With 2nd O’Keefe Video, Is NPR’s Tax-Exempt Status at Risk?

NPR can and will survive the firings of execs Ron and Vivian Schiller. It can even survive Congressional “defunding.” But NPR could never survive the loss of its tax-exempt status…and that is the issue implicated in James O’Keefe’s second undercover video in which NPR tells Muslim radical poseurs how to conceal donations from government audits.

The “star” of this second sting video is Betsy Liley, the Senior Director of Institutional Giving at NPR, who reported directly to the recently fired Ron Schiller, who himself starred in O’Keefe’s first NPR video laughing over lunch at Jews, whites, and racist Tea Partiers, and dismissively saying NPR doesn’t need public funding. And he may be right.

Turns out roughly 2% of NPR’s funding comes from public coffers. The real money comes from charitable donations to NPR and its public radio affiliates who rely on the NPR “brand” to attract charitable donors and then, in return, pay back to NPR the lion’s share of its operating budget.
So the real threat – the thermonuclear threat – posed by O’Keefe’s video may be the loss of NPR’s all-important tax exempt status. Without tax-exempt status, NPR’s charitable donation well runs dry.
In O’Keefe’s latest video, Ms. Liley reassured the actor posing as a Muslim Brotherhood front group that NPR could legally accept the $5 million dollar gift anonymously to shield the group from government audits disclosing the donor’s identity. On March 1, 2011, she confirmed this in writing via email, as you can see in the video.

NPR’s schmoozing for money from a group claiming ties to the Muslim Brotherhood clearly constitutes a moral outrage, but does it imperil its tax exempt status as a 501(c)(3) non-profit corporation?
The IRS makes clear that “leaders of 501(c)(3)s must not make partisan comments in official organization publications or at official functions,” and that NPR must comply with “information reporting obligations … [generally] met by filing Form 990.” Tax lawyers and CPAs may quibble and debate whether the O’Keefe videos expose prohibited conduct, but NPR unmistakably appreciates the dire threat.

Thus, barely hours after O’Keefe’s video posted, NPR responded: