Rep. Jason Smith (R-MO), chairman of the House Ways and Means Committee (which has jurisdiction over tax policy), has recently called into question the tax-exempt status of nonprofit organizations, including colleges and universities as well as other groups that have been promoting and providing support to the U.S.-designated terrorist organization Hamas.

Meanwhile, Virginia’s Attorney General Jason Miyares has already launched an investigation into Americans for Justice in Palestine Educational Foundation, a nonprofit umbrella group that fiscally sponsors the antisemitic U.S.-based boycott, divestment, and sanctions movement, in response to evidence that the organization “may have used funds raised for impermissible purposes under state law , including benefiting or providing support to terrorist organizations,” including Hamas .

These calls for investigation are not mere rhetoric or political posturing. There is a strong legal case for these organizations to have their financial benefits revoked. Nor is this a matter of free speech or censorship; a tax exemption is a privilege, not a right, and to enjoy that privilege an organization is required to both provide somehow for the public good and follow some very basic rules of human decency. If they are unable to do either of those things, they should lose their tax-exempt status.

Section 501(c)(3) of the Internal Revenue Code exempts from taxation entities organized and operated exclusively for the purposes specified therein, which include charitable and educational purposes. The Treasury Department’s regulations soften the operational test by requiring that an organization must engage “primarily” in activities that accomplish one or more of its exempt purposes and that an organization will fail the test “if more than an insubstantial part of its activities is not in furtherance of an exempt purpose” (emphasis added).

In three IRS rulings , the agency set forth additional requirements stating that activities of a Section 501(c)(3) organization must not be “illegal, contrary to a clearly defined and established public policy, or in conflict with express statutory restrictions” (emphasis added). These additional requirements are broader than but akin to a requirement recognized by the U.S. Supreme Court in Bob Jones University v. U.S. , which held that a charitable organization may not violate a “national public policy” and will lose its tax-exempt status if “there is no doubt that the organization's activities violate fundamental public policy.”

The IRS has strictly enforced these holdings with respect to incitement of violence and terrorism. For example, in Rev. Rul. 75-384 , the IRS held that a protest organization that urged demonstrators to engage in civil unrest by committing violations of local ordinances and breaches of public order should lose its tax exemption under 501(c)(4).

And lest you argue that even if they have crossed the line a few times, most of these pro-Palestinian nonprofit groups are not actively supporting terrorism, well, in GCM 34631, the IRS clearly stated that even “A very little planned violence or terrorism would constitute ‘substantial’ activities not in furtherance of exempt purpose.”

The above analysis is even simpler if a nonprofit group is found to be working with and/or providing support for any groups that are actually U.S.-designated terrorist organizations. If they are, then under IRC Section 501(p) their tax exemptions should be automatically suspended.

Why is this important now?

Back in 2016, the House Foreign Affairs Subcommittee on Terrorism, Nonproliferation, and Trade and the Subcommittee on the Middle East, North Africa, and Central Asia heard testimony from Jonathan Schanzer, a former terrorism finance analyst for the Treasury Department, linking a number of American nonprofit groups to radical terrorist groups whose mission is the destruction of the state of Israel. Since then, his testimony has been confirmed and greatly expanded upon , with detailed reports showing how a number of nonprofit organizations raise money with terrorist organizations and even share the same personnel.

Consider, for example, American Muslims for Palestine.

AMP was founded after three predecessor organizations (the Holy Land Foundation for Relief and Development, the Islamic Association of Palestine, and KindHearts for Charitable Humanitarian Development) were convicted of providing material support for Hamas and were shut down. Some of those organizations’ leaders were deported and others went to prison. Somehow, a few of them managed to evade prosecution and start a new organization, AMP.

AJP, the nonprofit group which is now under investigation in Virginia, is the tax-exempt fiscal sponsor of AMP. AMP, in turn, is one of the main sponsors and organizers for Students for Justice in Palestine, the radical antisemitic student group that is terrorizing Jews on campuses across the country and has been banned from Florida’s universities as a result. Hatem Bazian, AMP’s national chairman, is actually SJP’s founder.

And so it is no wonder that in a time when SJP chapters are openly waving Hamas flags and declaring that they “ are Hamas ,” and when they stand credibly accused of providing Hamas with material support, government officials want to know exactly where they are getting their money from and how it is being used.

Tax exemption is a privilege, and if an organization is using that privilege to funnel money to a group that endorses terrorism (and may even fund it), contrary to public policy, decency, and the law, well, they simply do not deserve to keep it.

Dr. Mark Goldfeder is a former law professor and director of the National Jewish Advocacy Center. Follow @markgoldfeder on X.