Harvard's Tax-Exempt Status: A Closer Look

Harvard University, a prominent institution of higher learning, currently holds tax-exempt status under U.S. law. This designation, common among colleges, universities, and charitable organizations, provides significant financial advantages. Specifically, Harvard is exempt from paying federal income taxes and property taxes on its assets used for educational purposes. These tax savings amount to billions of dollars, allowing the university to allocate more resources to its academic programs, research initiatives, and student financial aid.

The Internal Revenue Service (IRS) is responsible for granting and overseeing tax-exempt status. To qualify, an organization must meet specific criteria outlined in the Internal Revenue Code, primarily focusing on its purpose being charitable, educational, religious, scientific, or literary. These organizations must operate for the public benefit and not for the private gain of any individual.

While tax-exempt status is generally stable, the IRS can revoke it under certain circumstances. These include engaging in activities that are illegal or contrary to public policy, significantly deviating from its stated exempt purpose, or failing to comply with reporting requirements. For example, if Harvard were to engage in substantial lobbying activities unrelated to its educational mission or operate in a way that primarily benefits private individuals, its tax-exempt status could be at risk. Scrutiny of large endowments and potential misuse of funds could also trigger an IRS review. The IRS rarely revokes tax-exempt status, but it serves as a crucial mechanism for ensuring accountability and compliance among non-profit organizations.