Bob Jones University regains nonprofit status 17 years after it dropped discriminatory policy

Bob Jones University regains nonprofit status 17 years after it dropped discriminatory policy

BJU entrance (Picture: File)

In a move that’s been a lot more than 2 yrs within the creating, Bob Jones University announced Wednesday it might regain its federal status that is tax-exempt March 1, a lot more than three years following the IRS stripped its nonprofit status following a landmark U.S. Supreme Court ruling.

The problem when you look at the court instance ended up being the refusal that is university’s allow interracial relationship or wedding among pupils, staff or faculty associated with college, a guideline this has since abandoned.

The conservative Christian college dropped its interracial ban that is dating a nationwide televised interview with past president Bob Jones III on CNN’s Larry King are now living in 2000. In 2008, last President Stephen Jones, great-grandson of university and evangelist founder Bob Jones, apologized for BJU’s past racial discrimination.

Nevertheless the college hadn’t looked for to reinstate its tax-exempt status until 2014 after Steve Pettit took over given that school’s president that is fifth its 90-year history.

“Organizing as an entity that is tax-exempt one thing BJU has needed seriously to do for quite a while,” Pettit stated.

In their meeting that is first with university’s Cabinet, Pettit said he thought it had been right for BJU to look for its tax-exempt status considering that the university does not think the jobs it once held about battle.

Pettit called the university’s racist AmoLatina profile policies a social problem that had not been biblical.

“The Bible is quite clear,” Pettit stated while he announced the alteration into the university Wednesday evening. “We are constructed of one bloodstream.”

Bob Jones University destroyed its income tax exemption following a 13-year fight with the IRS over whether or not the university’s policies against interracial relationship precluded it as being a non-taxable spiritual institution that is educational. The university didn’t acknowledge any students that are black 1971, 17 years after Brown vs. Board of Education. After that it wouldn’t acknowledge any students have been in a mixed-race marriage and developed rules to prohibit pupils from interracial relationship.

The situation rose to your Supreme Court, which ruled in 1983 that the IRS could revoke the university’s tax-exempt status as the government’s desire for eradicating racial discrimination from training overrode the university’s First Amendment legal rights to spiritual free message.

The actual situation is cited often times through many years. Of late, it arose in a trade prior to the Supreme Court into the Obergefell vs. Hodges choice, which legalized marriage that is gay. The IRS commissioner said the agency would not target the tax-exempt status of religious institutions that oppose gay marriage after that decision.

It’s taken two-and-a-half years for BJU to perform the reorganization as it utilized a plan that is complicated separate its company into two entities aided by the college dropping under the umbrella of its primary school’s current non-profit status to realize its very own, in accordance with college statements and company documents filed with all the sc Secretary of State together with IRS.

That current nonprofit had been called Bob Jones Elementary class, Inc. until final might, with regards to ended up being renamed BJU, Inc.

The restructuring arrived after “consultation with a lawyer and accountants with numerous many years of expertise in assisting taxation exempt organizations—as well as input from users of the BJU community and our congressional delegation,” Pettit stated.

The alteration didn’t need IRS approval because its elementary college had been a nonprofit, although the college had formal communication and conversations using the IRS, stated Randy web Page, BJU spokesman.

The college has become detailed as a 501(c)(3) nonprofit regarding the IRS site, stated Michael Dobzinski, IRS spokesman.

What this means

Up to now, if people in town or alumni desired to contribute to the college, their gift suggestions were just income tax deductible should they provided to specific nonprofit hands of the college, such as for example its scholarship investment, art museum or foundation that is athletic.

Donors couldn’t provide gifts that are tax-deductible the college it self to greatly help with capital promotions or even for college initiatives.

All the big presents towards the college recently, such as for instance a $500,000 gift from the Sargant Foundation in December and a $1 million anonymous present announced final November, went toward its BJU Scholarship Fund, a nonprofit entity of this college.

Now donors’ gift ideas will likely to be tax-deductible, web web Page stated.

“It helps when you’re attempting to raise cash for a company to possess a status that is tax-exempt” web web Page stated. “That clearly helps your development people, your development people and people in the neighborhood – organizations, people, alumni – making it better to contribute to a nonprofit.”

The alteration would affect students’ n’t financial aid and wouldn’t influence workers, he stated.

The change amounts the playing field between your college as well as other sister organizations whenever trying to get funds, he stated.

In addition it moves BJU from the college that is for-profit a nonprofit category because of the U.S. Department of Education, “which is generally identified more positively because of the public,” web Page said.

That change could show essential because the U.S. Department of Education has targeted for-profit universities with added oversight in the last few years and fined a few for-profit companies of universities beneath the federal government, which led to universities like Corinthian university and ITT Technical Institute shutting down.

And even though the college runs debt-free and does not intend to accept financial obligation, it may possibly save your self through reduced rates of interest if it made a decision to undertake financial obligation, web Page stated.

just How BJU would be organized

On March 1, Bob Jones University, Inc. is going to be renamed Bob Jones Education Group, Inc. and can remain the university’s entity that is taxable will donate approximately half its assets towards the non-taxable BJU, Inc.

The university’s assets will efficiently be split involving the two companies.

BJU, Inc. should include the university & most of their facilities, the art museum, elementary college and son or daughter development center. BJU Press authors will also come underneath the umbrella of BJU, Inc.

The arm that is for-profit of college – Bob Jones Education Group, Inc. – includes the BJU Press, University Cleaners plus the Bob Jones Academy center and high schools.

The university will be governed by still its 25-member Board of Trustees. The board will appoint a brand new eight-member board to govern Bob Jones Education Group.

The change process started in belated 2014 with a scholarly research of just how to attain income tax exemption. Final might 5, the Board of Trustees authorized the last arrange for pursuing taxation exemption in addition to management happens to be attempting to implement it ever since then.

As well, the university was looking for local certification through the Southern Association of Colleges and Schools Commission on Colleges. The university, that is detailed as an applicant for certification, notified the payment of the possible modifications, which wouldn’t affect its candidacy, web web Page stated.

The college offered SACSCOC having its proposition policy for income tax exemption and there’s no improvement in governance, said Pamela Cravey, SACSCOC spokeswoman.

“The action ended up being an IRS matter and would not represent a substantive modification,” Cravey stated,

SACSCOC has considered the university being a not-for-profit, she stated.

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