U.S. Supreme Court Bob Jones Univ. v. United States, 461
U.S. 574 (1983) Bob Jones University v. United
States No. 81-3 Argued October 12,
1982 Decided May 24, 1983 461
U.S. 574 ast|>* 461
U.S. 574 CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE FOURTH CIRCUIT Syllabus Section 501(c)(3) of the Internal Revenue Code of 1954 (IRC)
provides that "[c]orporations . . . organized and operated
exclusively for religious, charitable . . . or educational
purposes" are entitled to tax exemption. Until 1970, the Internal
Revenue Service (IRS) granted tax-exempt status under § 501(c)(3)
to private schools, independent of racial admissions policies, and
granted charitable deductions for contributions to such schools
under § 170 of the IRC. But in 1970, the IRS concluded that it
could no longer justify allowing tax-exempt status under §
501(c)(3) to private schools that practiced racial discrimination,
and in 1971 issued Revenue Ruling 71-447 providing that a private
school not having a racially nondiscriminatory policy as to
students is not "charitable" within the common law concepts
reflected in §§ 170 and 501(c)(3). In No. 81-3, petitioner Bob
Jones University, while permitting unmarried Negroes to enroll as
students, denies admission to applicants engaged in an interracial
marriage or known to advocate interracial marriage or dating.
Because of this admissions policy, the IRS revoked the University's
tax-exempt status. After paying a portion of the federal
unemployment taxes for a certain taxable year, the University filed
a refund action in Federal District Court, and the Government
counterclaimed for unpaid taxes for that and other taxable years.
Holding that the IRS exceeded its powers in revoking the
University's tax-exempt status and violated the University's rights
under the Religion Clauses of the First Amendment, the District
Court ordered the IRS to refund the taxes paid and rejected the
counterclaim. The Court of Appeals reversed. In No. 81-1,
petitioner Goldsboro Christian Schools maintains a racially
discriminatory admissions policy based upon its interpretation of
the Bible, accepting for the most part only Caucasian students. The
IRS determined that Goldsboro was not an organization described in
§ 501(c)(3), and hence was required to pay federal social security
and unemployment taxes. After paying a portion of such taxes for
certain years, Goldsboro filed a refund suit in Federal District
Court, and the IRS counterclaimed for unpaid taxes. The District
Court entered summary judgment for Page 461 U. S. 575 the IRS, rejecting Goldsboro's claim to tax-exempt status under
§ 501(c) (3) and also its claim that the denial of such status
violated the Religion Clauses of the First Amendment. The Court of
Appeals affirmed. Held: Neither petitioner qualifies as a tax-exempt
organization under § 501(c)(3). Pp. 461 U. S.
585 -605.

															(a) An examination of the IRC's framework and the background of
congressional purposes reveals unmistakable evidence that,
underlying all relevant parts of the IRC, is the intent that
entitlement to tax exemption depends on meeting certain common law
standards of charity -- namely, that an institution seeking
tax-exempt status must serve a public purpose and not be contrary
to established public policy. Thus, to warrant exemption under §
501(c)(3), an institution must fall within a category specified in
that section, and must demonstrably serve and be in harmony with
the public interest, and the institution's purpose must not be so
at odds with the common community conscience as to undermine any
public benefit that might otherwise be conferred. Pp. 461 U. S.
585 -592.

															(b) The IRS's 1970 interpretation of § 501(c)(3) was correct. It
would be wholly incompatible with the concepts underlying tax
exemption to grant tax-exempt status to racially discriminatory
private educational entities. Whatever may be the rationale for
such private schools' policies, racial discrimination in education
is contrary to public policy. Racially discriminatory educational
institutions cannot be viewed as conferring a public benefit within
the above "charitable" concept or within the congressional intent
underlying § 501(c)(3). Pp. 461 U. S.
592 -596.

															(c) The IRS did not exceed its authority when it announced its
interpretation of § 501(c)(3) in 1970 and 1971. Such interpretation
is wholly consistent with what Congress, the Executive, and the
courts had previously declared. And the actions of Congress since
1970 leave no doubt that the IRS reached the correct conclusion in
exercising its authority. Pp. 461 U. S.
596 -62.

															(d) The Government's fundamental, overriding interest in
eradicating racial discrimination in education substantially
outweighs whatever burden denial of tax benefits places on
petitioners' exercise of their religious beliefs. Petitioners'
asserted interests cannot be accommodated with that compelling
governmental interest, and no less restrictive means are available
to achieve the governmental interest. Pp. 461 U. S.
602 -604.

															(e) The IRS properly applied its policy to both petitioners.
Goldsboro admits that it maintains racially discriminatory
policies, and, contrary to Bob Jones University's contention that
it is not racially discriminatory, discrimination on the basis of
racial affiliation and association is a form of racial
discrimination. P. 461 U. S.
605 .

															No. 81-1, 644 F.2d 879, and No. 81-3, 639 F.2d 147,
affirmed. Page 461 U. S. 576 BURGER, C.J., delivered the opinion of the Court, in which
BRENNAN, WHITE, MARSHALL, BLACKMUN, STEVENS, and O'CONNOR, JJ.,
joined, and in Part III of which POWELL, J., joined. POWELL, J.,
filed an opinion concurring in part and concurring in the judgment, post, p. 461 U. S. 606 .
REHNQUIST, J., filed a dissenting opinion, post, p. 461 U. S.
612 . Page 461 U. S. 577 CHIEF JUSTICE BURGER delivered the opinion of the Court.

															We granted certiorari to decide whether petitioners, nonprofit
private schools that prescribe and enforce racially discriminatory
admissions standards on the basis of religious doctrine, qualify as
tax-exempt organizations under § 501(c)(3) of the Internal Revenue
Code of 1954. I A Until 1970, the Internal Revenue Service granted tax-exempt
status to private schools, without regard to their racial
admissions policies, under § 501(c)(3) of the Internal Revenue
Code, 26 U.S.C. § 501(c)(3), [ Footnote 1 ] and granted charitable Page 461 U. S. 578 deductions for contributions to such schools under § 170 of the
Code, 26 U.S.C. § 170. [ Footnote
2 ]

															On January 12, 1970, a three-judge District Court for the
District of Columbia issued a preliminary injunction prohibiting
the IRS from according tax-exempt status to private schools in
Mississippi that discriminated as to admissions on the basis of
race. Green v. Kennedy, 309
F. Supp. 1127 , appeal dism'd sub nom. Cannon v. Green, 398 U.S. 956 (1970). Thereafter, in July, 1970, the IRS concluded
that it could "no longer legally justify allowing tax-exempt status
[under § 501(c)(3)] to private schools which practice racial
discrimination." IRS News Release, July 7, 1970, reprinted in App.
in No. 81-3, p. A235. At the same time, the IRS announced that it
could not "treat gifts to such schools as charitable deductions for
income tax purposes [under § 170]." Ibid. By letter dated
November 30, 1970, the IRS formally notified private schools,
including those involved in this litigation, of this change in
policy, "applicable to all private schools in the United States at
all levels of education." See id. at A232.

															On June 30, 1971, the three-judge District Court issued its
opinion on the merits of the Mississippi challenge. Green v.
Connally, 330
F. Supp. 1150 , summarily aff'd sub nom. Coit v. Green, 404 U.S. 997 (1971). That court approved the IRS's amended
construction of the Tax Code. The court also held that racially
discriminatory private schools were not entitled to exemption under
§ 501(c)(3) and that donors were not entitled to deductions for
contributions to such schools under § 170. The court permanently
enjoined the Commissioner of Page 461 U. S. 579 Internal Revenue from approving tax-exempt status for any school
in Mississippi that did not publicly maintain a policy of
nondiscrimination.

															The revised policy on discrimination was formalized in Revenue
Ruling 71-447, 1971-2 Cum.Bull. 230:

															"Both the courts and the Internal Revenue Service have long
recognized that the statutory requirement of being 'organized and
operated exclusively for religious, charitable, . . . or
educational purposes' was intended to express the basic common law
concept [of 'charity']. . . . All charitable trusts, educational or
otherwise, are subject to the requirement that the purpose of the
trust may not be illegal or contrary to public policy."

															Based on the "national policy to discourage racial
discrimination in education," the IRS ruled that

															"a [private] school not having a racially nondiscriminatory
policy as to students is not 'charitable' within the common law
concepts reflected in sections 170 and 501(c)(3) of the Code." Id. at 231. [ Footnote
3 ]

															The application of the IRS construction of these provisions to
petitioners, two private schools with racially discriminatory
admissions policies, is now before us. B No. 81-3, Bob Jones University v. United
States Bob Jones University is a nonprofit corporation located in
Greenville, S.C. [ Footnote 4 ]
Its purpose is "to conduct an institution Page 461 U. S. 580 of learning . . giving special emphasis to the Christian
religion and the ethics revealed in the Holy Scriptures."
Certificate of Incorporation, Bob Jones University, Inc., of
Greenville, S.C. reprinted in App. in No. 81-3, p. A119. The
corporation operates a school with an enrollment of approximately
5,000 students, from kindergarten through college and graduate
school. Bob Jones University is not affiliated with any religious
denomination, but is dedicated to the teaching and propagation of
its fundamentalist Christian religious beliefs. It is both a
religious and educational institution. Its teachers are required to
be devout Christians, and all courses at the University are taught
according to the Bible. Entering students are screened as to their
religious beliefs, and their public and private conduct is strictly
regulated by standards promulgated by University authorities.

															The sponsors of the University genuinely believe that the Bible
forbids interracial dating and marriage. To effectuate these views,
Negroes were completely excluded until 1971. From 1971 to May,
1975, the University accepted no applications from unmarried
Negroes, [ Footnote 5 ] but did
accept applications from Negroes married within their race.

															Following the decision of the United States Court of Appeals for
the Fourth Circuit in McCrary v. Runyon, 515 F.2d 1082
(1975), aff'd, 427 U. S. 160 (1976), prohibiting racial exclusion from private schools, the
University revised its policy. Since May 29, 1975, the University
has permitted unmarried Negroes to enroll; but a disciplinary rule
prohibits interracial dating and marriage. That rule reads:

															" There is to be no interracial dating. "

															"1. Students who are partners in an interracial marriage will be
expelled. " Page 461 U. S. 581 "2. Students who are members of or affiliated with any group or
organization which holds as one of its goals or advocates
interracial marriage will be expelled."

															"3. Students who date outside of their own race will be
expelled."

															"4. Students who espouse, promote, or encourage others to
violate the University's dating rules and regulations will be
expelled."

															App. in No. 81-3, p. A197. The University continues to deny
admission to applicants engaged in an interracial marriage or known
to advocate interracial marriage or dating. Id. at
A277.

															Until 1970, the IRS extended tax-exempt status to Bob Jones
University under § 501(c)(3). By the letter of November 30, 1970,
that followed the injunction issued in Green v.
Kennedy, 309 F.
Supp. 1127 (DC 1970), the IRS formally notified the University
of the change in IRS policy, and announced its intention to
challenge the tax-exempt status of private schools practicing
racial discrimination in their admissions policies.

															After failing to obtain an assurance of tax exemption through
administrative means, the University instituted an action in 1971
seeking to enjoin the IRS from revoking the school's tax-exempt
status. That suit culminated in Bob Jones University v.
Simon, 416 U. S. 725 (1974), in which this Court held that the Anti-Injunction Act of
the Internal Revenue Code, 26 U.S.C. § 7421(a), prohibited the
University from obtaining judicial review by way of injunctive
action before the assessment or collection of any tax.

															Thereafter, on April 16, 1975, the IRS notified the University
of the proposed revocation of its tax-exempt status. On January 19,
1976, the IRS officially revoked the University's tax-exempt
status, effective as of December 1, 1970, the day after the
University was formally notified of the change in IRS policy. The
University subsequently filed returns under the Federal
Unemployment Tax Act for the period from December 1, 1970, to
December 31, 1975, and paid a tax Page 461 U. S. 582 totalling $21 on one employee for the calendar year of 1975.
After its request for a refund was denied, the University
instituted the present action, seeking to recover the $21 it had
paid to the IRS. The Government counterclaimed for unpaid federal
unemployment taxes for the taxable years 1971 through 1975, in the
amount of $489,675.59, plus interest.

