the purpose of an institution’s tax exemption, charitable contributions received, and investment income are not subject to federal income tax," the AAU said. "The federal tax code classifies tax-exempt colleges and universities, and their foundations, as public charities. Consequently, they have historically not been subject to tax on investment income, payout requirements, or other rules that apply to private foundations."
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Previously, the Trump administration announced that it was stripping Harvard of $2.2 billion in research grants, a move that Harvard is suing over.
“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 antisemitism. Instead, the government’s April 11 demands seek to control whom we hire and what we teach," said Harvard President Alan Garber.
National Council of Nonprofits President Diane Yentel said the decision would set a "chilling precedent."
"America’s academic institutions are staffed by dedicated individuals working to advance education, scientific discovery, and public service. Their contributions range from researching cures for diseases like Alzheimer’s and cancer to addressing critical issues such as climate change, economic inequality, and the impacts of emerging technologies. Make no mistake, this action would not improve American lives, but instead actively harm them," she said.