															The United States District Court for the District of South
Carolina held that revocation of the University's tax-exempt status
exceeded the delegated powers of the IRS, was improper under the
IRS rulings and procedures, and violated the University's rights
under the Religion Clauses of the First Amendment. 468 F.
Supp. 890 , 907 (1978). The court accordingly ordered the IRS to pay the University
the $21 refund it claimed and rejected the IRS's counterclaim.

															The Court of Appeals for the Fourth Circuit, in a divided
opinion, reversed. 639 F.2d 147 (1980). Citing Green v.
Connally, 330 F.
Supp. 1150 (DC 1971), with approval, the Court of Appeals
concluded that § 501(c)(3) must be read against the background of
charitable trust law. To be eligible for an exemption under that
section, an institution must be "charitable" in the common law
sense, and therefore must not be contrary to public policy. In the
court's view, Bob Jones University did not meet this requirement,
since its

															"racial policies violated the clearly defined public policy,
rooted in our Constitution, condemning racial discrimination and,
more specifically, the government policy against subsidizing racial
discrimination in education, public or private."

															639 F.2d at 151. The court held that the IRS acted within its
statutory authority in revoking the University's tax-exempt status.
Finally, the Court of Appeals rejected petitioner's arguments that
the revocation of the tax exemption violated the Free Exercise and
Establishment Clauses of the First Amendment. The case was remanded
to the District Court with instructions to dismiss the University's
claim for a refund and to reinstate the IRS's counterclaim. Page 461 U. S. 583 C No. 81-1, Goldsboro Christian Schools, Inc. v. United
States Goldsboro Christian Schools is a nonprofit corporation located
in Goldsboro, N.C. Like Bob Jones University, it was
established

															"to conduct an institution or institutions of learning . . .
giving special emphasis to the Christian religion and the ethics
revealed in the Holy scriptures."

															Articles of Incorporation � 3(a); see Complaint � 6,
reprinted in App. in No. 81-1, pp. 5-6. The school offers classes
from kindergarten through high school, and, since at least 1969,
has satisfied the State of North Carolina's requirements for
secular education in private schools. The school requires its high
school students to take Bible-related courses, and begins each
class with prayer.

															Since its incorporation in 1963, Goldsboro Christian Schools has
maintained a racially discriminatory admissions policy based upon
its interpretation of the Bible. [ Footnote 6 ] Goldsboro has for the most part accepted only
Caucasians. On occasion, however, the school has accepted children
from racially mixed marriages in which one of the parents is
Caucasian.

															Goldsboro never received a determination by the IRS that it was
an organization entitled to tax exemption under § 501(c)(3). Upon
audit of Goldsboro's records for the years 1969 through 1972, the
IRS determined that Goldsboro was not an organization described in
§ 501(c)(3), and therefore was required to pay taxes under the
Federal Insurance Contribution Act and the Federal Unemployment Tax
Act. Page 461 U. S. 584 Goldsboro paid the IRS $3,459.93 in withholding, social
security, and unemployment taxes with respect to one employee for
the years 1969 through 1972. Thereafter, Goldsboro filed a suit
seeking refund of that payment, claiming that the school had been
improperly denied § 501(c)(3) exempt status. [ Footnote 7 ] The IRS counterclaimed for $160,073.96
in unpaid social security and unemployment taxes for the years 1969
through 1972, including interest and penalties. [ Footnote 8 ]

															The District Court for the Eastern District of North Carolina
decided the action on cross-motions for summary judgment. 436 F.
Supp. 1314 (1977). In addressing the motions for summary
judgment, the court assumed that Goldsboro's racially
discriminatory admissions policy was based upon a sincerely held
religious belief. The court nevertheless rejected Goldsboro's claim
to tax-exempt status under § 501(c) (3), finding that

															"private schools maintaining racially discriminatory admissions
policies violate clearly declared federal policy, and therefore
must be denied the federal tax benefits flowing from qualification
under Section 501(c)(3)." Id. at 1318. The court also rejected Goldsboro's
arguments that denial of tax-exempt status violated the Free
Exercise and Establishment Clauses of the First Amendment.
Accordingly, the court entered summary judgment for the IRS on its
counterclaim.

															The Court of Appeals for the Fourth Circuit affirmed, 644 F.2d
879 (1981) (per curiam). That court found an "identity for present
purposes" between the Goldsboro case and the Bob Jones
University case, which had been decided shortly Page 461 U. S. 585 before by another panel of that court, and affirmed for the
reasons set forth in Bob Jones University. We granted certiorari in both cases, 454 U.S. 892 (1981),
[ Footnote 9 ] and we affirm in
each. II A In Revenue Ruling 71-447, the IRS formalized the policy, first
announced in 1970, that § 170 and § 501(c)(3) embrace the common
law "charity" concept. Under that view, to qualify for a tax
exemption pursuant to § 501(c)(3), an institution must show, first,
that it falls within one of the eight categories expressly set
forth in that section, and second, that its activity is not
contrary to settled public policy.

															Section 501(c)(3) provides that "[c]orporations . . . organized
and operated exclusively for religious, charitable . . . or
educational purposes" are entitled to tax exemption. Petitioners
argue that the plain language of the statute guarantees them
tax-exempt status. They emphasize the absence of any language in
the statute expressly requiring all exempt organizations to be
"charitable" in the common law sense, and they contend that the
disjunctive "or" separating the categories in § 501(c)(3) precludes
such a reading. Instead, they argue that, if an institution falls
within one or more of Page 461 U. S. 586 the specified categories it is automatically entitled to
exemption, without regard to whether it also qualifies as
"charitable." The Court of Appeals rejected that contention and
concluded that petitioners' interpretation of the statute "tears
section 501(c)(3) from its roots." 639 F.2d at 151.

															It is a well-established canon of statutory construction that a
court should go beyond the literal language of a statute if
reliance on that language would defeat the plain purpose of the
statute:

															"The general words used in the clause . . . , taken by
themselves, and literally construed, without regard to the object
in view, would seem to sanction the claim of the plaintiff. But
this mode of expounding a statute has never been adopted by any
enlightened tribunal -- because it is evident that, in many cases,
it would defeat the object which the Legislature intended to
accomplish. And it is well-settled that, in interpreting a statute,
the court will not look merely to a particular clause in which
general words may be used, but will take in connection with it
the whole statute . . . and the objects and policy of the law. . .
. " Brown v.
Duchesne , 19 How. 183, 60 U. S. 194 (1857) (emphasis added).

															Section 501(c)(3) therefore must be.analyzed and construed
within the framework of the Internal Revenue Code and against the
background of the congressional purposes. Such an examination
reveals unmistakable evidence that, underlying all relevant parts
of the Code, is the intent that entitlement to tax exemption
depends on meeting certain common law standards of charity --
namely, that an institution seeking tax-exempt status must serve a
public purpose and not be contrary to established public
policy.

															This "charitable" concept appears explicitly in § 170 of the
Code. That section contains a list of organizations virtually
identical to that contained in § 501(c)(3). It is apparent that
Congress intended that list to have the same meaning in both Page 461 U. S. 587 sections. [ Footnote 10 ]
In § 170, Congress used the list of organizations in defining the
term "charitable contributions." On its face, therefore, § 170
reveals that Congress' intention was to provide tax benefits to
organizations serving charitable purposes. [ Footnote 11 ] The form of § 170 simply makes
plain what common sense and history tell us: in enacting both § 170
and Page 461 U. S. 588 § 501(c)(3), Congress sought to provide tax benefits to
charitable organizations, to encourage the development of private
institutions that serve a useful public purpose or supplement or
take the place of public institutions of the same kind.

															Tax exemptions for certain institutions thought beneficial to
the social order of the country as a whole, or to a particular
community, are deeply rooted in our history, as in that of England.
The origins of such exemptions lie in the special privileges that
have long been extended to charitable trusts. [ Footnote 12 ]

															More than a century ago, this Court announced the caveat that is
critical in this case:

															"[I]t has now become an established principle of American law
that courts of chancery will sustain and protect . . . a gift . . .
to public charitable uses, provided the same is consistent with
local laws and public policy. . . . " Perin v.
Carey , 24 How. 465, 65 U. S. 501 (1861) (emphasis added). Soon after that, in 1877, the Court
commented:

															"A charitable use, where neither law nor public policy
forbids, may be applied to almost any thing that tends to
promote the well-doing and well-being of social man. " Ould v. Washington Hospital for Foundlings, 95 U. S. 303 , 95 U. S. 311 (emphasis added). Page 461 U. S. 589 See also e.g., Jackson v. Phillips, 96 Mass. 539, 556
(1867). In 1891, in a restatement of the English law of charity
[ Footnote 13 ] which has long
been recognized as a leading authority in this country, Lord
MacNaghten stated:

															"'Charity,' in its legal sense, comprises four principal
divisions: trusts for the relief of poverty; trusts for the
advancement of education; trusts for the advancement of
religion; and trusts for other purposes beneficial to the
community, not falling under any of the preceding heads." Commissioners v. Pemsel, [1891] A. C. 531, 583
(emphasis added). See, e.g., 4 A. Scott, Law of Trusts §
368, pp. 2853-2854 (3d ed.1967) (hereinafter Scott). These
statements clearly reveal the legal background against which
Congress enacted the first charitable exemption statute in 1894:
[ Footnote 14 ] charities were
to be given preferential treatment because they provide a benefit
to society.

															What little floor debate occurred on the charitable exemption
provision of the 1894 Act and similar sections of later statutes
leaves no doubt that Congress deemed the specified organizations
entitled to tax benefits because they served desirable public
purposes. See, e.g., 26 Cong.Rec. 585-586 Page 461 U. S. 590 (1894); id. at 1727. In floor debate on a similar
provision in 1917, for example, Senator Hollis articulated the
rationale:

															"For every dollar that a man contributes for these public
charities, educational, scientific, or otherwise, the public gets
100 per cent."

															55 Cong.Rec. 6728. See also e.g., 44 Cong.Rec. 4150
(1909); 50 Cong.Rec. 1305-1306 (1913). In 1924, this Court restated
the common understanding of the charitable exemption provision:

															"Evidently, the exemption is made in recognition of the benefit
which the public derives from corporate activities of the class
named, and is intended to aid them when not conducted for private
gain." Trinidad v. Sagrada Orden, 263 U.
S. 578 , 263 U. S. 581 .
[ Footnote 15 ]

															In enacting the Revenue Act of 1938, ch. 289, 52 Stat. 447,
Congress expressly reconfirmed this view with respect to the
charitable deduction provision:

															"The exemption from taxation of money or property devoted to
charitable and other purposes is based upon the theory that the
Government is compensated for the loss of revenue by its relief
from financial burdens which would otherwise have to be met by
appropriations from other public funds, and by the benefits
resulting from the promotion of the general welfare."

															H.R.Rep. No. 1860, 75th Cong., 3d Sess., 19 (1938). [ Footnote 16 ] Page 461 U. S. 591 A corollary to the public benefit principle is the requirement,
long recognized in the law of trusts, that the purpose of a
charitable trust may not be illegal or violate established public
policy. In 1861, this Court stated that a public charitable use
must be "consistent with local laws and public policy," Perin
v. Carey, 24 How. at 65 U. S. 501 .
Modern commentators and courts have echoed that view. See,
e.g., Restatement (Second) of Trusts § 377, Comment c (1959); 4 Scott § 377, and cases cited therein; Bogert § 378, at
191-192. [ Footnote 17 ]

															When the Government grants exemptions or allows deductions all
taxpayers are affected; the very fact of the exemption or deduction
for the donor means that other taxpayers can be said to be indirect
and vicarious "donors." Charitable exemptions are justified on the
basis that the exempt entity confers a public benefit -- a benefit
which the society or the community may not itself choose or be able
to provide, or which supplements and advances the work of public
institutions already supported by tax revenues. [ Footnote 18 ] History buttresses Page 461 U. S. 592 logic to make clear that, to warrant exemption under §
501(c)(3), an institution must fall within a category specified in
that section and must demonstrably serve and be in harmony with the
public interest. [ Footnote
19 ] The institution's purpose must not be so at odds with the
common community conscience as to undermine any public benefit that
might otherwise be conferred. B We are bound to approach these questions with full awareness
that determinations of public benefit and public policy are
sensitive matters with serious implications for the institutions
affected; a declaration that a given institution is not
"charitable" should be made only where there can be no doubt that
the activity involved is contrary to a fundamental public policy.
But there can no longer be any doubt that racial discrimination in
education violates deeply and widely accepted views of elementary
justice. Prior to 1954, public education in many places still was
conducted under the pall of Page 461 U. S. 593 Plessy v. Ferguson, 163 U. S. 537 (1896); racial segregation in primary and secondary education
prevailed in many parts of the country. See, e.g., Segregation and the Fourteenth Amendment in the States (B. Reams
& P. Wilson eds.1975). [ Footnote 20 ] This Court's decision in Brown v. Board
of Education, 347 U. S. 483 (1954), signalled an end to that era. Over the past quarter of a
century, every pronouncement of this Court and myriad Acts of
Congress and Executive Orders attest a firm national policy to
prohibit racial segregation and discrimination in public
education.

															An unbroken line of cases following Brown v. Board of
Education establishes beyond doubt this Court's view that
racial discrimination in education violates a most fundamental
national public policy, as well as rights of individuals.

															"The right of a student not to be segregated on racial grounds
in schools . . . is indeed so fundamental and pervasive that it is
embraced in the concept of due process of law." Cooper v. Aaron, 358 U. S. 1 , 358 U. S. 19 (1958). In Norwood v. Harrison, 413 U.
S. 455 , 413 U. S.
468 -469 (1973), we dealt with a nonpublic
institution:

															"[A] private school -- even one that discriminates -- fulfills
an important educational function; however, . . . [that]
legitimate educational function cannot be isolated from Page 461 U. S. 594 discriminatory practices. . . . [D]iscriminatory treatment
exerts a pervasive influence on the entire educational
process. "

															(Emphasis added.) See also Runyon v. McCrary, 427 U. S. 160 (1976); Griffin v. County School Board, 377 U.
S. 218 (1964).

															Congress, in Titles IV and VI of the Civil Rights Act of 1964,
Pub.L. 88-352, 78 Stat. 241, 42 U.S.C. §§ 2000c, 2000c-6, 2000d,
clearly expressed its agreement that racial discrimination in
education violates a fundamental public policy. Other sections of
that Act, and numerous enactments since then, testify to the public
policy against racial discrimination. See, e.g., the
Voting Rights Act of 1965, Pub.L. 89-110, 79 Stat. 437, 42 U.S.C. §
1973 et seq. (1976 ed. and Supp. V); Title VIII of the
Civil Rights Act of 1968, Pub.L. 90-284, 82 Stat. 81, 42 U.S.C. §
3601 et seq. (1976 ed. and Supp. V); the Emergency School
Aid Act of 1972, Pub.L. 92-318, 86 Stat. 354 (repealed effective
Sept. 30, 1979; replaced by similar provisions in the Emergency
School Aid Act of 1978, Pub.L. 95-561, 92 Stat. 2252, 20 U.S.C. §§
3191-3207 (1976 ed., Supp. V)).

															The Executive Branch has consistently placed its support behind
eradication of racial discrimination. Several years before this
Court's decision in Brown v. Board of Education, supra, President Truman issued Executive Orders prohibiting racial
discrimination in federal employment decisions, Exec.Order No.
9980, 3 CFR 720 (1943-1948 Comp.), and in classifications for the
Selective Service, Exec.Order No. 9988, 3 CFR 726, 729 (1943-1948
Comp.). In 1957, President Eisenhower employed military forces to
ensure compliance with federal standards in school desegregation
programs. Exec.Order No. 10730, 3 CFR 389 (1954-1958 Comp.). And in
1962, President Kennedy announced:

															"[T]he granting of Federal assistance for . . . housing and
related facilities from which Americans are excluded because of
their race, color, creed, or national origin is unfair, unjust, and
inconsistent with the public policy of Page 461 U. S. 595 the United States as manifested in its Constitution and
laws."

															Exec.Order No. 11063, 3 CFR 652 (1959-1963 Comp.). These are but
a few of numerous Executive Orders over the past three decades
demonstrating the commitment of the Executive Branch to the
fundamental policy of eliminating racial discrimination. See,
e.g., Exec.Order No. 11197, 3 CFR 278 (1964-1965 Comp.);
Exec.Order No. 11478, 3 CFR 803 (1966-1970 Comp.); Exec.Order No.
11764, 3 CFR 849 (1971-1975 Comp.); Exec.Order No. 12250, 3 CFR 298
(1981).

															Few social or political issues in our history have been more
vigorously debated and more extensively ventilated than the issue
of racial discrimination, particularly in education. Given the
stress and anguish of the history of efforts to escape from the
shackles of the "separate but equal" doctrine of Plessy v.
Ferguson, 163 U. S. 537 (1896), it cannot be said that educational institutions that, for
whatever reasons, practice racial discrimination, are institutions
exercising "beneficial and stabilizing influences in community
life," Walz v. Tax Comm'n, 397 U.
S. 664 , 397 U. S. 673 (1970), or should be encouraged by having all taxpayers share in
their support by way of special tax status.

															There can thus be no question that the interpretation of § 170
and § 501(c)(3) announced by the IRS in 1970 was correct. That it
may be seen as belated does not undermine its soundness. It would
be wholly incompatible with the concepts underlying tax exemption
to grant the benefit of tax-exempt status to racially
discriminatory educational entities, which "exer[t] a pervasive
influence on the entire educational process." Norwood v.
Harrison, supra, at 413 U. S. 469 .
Whatever may be the rationale for such private schools' policies,
and however sincere the rationale may be, racial discrimination in
education is contrary to public policy. Racially discriminatory
educational institutions cannot be viewed as conferring a public
benefit within the "charitable" concept discussed earlier, Page 461 U. S. 596 or within the congressional intent underlying § 170 and §
501(c)(3). [ Footnote 21 ] C Petitioners contend that, regardless of whether the IRS properly
concluded that racially discriminatory private schools violate
public policy, only Congress can alter the scope of § 170 and §
501(c)(3). Petitioners accordingly argue that the IRS overstepped
its lawful bounds in issuing its 1970 and 1971 rulings.

															Yet ever since the inception of the Tax Code, Congress has seen
fit to vest in those administering the tax laws very broad
authority to interpret those laws. In an area as complex as the tax
system, the agency Congress vests with administrative
responsibility must be able to exercise its authority to meet
changing conditions and new problems. Indeed, as early as 1918,
Congress expressly authorized the Commissioner "to make all needful
rules and regulations for the enforcement" of the tax laws. Revenue
Act of 1918, ch. 18, § 1309, 40 Stat. 1143. The same provision, so
essential to efficient and fair administration of the tax laws, has
appeared in Tax Codes ever since, see 26 U.S.C. § 7805(a);
and this Court has long recognized the primary authority of the IRS
and its predecessors in construing the Internal Revenue Code, see, e.g., Commissioner v. Portland Cement Co. of Utah, 450 U. S. 156 , 450 U. S. 169 (1981); United States v. Correll, 389 U.
S. 299 , 389 U. S.
306 -307 (1967); Boske v. Comingore, 177 U. S. 459 , 177 U. S.
469 -470 (1900).

															Congress, the source of IRS authority, can modify IRS rulings it
considers improper; and courts exercise review over IRS actions. In
the first instance, however, the responsibility Page 461 U. S. 597 for construing the Code falls to the IRS. Since Congress cannot
be expected to anticipate every conceivable problem that can arise
or to carry out day-to-day oversight, it relies on the
administrators and on the courts to implement the legislative will.
Administrators, like judges, are under oath to do so.

															In § 170 and § 501(c)(3), Congress has identified categories of
traditionally exempt institutions and has specified certain
additional requirements for tax exemption. Yet the need for
continuing interpretation of those statutes is unavoidable. For
more than 60 years, the IRS and its predecessors have constantly
been called upon to interpret these and comparable provisions, and
in doing so have referred consistently to principles of charitable
trust law. In Treas.Regs. 45, Art. 517(1) (1921), for example, the
IRS's predecessor denied charitable exemptions on the basis of
proscribed political activity before the Congress itself added such
conduct as a disqualifying element. In other instances, the IRS has
denied charitable exemptions to otherwise qualified entities
because they served too limited a class of people, and thus did not
provide a truly "public" benefit under the common law test. See, e.g., Crellin v. Commissioner, 46 B. T. A. 1152,
1155-1156 (1942); James Sprunt Benevolent Trust v.
Commissioner, 20 B. T. A.19, 24-25 (1930). See also Treas.Reg. § 1.501(c)(3)(d)(1)(ii) (1959). Some years before the
issuance of the rulings challenged in these cases, the IRS also
ruled that contributions to community recreational facilities would
not be deductible, and that the facilities themselves would not be
entitled to tax-exempt status, unless those facilities were open to
all on a racially nondiscriminatory basis. See Rev.Rul.
67-325, 1967-2 Cum.Bull. 113. These rulings reflect the
Commissioner's continuing duty to interpret and apply the Internal
Revenue Code. See also Textile Mills Securities Corp. v.
Commissioner, 314 U. S. 326 , 314 U. S.
337 -338 (1941).

															Guided, of course, by the Code, the IRS has the responsibility,
in the first instance, to determine whether a particular Page 461 U. S. 598 entity is "charitable" for purposes of § 170 and § 501(c)(3).
[ Footnote 22 ] This in turn
may necessitate later determinations of whether given activities so
violate public policy that the entities involved cannot be deemed
to provide a public benefit worthy of "charitable" status. We
emphasize, however, that these sensitive determinations should be
made only where there is no doubt that the organization's
activities violate fundamental public policy.

															On the record before us, there can be no doubt as to the
national policy. In 1970, when the IRS first issued the ruling
challenged here, the position of all three branches of the Federal
Government was unmistakably clear. The correctness of the
Commissioner's conclusion that a racially discriminatory private
school "is not charitable' within the common law concepts
reflected in . . . the Code," Rev.Rul. 71-447, 1971-2 Cum.Bull., at
231, is wholly consistent with what Congress, the Executive, and
the courts had repeatedly declared before 1970. Indeed, it would be
anomalous for the Executive, Legislative, and Judicial Branches to
reach conclusions that add up to a firm public policy on racial
discrimination, and at the same time have the IRS blissfully ignore
what all three branches of the Federal Government had declared.
[ Footnote 23 ] Clearly an
educational institution engaging in Page 461 U. S.
599 practices affirmatively at odds with this declared position
of the whole Government cannot be seen as exercising a "beneficial
and stabilizing influenc[e] in community life," Walz v. Tax
Comm'n, 397 U.S. at 397 U. S. 673 ,
and is not "charitable," within the meaning of § 170 and §
501(c)(3). We therefore hold that the IRS did not exceed its
authority when it announced its interpretation of § 170 and §
501(c)(3) in 1970 and 1971. [ Footnote 24 ] D The actions of Congress since 1970 leave no doubt that the IRS
reached the correct conclusion in exercising its authority. It is,
of course, not unknown for independent agencies or the Executive
Branch to misconstrue the intent of a statute; Congress can and
often does correct such misconceptions, if the courts have not done
so. Yet, for a dozen years, Congress has been made aware -- acutely
aware -- of the IRS rulings of 1970 and 1971. As we noted earlier,
few issues have been the subject of more vigorous and widespread
debate and discussion in and out of Congress than those related to
racial segregation in education. Sincere adherents advocating
contrary views have ventilated the subject for well over three
decades. Failure of Congress to modify the IRS rulings of 1970 and
1971, of which Congress was, by its own studies and by public
discourse, constantly reminded, and Congress' awareness of the
denial of tax-exempt status for racially discriminatory schools
when enacting other and related legislation make out an unusually
strong case of legislative acquiescence in and ratification by
implication of the 1970 and 1971 rulings. Page 461 U. S. 600 Ordinarily, and quite appropriately, courts are slow to
attribute significance to the failure of Congress to act on
particular legislation. See, e.g., Aaron v. SEC, 446 U. S. 680 , 446 U. S. 694 ,
n. 11 (1980). We have observed that "unsuccessful attempts at
legislation are not the best of guides to legislative intent," Red Lion Broadcasting Co. v. FCC, 395 U.
S. 367 , 395 U. S. 382 ,
n. 11 (1969). Here, however, we do not have an ordinary claim of
legislative acquiescence. Only one month after the IRS announced
its position in 1970, Congress held its first hearings on this
precise issue. Equal Educational Opportunity: Hearings before the
Senate Select Committee on Equal Educational Opportunity, 91st
Cong., 2d Sess., 1991 (1970). Exhaustive hearings have been held on
the issue at various times since then. These include hearings in
February. 1982, after we granted review in this case.
Administration's Change in Federal Policy Regarding the Tax Status
of Racially Discriminatory Private Schools: Hearing before the
House Committee on Ways and Means, 97th Cong., 2d Sess. (1982).

															Nonaction by Congress is not often a useful guide, but the
nonaction here is significant. During the past 12 years. there have
been no fewer than 13 bills introduced to overturn the IRS
interpretation of § 501(c)(3). [ Footnote 25 ] Not one of these bills has emerged from any
committee, although Congress has enacted numerous other amendments
to § 501 during this same period, including an amendment to §
501(c)(3) itself. Tax Reform Act of 1976, Pub.L. 94-455, § 1313(a),
90 Stat. 1730. It is hardly conceivable that Congress -- and in
this setting, any Member of Congress -- was not abundantly Page 461 U. S. 601 aware of what was going on. In view of its prolonged and acute
awareness of so important an issue, Congress' failure to act on the
bills proposed on this subject provides added support for
concluding that Congress acquiesced in the IRS rulings of 1970 and
1971. See, e.g., Merrill Lynch, Pierce, Fenner & Smith,
Inc. v. Curran, 456 U. S. 353 , 456 U. S.
379 -382 (1982); Haig v. Agee, 453 U.
S. 280 , 453 U. S.
300 -301 (1981); Herman & MacLean v.
Huddleston, 459 U. S. 375 , 459 U. S.
384 -386 (1983); United States v. Rutherford, 442 U. S. 544 , 442 U. S. 554 ,
n. 10 (1979).

															The evidence of congressional approval of the policy embodied in
Revenue Ruling 71-447 goes well beyond the failure of Congress to
act on legislative proposals. Congress affirmatively manifested its
acquiescence in the IRS policy when it enacted the present § 501(i)
of the Code, Act of Oct. 20, 1976, Pub.L. 94-568, 90 Stat. 2697.
That provision denies tax-exempt status to social clubs whose
charters or policy statements provide for "discrimination against
any person on the basis of race, color, or religion." [ Footnote 26 ] Both the House and
Senate Committee Reports on that bill articulated the national
policy against granting tax exemptions to racially discriminatory
private clubs. S.Rep. No. 94-1318, p. 8 (1976); H.R.Rep. No.
94-1353, p. 8 (1976).

															Even more significant is the fact that both Reports focus on
this Court's affirmance of Green v.
Connally, 330 F.
Supp. 1150 (DC 1971), as having established that
"discrimination on account of race is inconsistent with an educational institution's tax-exempt status." S.Rep. No.
94-1318, supra, at 7-8, and n. 5; H.R.Rep. No. 94-1353, supra at 7-8, and n. 5 (emphasis added). These references
in congressional Committee Reports on an enactment denying tax
exemptions to racially discriminatory private social clubs cannot
be read Page 461 U. S. 602 other than as indicating approval of the standards applied to
racially discriminatory private schools by the IRS subsequent to
1970, and specifically of Revenue Ruling 71-447. [ Footnote 27 ] III Petitioners contend that, even if the Commissioner's policy is
valid as to nonreligious private schools, that policy cannot
constitutionally be applied to schools that engage in racial
discrimination on the basis of sincerely held religious beliefs.
[ Footnote 28 ] Page 461 U. S. 603 As to such schools, it is argued that the IRS construction of §
170 and § 501(c)(3) violates their free exercise rights under the
Religion Clauses of the First Amendment. This contention presents
claims not heretofore considered by this Court in precisely this
context.

															This Court has long held the Free Exercise Clause of the First
Amendment to be an absolute prohibition against governmental
regulation of religious beliefs, Wisconsin v. Yoder, 406 U. S. 205 , 406 U. S. 219 (1972); Sherbert v. Verner, 374 U.
S. 398 , 374 U. S. 402 (1963); Cantwell v. Connecticut, 310 U.
S. 296 , 310 U. S. 303 (1940). As interpreted by this Court, moreover, the Free Exercise
Clause provides substantial protection for lawful conduct grounded
in religious belief, see Wisconsin v. Yoder, supra, at 406 U. S. 220 ; Thomas v. Review Board of Indiana Employment Security
Div., 450 U. S. 707 (1981); Sherbert v. Verner, supra, at 374 U. S.
402 -403. However,

															"[n]ot all burdens on religion are unconstitutional. . . . The
state may justify a limitation on religious liberty by showing that
it is essential to accomplish an overriding governmental
interest." United States v. Lee, 455 U. S. 252 , 455 U. S.
257 -258 (1982). See, e.g., McDaniel v. Paty, 435 U. S. 618 , 435 U. S. 628 ,
and n. 8 (1978); Wisconsin v. Yoder, supra, at 406 U. S. 215 ; Gillette v. United States, 401 U.
S. 437 (1971).

															On occasion, this Court has found certain governmental interests
so compelling as to allow even regulations prohibiting religiously
based conduct. In Prince v. Massachusetts, 321 U.
S. 158 (1944), for example, the Court held that
neutrally cast child labor laws prohibiting sale of printed
materials on public streets could be applied to prohibit children
from dispensing religious literature. The Court found no
constitutional infirmity in "excluding [Jehovah's Witness children]
from doing there what no other children may do." Id. at 321 U. S. 171 . See also Reynolds v. United States, 98 U. S.
145 (1879); United States v. Lee, supra; Gillette v.
United States, supra. Denial of tax benefits will inevitably
have a substantial Page 461 U. S. 604 impact on the operation of private religious schools, but will
not prevent those schools from observing their religious
tenets.

															The governmental interest at stake here is compelling. As
discussed in 461 U. S. supra, the Government has a fundamental, overriding
interest in eradicating racial discrimination in education
[ Footnote 29 ] --
discrimination that prevailed, with official approval, for the
first 165 years of this Nation's constitutional history. That
governmental interest substantially outweighs whatever burden
denial of tax benefits places on petitioners' exercise of their
religious beliefs. The interests asserted by petitioners cannot be
accommodated with that compelling governmental interest, see
United States v. Lee, supra, at 455 U. S.
259 -260; and no "less restrictive means," see Thomas
v. Review Board of Indiana Employment Security Div., supra, at 450 U. S. 718 ,
are available to achieve the governmental interest. [ Footnote 30 ] Page 461 U. S. 605 IV The remaining issue is whether the IRS properly applied its
policy to these petitioners. Petitioner Goldsboro Christian Schools
admits that it "maintain[s] racially discriminatory policies,"
Brief for Petitioner in No. 81-1, p. 10, but seeks to justify those
policies on grounds we have fully discussed. The IRS properly
denied tax-exempt status to Goldsboro Christian Schools.

															Petitioner Bob Jones University, however, contends that it is
not racially discriminatory. It emphasizes that it now allows all
races to enroll, subject only to its restrictions on the conduct of
all students, including its prohibitions of association between men
and women of different races, and of interracial marriage.
[ Footnote 31 ] Although a ban
on intermarriage or interracial dating applies to all races,
decisions of this Court firmly establish that discrimination on the
basis of racial affiliation and association is a form of racial
discrimination, see, e.g., Loving v. Virginia, 388 U. S. 1 (1967); McLaughlin v. Florida, 379 U. S. 184 (1964); Tillman v. Wheaton-Haven Recreation Assn., 410 U. S. 431 (1973). We therefore find that the IRS properly applied Revenue
Ruling 71-447 to Bob Jones University. [ Footnote 32 ]

															The judgments of the Court of Appeals are, accordingly, Affirmed. Page 461 U. S. 606 * Together with No. 81-1, Goldsboro Christian Schools, Inc.
v. United States, also on certiorari to the same court.

															[ Footnote 1 ]

															Section 501(c)(3) lists the following organizations, which,
pursuant to § 501(a), are exempt from taxation unless denied tax
exemptions under other specified sections of the Code:

															"Corporations, and any community chest, fund, or foundation, organized and operated exclusively for religious,
charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or
international amateur sports competition (but only if no part of
its activities involve the provision of athletic facilities or
equipment), or for the prevention of cruelty to children or
animals, no part of the net earnings of which inures to the benefit
of any private shareholder or individual, no substantial part of
the activities of which is carrying on propaganda, or otherwise
attempting, to influence legislation . . . and which does not
participate in, or intervene in (including the publishing or
distributing of statements), any political campaign on behalf of
any candidate for public office."

															(Emphasis added.)

															[ Footnote 2 ]

															Section 170(a) allows deductions for certain "charitable
contributions." Section 170(c)(2)(B) includes within the definition
of "charitable contribution" a contribution or gift to or for the
use of a corporation "organized and operated exclusively for
religious, charitable, scientific, literary, or educational
purposes. . . ."

															[ Footnote 3 ]

															Revenue Ruling 71-447, 1971-2 Cum.Bull. 230, defined "racially
nondiscriminatory policy as to students" as meaning that

															"the school admits the students of any race to all the rights,
privileges, programs, and activities generally accorded or made
available to students at that school, and that the school does not
discriminate on the basis of race in administration of its
educational policies, admissions policies, scholarship and loan
programs, and athletic and other school-administered programs."

															[ Footnote 4 ]

															Bob Jones University was founded in Florida in 1927. It moved to
Greenville, S.C., in 1940, and has been incorporated as an
eleemosynary institution in South Carolina since 1952.

															[ Footnote 5 ]

															Beginning in 1973, Bob Jones University instituted an exception
to this rule, allowing applications from unmarried Negroes who had
been members of the University staff for four years or more.

															[ Footnote 6 ]

															According to the interpretation espoused by Goldsboro, race is
determined by descendance from one of Noah's three sons -- Ham,
Shem, and Japheth. Based on this interpretation, Orientals and
Negroes are Hamitic, Hebrews are Shemitic, and Caucasians are
Japhethitic. Cultural or biological mixing of the races is regarded
as a violation of God's command. App. in No. 81-1, pp. 40-41.

															[ Footnote 7 ]

															Goldsboro also asserted that it was not obliged to pay taxes on
lodging furnished to its teachers. It does not ask this Court to
review the rejection of that claim.

															[ Footnote 8 ]

															By stipulation, the IRS agreed to abate its assessment for 1969
and most of 1970 to reflect the fact that the IRS did not begin
enforcing its policy of denying tax-exempt status to racially
discriminatory private schools until November 30, 1970. As a
result, the amount of the counterclaim was reduced to $116,190.99. Id. at 104, 110.

															[ Footnote 9 ]

															After the Court granted certiorari, the Government filed a
motion to dismiss, informing the Court that the Department of the
Treasury intended to revoke Revenue Ruling 71-447 and other
pertinent rulings and to recognize § 501(c)(3) exemptions for
petitioners. The Government suggested that these actions were
therefore moot. Before this Court ruled on that motion, however,
the United States Court of Appeals for the District of Columbia
Circuit enjoined the Government from granting § 501(c)(3)
tax-exempt status to any school that discriminates on the basis of
race. Wright v. Regan, No. 80-1124 (Feb. 18, 1982) (per
curiam order). Thereafter, the Government informed the Court that
it would not revoke the Revenue Rulings, and withdrew its request
that the actions be dismissed as moot. The Government continues to
assert that the IRS lacked authority to promulgate Revenue Ruling
71-447, and does not defend that aspect of the rulings below.

															[ Footnote 10 ]

															The predecessor of § 170 originally was enacted in 1917, as part
of the War Revenue Act of 1917, ch. 63, § 1201(2), 40 Stat. 330,
whereas the predecessor of 501(c)(3) dates back to the income tax
law of 1894, Act of Aug. 27, 1894, ch. 349, 28 Stat. 509, see n 14, infra. There are minor differences between the lists of
organizations in the two sections, see generally Liles
& Blum, Development of the Federal Tax Treatment of Charities,
39 Law & Contemp. Prob. 6, 24-25 (No. 4, 1975) (hereinafter
Liles & Blum). Nevertheless, the two sections are closely
related; both seek to achieve the same basic goal of encouraging
the development of certain organizations through the grant of tax
benefits. The language of the two sections is in most respects
identical, and the Commissioner and the courts consistently have
applied many of the same standards in interpreting those sections. See 5 J. Mertens, Law of Federal Income Taxation § 31.12
(1980); 6 id. §§ 34.01-34.13 (1975); B. Bittker & L.
Stone, Federal Income Taxation 220-222 (5th ed.1980). To the extent
that § 170 "aids in ascertaining the meaning" of § 501(c)(3),
therefore, it is "entitled to great weight," United States v.
Stewart, 311 U. S. 60 , 311 U. S. 64 -65
(1940). See Harris v. Commissioner, 340 U.
S. 106 , 340 U. S. 107 (1950).

															[ Footnote 11 ]

															The dissent suggests that the Court "quite adeptly avoids the
statute it is construing," post at 461 U. S. 612 ,
and "seeks refuge . . . by turning to § 170," post at 461 U. S. 613 .
This assertion dissolves when one sees that § 501(c)(3) and § 170
are construed together, as they must be. The dissent acknowledges
that the two sections are "mirror" provisions; surely there can be
no doubt that the Court properly looks to § 170 to determine the
meaning of § 501(c)(3). It is also suggested that § 170 is "at best
of little usefulness in finding the meaning of § 501(c)(3)," since
"§ 170(c) simply tracks the requirements set forth in § 501(c)(3)," post at 461 U. S. 614 .
That reading loses sight of the fact that § 170(c) defines the term
"charitable contribution." The plain language of § 170 reveals that
Congress' objective was to employ tax exemptions and deductions to
promote certain charitable purposes. While the eight
categories of institutions specified in the statute are indeed
presumptively charitable in nature, the IRS properly considered
principles of charitable trust law in determining whether the
institutions in question may truly be considered "charitable" for
purposes of entitlement to the tax benefits conferred by § 170 and
§ 501(c)(3).

															[ Footnote 12 ]

															The form and history of the charitable exemption and deduction
sections of the various income tax Acts reveal that Congress was
guided by the common law of charitable trusts. See Simon,
The Tax-Exempt Status of Racially Discriminatory Religious Schools,
36 Tax L.Rev. 477, 485-489 (1981) (hereinafter Simon). Congress
acknowledged as much in 1969. The House Report on the Tax Reform
Act of 1969, Pub.L. 91-172, 83 Stat. 487, stated that the §
501(c)(3) exemption was available only to institutions that served
"the specified charitable purposes," H.R.Rep. No. 91-413, pt. 1, p.
35 (1969), and described "charitable" as "a term that has been used
in the law of trusts for hundreds of years." Id. at 43. We
need not consider whether Congress intended to incorporate into the
Internal Revenue Code any aspects of charitable trust law other
than the requirements of public benefit and a valid public
purpose.

															[ Footnote 13 ]

															The draftsmen of the 1894 income tax law, which included the
first charitable exemption provision, relied heavily on English
concepts of taxation, and the list of exempt organizations appears
to have been patterned upon English income tax statutes. See 26 Cong.Rec. 584-588, 6612-6615 (1894)

															[ Footnote 14 ]

															Act of Aug. 27, 1894, ch. 349, § 32, 28 Stat. 556-557. The
income tax system contained in the 1894 Act was declared
unconstitutional, Pollock v. Farmers' Loan & Trust
Co., 158 U. S. 601 (1895), for reasons unrelated to the charitable exemption
provision. The terms of that exemption were, in substance, included
in the corporate income tax contained in the Payne-Aldrich Tariff
Act of 1909, ch. 6, § 38, 36 Stat. 112. A similar exemption has
been included in every income tax Act since the adoption of the
Sixteenth Amendment, beginning with the Revenue Act of 1913, ch.
16, § II(G), 38 Stat. 172. See generally Reiling, Federal
Taxation: What Is a Charitable Organization?, 44 A.B.A.J. 525
(1958); Liles & Blum.

															[ Footnote 15 ]

															That same year, the Bureau of Internal Revenue expressed a
similar view of the charitable deduction section of the estate tax
contained in the Revenue Act of 1918, ch. 18, § 403(a)(3), 40 Stat.
1098. The Solicitor of Internal Revenue looked to the common law of
charitable trusts in construing that provision, and noted that
"generally bequests for the benefit and advantage of the general
public are valid as charities." Sol.Op. 159, III-1 Cum.Bull. 480,
482 (1924).

															[ Footnote 16 ]

															The common law requirement of public benefit is universally
recognized by commentators on the law of trusts. For example, the
Bogerts state:

															"In return for the favorable treatment accorded charitable gifts
which imply some disadvantage to the community, the courts must
find in the trust which is to be deemed 'charitable' some real
advantages to the public which more than offset the disadvantages
arising out of special privileges accorded charitable trusts."

															G. Bogert & G. Bogert, Law of Trusts and Trustees § 361, p.
3 (rev.2d ed.1977) (hereinafter Bogert). For other statements of
this principle, see, e.g., 4 Scott § 348, at 2770;
Restatement (Second) of Trusts § 368, Comment (1959); E. Fisch, D.
Freed, & E. Schachter, Charities and Charitable Foundations §
256 (1974)

															[ Footnote 17 ] Cf. Tank Truck Rentals, Inc. v. Commissioner, 356 U. S. 30 , 356 U. S. 35 (1958), in which this Court referred to "the presumption against
congressional intent to encourage violation of declared public
policy" in upholding the Commissioner's disallowance of deductions
claimed by a trucking company for fines it paid for violations of
state maximum weight laws.

															[ Footnote 18 ]

															The dissent acknowledges that "Congress intended . . . to offer
a tax benefit to organizations . . . providing a public benefit," post at 461 U. S.
614 -615, but suggests that Congress itself fully defined
what organizations provide a public benefit, through the list of
eight categories of exempt organizations contained in § 170 and §
501(c)(3). Under that view, any nonprofit organization that falls
within one of the specified categories is automatically entitled to
the tax benefits, provided it does not engage in expressly
prohibited lobbying or political activities. Post at 461 U. S. 617 .
The dissent thus would have us conclude, for example, that any
nonprofit organization that does not engage in prohibited lobbying
activities is entitled to tax exemption as an "educational"
institution if it is organized for the " instruction or training
of the individual for the purpose of improving or developing his
capabilities,'" 26 CFR § 1.501(c)(3) - 1(d)(3) (1982). See
post at 461 U. S. 623 .
As Judge Leventhal noted in Green v.
Connally, 330
F. Supp. 1150 , 1160 (DC), summarily aff'd sub nom. Coit v.
Green, 404 U.S. 997 (1971), Fagin's school for educating
English boys in the art of picking pockets would be an
"educational" institution under that definition. Similarly, a band
of former military personnel might well set up a school for
intensive training of subversives for guerrilla warfare and
terrorism in other countries; in the abstract, that "school" would
qualify as an "educational" institution. Surely Congress had no
thought of affording such an unthinking, wooden meaning to § 170
and § 501(c)(3) as to provide tax benefits to "educational"
organizations that do not serve a public, charitable
purpose. [ Footnote 19 ]

															The Court's reading of § 501(c)(3) does not render meaningless
Congress' action in specifying the eight categories of
presumptively exempt organizations, as petitioners suggest. See Brief for Petitioner in No. 811, pp. 18-24. To be
entitled to tax-exempt status under § 501(c)(3), an organization
must first fall within one of the categories specified by Congress,
and in addition must serve a valid charitable purpose.

															[ Footnote 20 ]

															In 1894, when the first charitable exemption provision was
enacted, racially segregated educational institutions would not
have been regarded as against public policy. Yet contemporary
standards must be considered in determining whether given
activities provide a public benefit and are entitled to the
charitable tax exemption. In Walz v. Tax Comm'r, 397 U. S. 664 , 397 U. S. 673 (1970), we observed:

															"Qualification for tax exemption is not perpetual or immutable;
some tax-exempt groups lose that status when their activities take
them outside the classification and new entities can come into
being and qualify for exemption."

															Charitable trust law also makes clear that the definition of
"charity" depends upon contemporary standards. See, e.g., Restatement (Second) of Trusts § 374, Comment a (1959);
Bogert § 369, at 65-67; 4 Scott § 368, at 2855-2856.

															[ Footnote 21 ]

															In view of our conclusion that racially discriminatory private
schools violate fundamental public policy and cannot be deemed to
confer a benefit on the public, we need not decide whether an
organization providing a public benefit and otherwise meeting the
requirements of § 501(c)(3) could nevertheless be denied tax-exempt
status if certain of its activities violated a law or public
policy.

															[ Footnote 22 ]

															In the present case, the IRS issued its rulings denying
exemptions to racially discriminatory schools only after a
three-judge District Court had issued a preliminary injunction. See supra at 461 U. S.
578 -579.

															[ Footnote 23 ]

															JUSTICE POWELL misreads the Court's opinion when he suggests
that the Court implies that

															"the Internal Revenue Service is invested with authority to
decide which public policies are sufficiently 'fundamental' to
require denial of tax exemptions," post at 461 U. S. 611 .
The Court's opinion does not warrant that interpretation. JUSTICE
POWELL concedes that,

															"if any national policy is sufficiently fundamental to
constitute such an overriding limitation on the availability of
tax-exempt status under § 501(c)(3), it is the policy against
racial discrimination in education." Post at 461 U. S. 607 .
Since that policy is sufficiently clear to warrant JUSTICE POWELL's
concession and for him to support our finding of longstanding
congressional acquiescence, it should be apparent that his concerns
about the Court's opinion are unfounded.

															[ Footnote 24 ]

															Many of the amici curiae, including amicus Wiilliam T. Coleman, Jr. (appointed by the Court), argue that
denial of tax-exempt status to racially discriminatory schools is
independently required by the equal protection component of the
Fifth Amendment. In light of our resolution of this litigation, we
do not reach that issue. See, e.g., United States v.
Clark, 445 U. S. 23 , 445 U. S. 27 (190); NLRB v. Catholic Bishop of Chicago, 440 U.
S. 490 , 440 U. S. 504 (1979).

															[ Footnote 25 ]

															H.R. 1096, 97th Cong., 1st Sess. (1981); H.R. 802, 97th Cong.,
1st Sess. (1981); H.R. 498, 97th Cong., 1st Sess. (1981); H.R. 332,
97th Cong., 1st Sess. (1981); H.R. 95, 97th Cong., 1st Sess.
(1981); S. 995, 96th Cong., 1st Sess. (1979); H.R.1905, 96th Cong.,
1st Sess. (1979); H.R. 96, 96th Cong., 1st Sess. (1979); H.R. 3225,
94th Cong., 1st Sess. (1975); H.R. 1394, 93d Cong., 1st Sess.
(1973); H.R. 5350, 92d Cong., 1st Sess. (1971); H.R. 2352, 92d
Cong., 1st Sess. (1971); H.R. 68, 92d Cong., 1st Sess. (1971).

															[ Footnote 26 ]

															Prior to the introduction of this legislation, a three-judge
District Court had held that segregated social clubs were entitled
to tax exemptions. McGlotten v. Connally, 338 F.
Supp. 448 (DC 1972). Section 501(i) was enacted primarily in
response to that decision. See S.Rep. No. 94-1318, pp. 7-8
(1976); H.R.Rep. No. 94-1353, p. 8 (1976).

															[ Footnote 27 ]

															Reliance is placed on scattered statements in floor debate by
Congressmen critical of the IRS's adoption of Revenue Ruling
71-447. See, e.g., Brief for Petitioner in No. 81-1, pp.
27-28. Those views did not prevail. That several Congressmen,
expressing their individual views, argued that the IRS had no
authority to take the action in question is hardly a balance for
the overwhelming evidence of congressional awareness of and
acquiescence in the IRS rulings of 1970 and 1971. Petitioners also
argue that the Ashbrook and Dornan Amendments to the Treasury,
Postal Service, and General Government Appropriations Act of 1980,
Pub.L. 96-74, §§ 103, 614, 615, 93 Stat. 559, 562, 576-577, reflect
congressional opposition to the IRS policy formalized in Revenue
Ruling 71-447. Those amendments, however, are directly concerned
only with limiting more aggressive enforcement procedures proposed
by the IRS in 1978 and 1979 and preventing the adoption of more
stringent substantive standards. The Ashbrook Amendment, § 103 of
the Act, applies only to procedures, guidelines, or measures
adopted after August 22, 1978, and thus in no way affects the
status of Revenue Ruling 71-447. In fact, both Congressman Dornan
and Congressman Ashbrook explicitly stated that their amendments
would have no effect on prior IRS policy, including Revenue Ruling
71-447, see 125 Cong.Rec. 18815 (1979) (Cong. Dornan:
"[M]y amendment will not affect existing IRS rules which IRS has
used to revoke tax exemptions of white segregated academies under
Revenue Ruling 71-447. . . ."); id. at 18446 (Cong.
Ashbrook: "My amendment very clearly indicates on its face that all
the regulations in existence as of August 22, 1978, would not be
touched"). These amendments therefore do not indicate congressional
rejection of Revenue Ruling 71-447 and the standards contained
therein.

															[ Footnote 28 ]

															The District Court found, on the basis of a full evidentiary
record, that the challenged practices of petitioner Bob Jones
University were based on a genuine belief that the Bible forbids
interracial dating and marriage. 468 F. Supp. at 894. We assume, as
did the District Court, that the same is true with respect to
petitioner Goldsboro Christian Schools. See 436 F. Supp.
at 1317.

															[ Footnote 29 ]

															We deal here only with religious schools -- not with
churches or other purely religious institutions; here, the
governmental interest is in denying public support to racial
discrimination in education. As noted earlier, racially
discriminatory schools "exer[t] a pervasive influence on the entire
educational process," outweighing any public benefit that they
might otherwise provide, Norwood v. Harrison, 413 U.
S. 455 , 413 U. S. 469 (1973). See generally Simon, 495-496.

															[ Footnote 30 ]

															Bob Jones University also contends that denial of tax exemption
violates the Establishment Clause by preferring religions whose
tenets do not require racial discrimination over those which
believe racial intermixing is forbidden. It is well settled that
neither a state nor the Federal Government may pass laws which
"prefer one religion over another," Everson v. Board of
Education, 330 U. S. 1 , 330 U. S. 15 (1947), but "[i]t is equally true" that a regulation does not
violate the Establishment Clause merely because it "happens to
coincide or harmonize with the tenets of some or all religions." McGowan v. Maryland, 366 U. S. 420 , 366 U. S. 442 (1961). See Harris v. McRae, 448 U.
S. 297 , 448 U. S.
319 -320 (1980). The IRS policy at issue here is founded
on a "neutral, secular basis," Gillette v. United States, 401 U. S. 437 , 401 U. S. 452 (1971), and does not violate the Establishment Clause. See
generally U.S. Comm'n on Civil Rights, Discriminatory
Religious Schools and Tax Exempt Status 10-17 (1982). In addition,
as the Court of Appeals noted,

															"the uniform application of the rule to all religiously operated
schools avoids the necessity for a potentially entangling
inquiry into whether a racially restrictive practice is the result
of sincere religious belief."

															639 F.2d 147, 155 (CA4 1980) (emphasis in original). Cf.
NLRB v. Catholic Bishop of Chicago, 440 U.
S. 490 (1979). But see generally Note, 90 Yale
L.J. 350 (1980).

															[ Footnote 31 ]

															This argument would, in any event, apply only to the final eight
months of the five tax years at issue in this case. Prior to May,
1975, Bob Jones University's admissions policy was racially
discriminatory on its face, since the University excluded unmarried
Negro students while admitting unmarried Caucasians.

															[ Footnote 32 ]

															Bob Jones University also argues that the IRS policy should not
apply to it, because it is entitled to exemption under § 501(c)(3)
as a "religious" organization, rather than as an "educational"
institution. The record in this case leaves no doubt, however, that
Bob Jones University is both an educational institution and a
religious institution. As discussed previously, the IRS policy
properly extends to all private schools, including religious
schools. See n 29, supra. The IRS policy thus was properly applied to Bob
Jones University.

															JUSTICE POWELL, concurring in part and concurring in the
judgment.

															I join the Court's judgment, along with 461 U.
S. holding that the denial of tax exemptions to
petitioners does not violate the First Amendment. I write
separately because I am troubled by the broader implications of the
Court's opinion with respect to the authority of the Internal
Revenue Service (IRS) and its construction of §§ 170(c) and
501(c)(3) of the Internal Revenue Code. I Federal taxes are not imposed on organizations "operated
exclusively for religious, charitable, scientific, testing for
public safety, literary, or educational purposes. . . ." 26 U.S.C.
§ 501(c)(3). The Code also permits a tax deduction for
contributions made to these organizations. § 170(c). It is clear
that petitioners, organizations incorporated for educational
purposes, fall within the language of the statute. It also is clear
that the language itself does not mandate refusal of tax-exempt
status to any private school that maintains a racially
discriminatory admissions policy. Accordingly, there is force in
JUSTICE REHNQUIST's argument that §§ 170(c) and 501(c)(3) should be
construed as setting forth the only criteria Congress has
established for qualification as a tax-exempt organization. See
post at 461 U. S.
612 -615 (REHNQUIST, J., dissenting). Indeed, were we
writing prior to the history detailed in the Court's opinion, this
could well be the construction I would adopt. But there has been a
decade of acceptance that is persuasive in the circumstances of
these cases, and I conclude that there are now sufficient reasons
for accepting the IRS's construction of the Code as proscribing Page 461 U. S. 607 tax exemptions for schools that discriminate on the basis of
race as a matter of policy.

															I cannot say that this construction of the Code, adopted by the
IRS in 1970 and upheld by the Court of Appeals below, is without
logical support. The statutory terms are not self-defining, and it
is plausible that, in some instances, an organization seeking a tax
exemption might act in a manner so clearly contrary to the purposes
of our laws that it could not be deemed to serve the enumerated
statutory purposes. [ Footnote 2/1 ]
And, as the Court notes, if any national policy is sufficiently
fundamental to constitute such an overriding limitation on the
availability of tax-exempt status under § 501(c)(3), it is the
policy against racial discrimination in education. See
ante at 461 U. S.
595 -596. Finally, and of critical importance for me, the
subsequent actions of Congress present "an unusually strong case of
legislative acquiescence in and ratification by implication of the
[IRS's] 1970 and 1971 rulings" with respect to racially
discriminatory schools. Ante at 461 U. S. 599 .
In particular, Congress' enactment of § 501(i) in 1976 is strong
evidence of agreement with these particular IRS rulings. [ Footnote 2/2 ] Page 461 U. S. 608 II I therefore concur in the Court's judgment that tax-exempt
status under §§ 170(c) and 501(c)(3) is not available to private
schools that concededly are racially discriminatory. I do not
agree, however, with the Court's more general explanation of the
justifications for the tax exemptions provided to charitable
organizations. The Court states:

															"Charitable exemptions are justified on the basis that the
exempt entity confers a public benefit -- a benefit which the
society or the community may not itself choose or be able to
provide, or which supplements and advances the work of public
institutions already supported by tax revenues. History buttresses
logic to make clear that, to warrant exemption under § 501(c)(3),
an institution must fall within a category specified in that
section, and must demonstrably serve and be in harmony with the
public interest. The institution's purpose must not be so at odds
with the common community conscience as to undermine any public
benefit that might otherwise be conferred." Ante at 461 U. S.
591 -592 (footnotes omitted). Applying this test to
petitioners, the Court concludes that

															"[c]learly an educational institution engaging in practices
affirmatively at odds with [the] declared position of the whole
Government cannot be seen as exercising a 'beneficial and
stabilizing influenc[e] in community life,' . . . and is not
'charitable,' within the meaning of § 170 and § 501(c)(3)." Ante at 461 U. S.
598 -599 (quoting Walz v. Tax Comm'n, 397 U. S. 664 , 397 U. S. 673 (1970)).

															With all respect, I am unconvinced that the critical question in
determining tax-exempt status is whether an individual organization
provides a clear "public benefit" as defined by the Court. Over
106,000 organizations filed § 501(c)(3) returns in 1981. Internal
Revenue Service, 1982 Exempt Page 461 U. S. 609 Organization/Business Master File. I find it impossible to
believe that all or even most of those organizations could prove
that they "demonstrably serve and [are] in harmony with the public
interest," or that they are "beneficial and stabilizing influences
in community life." Nor am I prepared to say that petitioners,
because of their racially discriminatory policies, necessarily
contribute nothing of benefit to the community. It is clear from
the substantially secular character of the curricula and degrees
offered that petitioners provide educational benefits.

															Even more troubling to me is the element of conformity that
appears to inform the Court's analysis. The Court asserts that an
exempt organization must "demonstrably serve and be in harmony with
the public interest," must have a purpose that comports with "the
common community conscience," and must not act in a manner
"affirmatively at odds with [the] declared position of the whole
Government." Taken together, these passages suggest that the
primary function of a tax-exempt organization is to act on behalf
of the Government in carrying out governmentally approved policies.
In my opinion, such a view of § 501(c)(3) ignores the important
role played by tax exemptions in encouraging diverse, indeed often
sharply conflicting, activities and viewpoints. As JUSTICE BRENNAN
has observed, private, nonprofit groups receive tax exemptions
because "each group contributes to the diversity of association,
viewpoint, and enterprise essential to a vigorous, pluralistic
society." Walz, supra, at 397 U. S. 689 (concurring opinion). Far from representing an effort to reinforce
any perceived "common community conscience," the provision of tax
exemptions to nonprofit groups is one indispensable means of
limiting the influence of governmental orthodoxy on important areas
of community life. [ Footnote
2/3 ] Page 461 U. S. 610 Given the importance of our tradition of pluralism, [ Footnote 2/4 ] "[t]he interest in preserving
an area of untrammeled choice for private philanthropy is very
great." Jackson v. Statler Foundation, 496 F.2d 623, 639
(CA2 1974) (Friendly, J., dissenting from denial of reconsideration
en banc).

															I do not suggest that these considerations always are or should
be dispositive. Congress, of course, may find that some
organizations do not warrant tax-exempt status. In these cases, I
agree with the Court that Congress has determined that the policy
against racial discrimination in education should override the
countervailing interest in permitting unorthodox private
behavior. Page 461 U. S. 611 I would emphasize, however, that the balancing of these
substantial interests is for Congress to perform. I am
unwilling to join any suggestion that the Internal Revenue Service
is invested with authority to decide which public policies are
sufficiently "fundamental" to require denial of tax exemptions. Its
business is to administer laws designed to produce revenue for the
Government, not to promote "public policy." As former IRS
Commissioner Kurtz has noted, questions concerning religion and
civil rights "are far afield from the more typical tasks of tax
administrators -- determining taxable income." Kurtz, Difficult
Definitional Problems in Tax Administration: Religion and Race, 23
Catholic Lawyer 301 (1978). This Court often has expressed concern
that the scope of an agency's authorization be limited to those
areas in which the agency fairly may be said to have expertise,
[ Footnote 2/5 ] and this concern
applies with special force when the asserted administrative power
is one to determine the scope of public policy. As JUSTICE BLACKMUN
has noted:

															"[W]here the philanthropic organization is concerned, there
appears to be little to circumscribe the almost unfettered power of
the Commissioner. This may be very well so long as one subscribes
to the particular brand of social policy the Commissioner happens
to be advocating Page 461 U. S. 612 at the time . . . , but application of our tax laws should not
operate in so fickle a fashion. Surely, social policy in the first
instance is a matter for legislative concern." Commissioner v. "Americans United" Inc., 416 U.
S. 752 , 416 U. S.
774 -775 (1974) (dissenting opinion). III The Court's decision upholds IRS Revenue Ruling 71-447, and thus
resolves the question whether tax-exempt status is available to
private schools that openly maintain racially discriminatory
admissions policies. There no longer is any justification for
Congress to hesitate -- as it apparently has -- in articulating and
codifying its desired policy as to tax exemptions for
discriminatory organizations. Many questions remain, such as
whether organizations that violate other policies should receive
tax-exempt status under § 501(c)(3). These should be legislative
policy choices. It is not appropriate to leave the IRS "on the
cutting edge of developing national policy." Kurtz, supra, at 308. The contours of public policy should be determined by
Congress, not by judges or the IRS.

															[ Footnote 2/1 ]

															I note that the Court has construed other provisions of the Code
as containing narrowly defined public policy exceptions. See
Commissioner v. Tellier, 383 U. S. 687 , 383 U. S.
693 -694 (1966); Tank Truck Rentals, Inc. v.
Commissioner, 356 U. S. 30 , 356 U. S. 35 (1958).

															[ Footnote 2/2 ]

															The District Court for the District of Columbia in Green v.
Connally, 330 F.
Supp. 1150 (three-judge court), summarily aff'd sub nom.
Coit v. Green, 404 U.S. 997 (1971), held that racially
discriminatory private schools were not entitled to tax-exempt
status. The same District Court, however, later ruled that racially
segregated social clubs could receive tax exemptions under §
501(c)(7) of the Code. See McGlotten v.
Connally, 338 F.
Supp. 448 (1972) (three-judge court). Faced with these two
important three-judge court rulings, Congress expressly overturned
the relevant portion of McGlotten by enacting § 501(i),
thus conforming the policy with respect to social clubs to the
prevailing policy with respect to private schools. This affirmative
step is a persuasive indication that Congress has not just silently
acquiesced in the result of Green. Cf. Merrill Lynch, Pierce,
Fenner & Smith, Inc. v. Curran, 456 U.
S. 353 , 456 U. S. 402 (1982) (POWELL, J., dissenting) (rejecting theory "that
congressional intent can be inferred from silence, and that
legislative inaction should achieve the force of law").

															[ Footnote 2/3 ]

															Certainly § 501(c)(3) has not been applied in the manner
suggested by the Court's analysis. The 1,100-page list of exempt
organizations includes -- among countless examples -- such
organizations as American Friends Service Committee, Inc.,
Committee on the Present Danger, Jehovahs Witnesses in the United
States, Moral Majority Foundation, Inc., Friends of the Earth
Foundation, Inc., Mountain States Legal Foundation, National Right
to Life Educational Foundation, Planned Parenthood Federation of
America, Scientists and Engineers for Secure Energy, Inc., and
Union of Concerned Scientists Fund, Inc. See Internal
Revenue Service, Cumulative List of Organizations Described in
Section 170(C) of the Internal Revenue Code of 1954, Pp. 31, 221,
376, 518, 670, 677, 694, 795, 880, 1001, 1073 (Revised Oct.1981).
It would be difficult indeed to argue that each of these
organizations reflects the views of the "common community
conscience" or "demonstrably . . . [is] in harmony with the public
interest." In identifying these organizations, largely taken at
random from the tens of thousands on the list, I of course do not
imply disapproval of their being exempt from taxation. Rather, they
illustrate the commendable tolerance by our Government of even the
most strongly held divergent views, including views that at least
from time to time are "at odds" with the position of our
Government. We have consistently recognized that such disparate
groups are entitled to share the privilege of tax exemption.

															[ Footnote 2/4 ]

															"A distinctive feature of America's tradition has been respect
for diversity. This has been characteristic of the peoples from
numerous lands who have built our country. It is the essence of our
democratic system." Mississippi University for Women v. Hogan, 458 U.
S. 718 , 458 U. S. 745 (1982) (POWELL, J., dissenting). Sectarian schools make an
important contribution to this tradition, for they "have provided
an educational alternative for millions of young Americans" and
"often afford wholesome competition with our public schools." Wolman v. Walter, 433 U. S. 229 , 433 U. S. 262 (1977) (POWELL, J., concurring in part, concurring in judgment in
part, and dissenting in part).

															[ Footnote 2/5 ] See, e.g., Community Television of Southern California v.
Gottfried, 459 U. S. 498 , 459 U. S.
510 -511, n. 17 (1983) ("[A]n agency's general duty to
enforce the public interest does not require it to assume
responsibility for enforcing legislation that is not directed at
the agency"); Hampton v. Mow Sun Wong, 426 U. S.
88 , 426 U. S. 114 (1976) ("It is the business of the Civil Service Commission to
adopt and enforce regulations which will best promote the
efficiency of the federal civil service. That agency has no
responsibility for foreign affairs, for treaty negotiations, for
establishing immigration quotas or conditions of entry, or for
naturalization policies"); NAACP v. FPC, 425 U.
S. 662 , 425 U. S. 670 (1976) ("The use of the words public interest' in the Gas and
Power Acts is not a directive to the [Federal Power] Commission to
seek to eradicate discrimination, but, rather, is a charge to
promote the orderly production of supplies of electric energy and
natural gas at just and reasonable rates"). JUSTICE REHNQUIST, dissenting.

															The Court points out that there is a strong national policy in
this country against racial discrimination. To the extent that the
Court states that Congress, in furtherance of this policy, could
deny tax-exempt status to educational institutions that promote
racial discrimination, I readily agree. But, unlike the Court, I am
convinced that Congress simply has failed to take this action and,
as this Court has said over and over again, regardless of our view
on the propriety of Congress' failure to legislate, we are not
constitutionally empowered to act for it.

															In approaching this statutory construction question, the Court
quite adeptly avoids the statute it is construing. This I am sure
is no accident, for there is nothing in the language Page 461 U. S. 613 of § 501(c)(3) that supports the result obtained by the Court.
Section 501(c)(3) provides tax-exempt status for:

															"Corporations, and any community chest, fund, or foundation,
organized and operated exclusively for religious, charitable,
scientific, testing for public safety, literary, or educational
purposes, or to foster national or international amateur sports
competition (but only if no part of its activities involve the
provision of athletic facilities or equipment), or for the
prevention of cruelty to children or animals, no part of the net
earnings of which inures to the benefit of any private shareholder
or individual, no substantial part of the activities of which is
carrying on propaganda, or otherwise attempting, to influence
legislation (except as otherwise provided in subsection (h)), and
which does not participate in, or intervene in (including the
publishing or distributing of statements), any political campaign
on behalf of any candidate for public office."

															26 U.S.C. § 501(c)(3). With undeniable clarity, Congress has
explicitly defined the requirements for § 501(c)(3) status. An
entity must be (1) a corporation, or community chest, fund, or
foundation, (2) organized for one of the eight enumerated purposes,
(3) operated on a nonprofit basis, and (4) free from involvement in
lobbying activities and political campaigns. Nowhere is there to be
found some additional, undefined public policy requirement.

															The Court first seeks refuge from the obvious reading of §
501(c)(3) by turning to § 170 of the Internal Revenue Code, which
provides a tax deduction for contributions made to § 501(c)(3)
organizations. In setting forth the general rule, § 170 states:

															"There shall be allowed as a deduction any charitable
contribution (as defined in subsection (c)) payment of which is
made within the taxable year. A charitable contribution shall be
allowable as a deduction only if verified Page 461 U. S. 614 under regulations prescribed by the Secretary."

															26 U.S.C. § 170(a)(1). The Court seizes the words "charitable
contribution" and with little discussion concludes that "[o]n its
face, therefore, § 170 reveals that Congress' intention was to
provide tax benefits to organizations serving charitable purposes,"
intimating that this implies some unspecified common law charitable
trust requirement. Ante at 461 U. S.
587 .

															The Court would have been well advised to look to subsection (c)
where, as § 170(a)(1) indicates, Congress has defined a "charitable
contribution":

															"For purposes of this section, the term 'charitable
contribution' means a contribution or gift to or for the use of . .
. [a] corporation, trust, or community chest, fund, or foundation .
. . organized and operated exclusively for religious, charitable,
scientific, literary, or educational purposes, or to foster
national or international amateur sports competition (but only if
no part of its activities involve the provision of athletic
facilities or equipment), or for the prevention of cruelty to
children or animals; . . . no part of the net earnings of which
inures to the benefit of any private shareholder or individual; and
. . . which is not disqualified for tax exemption under section
501(c) (3) by reason of attempting to influence legislation, and
which does not participate in, or intervene in (including the
publishing or distributing of statements), any political campaign
on behalf of any candidate for public office."

															26 U.S.C. § 170(c). Plainly, § 170(c) simply tracks the
requirements set forth in § 501(c)(3). Since § 170 is no more than
a mirror of § 501(c)(3) and, as the Court points out, § 170
followed § 501(c)(3) by more than two decades, ante at 461 U. S. 587 ,
n. 10, it is, at best, of little usefulness in finding the meaning
of § 501(c)(3).

															Making a more fruitful inquiry, the Court next turns to the
legislative history of § 501(c)(3) and finds that Congress
intended Page 461 U. S. 615 in that statute to offer a tax benefit to organizations that
Congress believed were providing a public benefit. I certainly
agree. But then the Court leaps to the conclusion that this history
is proof Congress intended that an organization seeking § 501(c)(3)
status "must fall within a category specified in that section and must demonstrably serve and be in harmony with the public
interest. " Ante at 461 U. S. 592 (emphasis added). To the contrary, I think that the legislative
history of § 501(c)(3) unmistakably makes clear that Congress
has decided what organizations are serving a public purpose
and providing a public benefit within the meaning of § 501(c)(3),
and has clearly set forth in § 501(c)(3) the characteristics of
such organizations. In fact, there are few examples which better
illustrate Congress' effort to define and redefine the requirements
of a legislative Act.

															The first general income tax law was passed by Congress in the
form of the Tariff Act of 1894. A provision of that Act provided an
exemption for "corporations, companies, or associations organized
and conducted solely for charitable, religious, or educational
purposes." Ch. 349, § 32, 28 Stat. 556 (1894). The income tax
portion of the 1894 Act was held unconstitutional by this Court, see Pollock v. Farmers' Loan & Trust Co., 158 U.
S. 601 (1895), but a similar exemption appeared in the
Tariff Act of 1909 which imposed a tax on corporate income. The
1909 Act provided an exemption for

															"any corporation or association organized and operated
exclusively for religious, charitable, or educational purposes, no
part of the net income of which inures to the benefit of any
private stockholder or individual."

															Ch. 6, § 38, 36 Stat. 113 (1909).

															With the ratification of the Sixteenth Amendment, Congress again
turned its attention to an individual income tax with the Tariff
Act of 1913. And again, in the direct predecessor of § 501(c)(3), a
tax exemption was provided for

															"any corporation or association organized and operated
exclusively for religious, charitable, scientific, or educational
purposes, Page 461 U. S. 616 no part of the net income of which inures to the benefit of any
private stockholder or individual."

															Ch. 16, §II(G)(a), 38 Stat. 172 (1913). In subsequent Acts,
Congress continued to broaden the list of exempt purposes. The
Revenue Act of 1918 added an exemption for corporations or
associations organized "for the prevention of cruelty to children
or animals." Ch. 18, § 231(6), 40 Stat. 1057, 1076 (1918). The
Revenue Act of 1921 expanded the groups to which the exemption
applied to include "any community chest, fund, or foundation" and
added "literary" endeavors to the list of exempt purposes. Ch. 136,
§ 231(6), 42 Stat. 263 (1921). The exemption remained unchanged in
the Revenue Acts of 1924, 1926, 1928, and 1932. [ Footnote 3/1 ] In the Revenue Act of 1934, Congress
added the requirement that no substantial part of the activities of
any exempt organization can involve the carrying on of "propaganda"
or "attempting to influence legislation." Ch. 277, § 101(6), 48
Stat. 700 (1934). Again, the exemption was left unchanged by the
Revenue Acts of 1936 and 1938. [ Footnote 3/2 ] The tax laws were overhauled by the
Internal Revenue Code of 1939, but this exemption was left
unchanged. Ch. 1, § 101(6), 53 Stat. 33 (1939). When the 1939 Code
was replaced with the Internal Revenue Code of 1954, the exemption
was adopted in full in the present § 501(c)(3) with the addition of
"testing for public safety" as an exempt purpose and an additional
restriction that tax-exempt organizations could not

															"participate in, or intervene in (including the publishing or
distributing of statements), any political campaign on behalf of
any candidate for public office."

															Ch. 1, § 501(c) (3), 68A Stat. 163 (1954). Then, in 1976, the
statute was again amended adding to the purposes for which an
exemption would be authorized, "to foster national or international
amateur Page 461 U. S. 617 sports competition," provided the activities did not involve the
provision of athletic facilities or equipment. Tax Reform Act of
1976, Pub.L. 94-455, § 1313(a), 90 Stat. 1730 (1976).

															One way to read the opinion handed down by the Court today leads
to the conclusion that this long and arduous refining process of §
501(c)(3) was certainly a waste of time, for when enacting the
original 1894 statute, Congress intended to adopt a common law term
of art, and intended that this term of art carry with it all of the
common law baggage which defines it. Such a view, however, leads
also to the unsupportable idea that Congress has spent almost a
century adding illustrations simply to clarify an already defined
common law term.

															Another way to read the Court's opinion leads to the conclusion
that, even though Congress has set forth some of the requirements
of a § 501(c)(3) organization, it intended that the IRS
additionally require that organizations meet a higher standard of
public interest, not stated by Congress, but to be determined and
defined by the IRS and the courts. This view I find equally
unsupportable. Almost a century of statutory history proves that
Congress itself intended to decide what § 501(c)(3) requires.
Congress has expressed its decision in the plainest of terms in §
501(c)(3) by providing that tax-exempt status is to be given to any
corporation, or community chest, fund, or foundation that is
organized for one of the eight enumerated purposes, operated on a
nonprofit basis, and uninvolved in lobbying activities or political
campaigns. The IRS certainly is empowered to adopt regulations for
the enforcement of these specified requirements, and the courts
have authority to resolve challenges to the IRS's exercise of this
power, but Congress has left it to neither the IRS nor the courts
to select or add to the requirements of § 501(c)(3).

															The Court suggests that, unless its new requirement be added to
§ 501(c)(3), nonprofit organizations formed to teach pickpockets
and terrorists would necessarily acquire tax-exempt Page 461 U. S. 618 status. Ante at 461 U. S. 592 ,
n. 18. Since the Court does not challenge the characterization of petitioners as "educational" institutions within the
meaning of § 501(c)(3), and in fact states several times in the
course of its opinion that petitioners are educational
institutions, see, e.g., ante at 461 U. S. 580 , 461 U. S. 583 , 461 U. S. 604 ,
n. 29, 461 U. S. 606 ,
n. 32, it is difficult to see how this argument advances the
Court's reasoning for disposing of petitioners' cases.

															But simply because I reject the Court's heavy-handed creation of
the requirement that an organization seeking 501(c)(3) status must
"serve and be in harmony with the public interest," ante at 461 U. S. 592 ,
does not mean that I would deny to the IRS the usual authority to
adopt regulations further explaining what Congress meant by the
term "educational." The IRS has fully exercised that authority in
Treas.Reg. § 1.501(c)(3) - 1(d)(3), 26 CFR § 1.501(c)(3) - 1(d)(3)
(1982), which provides:

															"(3) Educational defined -- (i) In general. The term
'educational,' as used in section 501(c)(3), relates to -- "

															"(a) The instruction or training of the individual for the
purpose of improving or developing his capabilities; or"

															"(b) The instruction of the public on subjects useful to the
individual and beneficial to the community."

															"An organization may be educational even though it advocates a
particular position or viewpoint so long as it presents a
sufficiently full and fair exposition of the pertinent facts as to
permit an individual or the public to form an independent opinion
or conclusion. On the other hand, an organization is not
educational if its principal function is the mere presentation of
unsupported opinion."

															"(ii) Examples of educational organizations. The
following are examples of organizations which, if they otherwise
meet the requirements of this section, are educational: " Page 461 U. S. 619 " Example (1). An organization, such as a primary or
secondary school, a college, or a professional or trade school,
which has a regularly scheduled curriculum, a regular faculty, and
a regularly enrolled body of students in attendance at a place
where the educational activities are regularly carried on."

															" Example (2). An organization whose activities consist
of presenting public discussion groups, forums, panels, lectures,
or other similar programs. Such programs may be on radio or
television."

															" Example (3). An organization which presents a course
of instruction by means of correspondence or through the
utilization of television or radio."

															" Example (4). Museums, zoos, planetariums, symphony
orchestras, and other similar organizations."

															I have little doubt that neither the "Fagin School for
Pickpockets" nor a school training students for guerrilla warfare
and terrorism in other countries would meet the definitions
contained in the regulations.

															Prior to 1970, when the charted course was abruptly changed, the
IRS had continuously interpreted § 501(c)(3) and its predecessors
in accordance with the view I have expressed above. This, of
course, is of considerable significance in determining the intended
meaning of the statute. NLRB v. Boeing Co., 412 U. S.
67 , 412 U. S. 75 (1973); Power Reactor Development Co. v. Electrical
Workers, 367 U. S. 396 , 367 U. S. 408 (1961).

															In 1970, the IRS was sued by parents of black public school
children seeking to enjoin the IRS from according tax-exempt status
under § 501(c)(3) to private schools in Mississippi that
discriminated against blacks. The IRS answered, consistent with its
longstanding position, by maintaining a lack of authority to deny
the tax exemption if the schools met the specified requirements of
§ 501(c)(3). Then, "[i]n the midst of this litigation," Green
v. Connally, 330
F. Supp. 1150 , 1156 (DC), summarily aff'd sub nom. Coit v.
Green, 404 U.S. 997 (1971), and in the face of a preliminary
injunction, Page 461 U. S. 620 the IRS changed its position and adopted the view of the
plaintiffs.

															Following the close of the litigation, the IRS published its new
position in Revenue Ruling 71-447, stating that

															"a school asserting a right to the benefits provided for in
section 501(c)(3) of the Code as being organized and operated
exclusively for educational purposes must be a common law charity
in order to be exempt under that section."

															Rev.Rul. 71-447, 1971-2 Cum.Bull. 230. The IRS then concluded
that a school that promotes racial discrimination violates public
policy, and therefore cannot qualify as a common law charity. The
circumstances under which this change in interpretation was made
suggest that it is entitled to very little deference. But even if
the circumstances were different, the latter-day wisdom of the IRS
has no basis in § 501(c)(3).

															Perhaps recognizing the lack of support in the statute itself,
or in its history, for the 1970 IRS change in interpretation, the
Court finds that "[t]he actions of Congress since 1970 leave no
doubt that the IRS reached the correct conclusion in exercising its
authority," concluding that there is "an unusually strong case of
legislative acquiescence in and ratification by implication of the
1970 and 1971 rulings." Ante at 461 U. S. 599 .
The Court relies first on several bills introduced to overturn the
IRS interpretation of § 501(c)(3). Ante at 461 U. S. 600 ,
and n. 25. But we have said before, and it is equally applicable
here, that this type of congressional inaction is of virtually no
weight in determining legislative intent. See United States v.
Wise, 370 U. S. 405 , 370 U. S. 411 (1962); Waterman S.S. Corp. v. United States, 381 U.
S. 252 , 381 U. S. 269 (1965). These bills and related hearings indicate little more than
that a vigorous debate has existed in Congress concerning the new
IRS position.

															The Court next asserts that "Congress affirmatively manifested
its acquiescence in the IRS policy when it enacted the present §
501(i) of the Code," a provision that "denies tax-exempt status to
social clubs whose charters or policy statements Page 461 U. S. 621 provide for" racial discrimination. Ante at 461 U. S. 601 .
Quite to the contrary, it seems to me that, in § 501(i), Congress
showed that, when it wants to add a requirement prohibiting racial
discrimination to one of the tax-benefit provisions, it is fully
aware of how to do it. Cf. Commissioner v. Tellier, 383 U. S. 687 , 383 U. S. 693 ,
n. 10 (1966).

															The Court intimates that the Ashbrook and Dornan Amendments also
reflect an intent by Congress to acquiesce in the new IRS position. Ante at 461 U. S. 602 ,
n. 27. T he amendments were passed to limit certain enforcement
procedures proposed by the IRS in 1978 and 1979 for determining
whether a school operated in a racially nondiscriminatory fashion.
The Court points out that, in proposing his amendment, Congressman
Ashbrook stated: " My amendment very clearly indicates on its
face that all the regulations in existence as of August 22, 1978,
would not be touched.'" Ibid. The Court fails to note that
Congressman Ashbrook also said: "The IRS has no authority to create public policy. . . . So long
as the Congress has not acted to set forth a national policy
respecting denial of tax exemptions to private schools, it is
improper for the IRS or any other branch of the Federal Government
to seek denial of tax-exempt status. . . . There exists but a
single responsibility which is proper for the Internal Revenue
Service: To serve as tax collector."

															125 Cong.Rec. 18444 (1979). In the same debate, Congressman
Grassley asserted:

															"Nobody argues that racial discrimination should receive
preferred tax status in the United States. However, the IRS should
not be making these decisions on the agency's own discretion.
Congress should make these decisions." Id. at 18448. The same debates are filled with other
similar statements. While on the whole these debates do not show
conclusively that Congress believed the IRS had exceeded its
authority with the 1970 change in position, they likewise are Page 461 U. S. 622 far less than a showing of acquiescence in and ratification of
the new position.

															This Court continuously has been hesitant to find ratification
through inaction. See United States v. Wise, supra. This
is especially true where such a finding

															"would result in a construction of the statute which not only is
at odds with the language of the section in question and the
pattern of the statute taken as a whole, but also is extremely far
reaching in terms of the virtually untrammeled and unreviewable
power it would vest in a regulatory agency." SEC v. Sloan, 436 U. S. 103 , 436 U. S. 121 (1978). Few cases would call for more caution in finding
ratification by acquiescence than the present ones. The new IRS
interpretation is not only far less than a longstanding
administrative policy, it is at odds with a position maintained by
the IRS, and unquestioned by Congress, for several decades prior to
1970. The interpretation is unsupported by the statutory language,
it is unsupported by legislative history, the interpretation has
led to considerable controversy in and out of Congress, and the
interpretation gives to the IRS a broad power which, until now,
Congress had kept for itself. Where in addition to these
circumstances Congress has shown time and time again that it is
ready to enact positive legislation to change the Tax Code when it
desires, this Court has no business finding that Congress has
adopted the new IRS position by failing to enact legislation to
reverse it.

															I have no disagreement with the Court's finding that there is a
strong national policy in this country opposed to racial
discrimination. I agree with the Court that Congress has the power
to further this policy by denying § 501(c)(3) status to
organizations that practice racial discrimination. [ Footnote 3/3 ] But as of yet, Congress has failed to
do so. Whatever the reasons for the failure, this Court should not
legislate for Congress. [ Footnote
3/4 ] Page 461 U. S. 623 Petitioners are each organized for the "instruction or training
of the individual for the purpose of improving or developing his
capabilities," 26 CFR § 1.501(c)(3) - 1(d)(3) (1982), and thus are
organized for "educational purposes" within the meaning of §
501(c)(3). Petitioners' nonprofit status is uncontested. There is
no indication that either petitioner has been involved in lobbying
activities or political campaigns. Therefore, it is my view that,
unless and until Congress affirmatively amends § 501(c)(3) to
require more, the IRS is without authority to deny petitioners §
501(c)(3) status. For this reason, I would reverse the Court of
Appeals.

															[ Footnote 3/1 ] See Revenue Act of 1924, ch. 234, § 231(6), 43 Stat.
282; Revenue Act of 1926, ch. 27, § 231(6), 44 Stat. 40; Revenue
Act of 1928, ch. 852, § 103(6), 45 Stat. 813; Revenue Act of 1932,
ch. 209, § 103(6), 47 Stat.193.

															[ Footnote 3/2 ] See Revenue Act of 1936, ch. 690, § 101(6), 49 Stat.
1674; Revenue Act of 1938, ch. 289, § 101(6), 52 Stat. 481.

															[ Footnote 3/3 ]

															I agree with the Court that such a requirement would not
infringe on petitioners' First Amendment rights.

															[ Footnote 3/4 ]

															Because of its holding, the Court does not have to decide
whether it would violate the equal protection component of the
Fifth Amendment for Congress to grant § 501(c)(3) status to
organizations that practice racial discrimination. Ante at 461 U. S. 599 ,
n. 24. I would decide that it does not. The statute is facially
neutral; absent a showing of a discriminatory purpose, no equal
protection violation is established. Washington v. Davis, 426 U. S. 229 , 426 U. S.
241 -244 (1976).