Why Is Project Veritas A Tax-Exempt Nonprofit, Anyway?

James O’Keefe’s organization, known for its shady “sting” operations, is eligible to solicit millions of dollars in tax-exempt donations. Here’s why.

Why Is Project Veritas A Tax-Exempt Nonprofit, Anyway?
[Photo: Chip Somodevilla/Getty Images]

Project Veritas–a self-described investigative organization led by the conservative activist James O’Keefe–reportedly attempted to mislead the Washington Post by sending a woman to pose as a Roy Moore informant. According to a detailed report in the Post yesterday, the group’s stunt backfired when reporters sniffed out holes in the woman’s story and questioned her motivation. Far from admitting fault, Project Veritas doubled down: It released a highly edited undercover video in which Post employees were seen describing the difference between the news team and the opinion team. The group then touted the video as exposing the newspaper’s “hidden agenda.”


According to Project Veritas, these seemingly unethical stakeouts are all in the name of fulfilling its founding mission:

“[T]o train, educate, and inform others to investigate and expose corruption, dishonesty, self-dealing, waste, fraud, and other misconduct in both public and private institutions in order to achieve a more ethical and transparent society.”

It was on the strength of this mission that the group, back in 2011, was granted tax-exempt status as a 501(c)(3) nonprofit corporation—a coveted designation reserved only for groups that meet stringent guidelines. The language Veritas uses, “investigate and expose,” suggests it’s a nonprofit news organization, similar to, say, ProPublica or NPRBut how can such a partisan organization that engages in questionable journalistic practices receive that status?

“Education,” Not Journalism

The answer is tricky. Journalistic organizations, on their own merits, are typically not eligible for 501(c)(3) status. Instead, nonprofit news groups have to perform another function that benefits society. The categories the IRS considers eligible are very specific: “Religious, Educational, Charitable, Scientific, Literary, Testing for Public Safety, to Foster National or International Amateur Sports Competition, or Prevention of Cruelty to Children or Animals Organizations.”

Therefore, most nonprofit news organizations are considered by the IRS to be educational in nature. According to Sue Cross, the executive director and CEO of the Institute for Nonprofit News, that usually means the organization in question has to have a strong mission to back up its educational purpose. “[Nonprofit news organizations] have a particularly strong public-service mission,” she says.

In this sense, Cross says she wouldn’t consider Project Veritas a nonprofit journalism project, since nonprofit journalism’s function is to educate the public without an agenda. Instead, she says, Veritas is more of an advocacy organization. “There are nonprofits that are advocacy organizations,” Cross says, that are “engaged in activism.”

Does that mean Project Veritas could lose its nonprofit status if it’s determined not to be fulfilling an educational mission? “That’s really a designation for the IRS,” says Cross.


At this point, revoking the status would be a difficult case to make: In its 2011 application for 501(c)(3) status, the group did pledge to not to carry out propaganda or otherwise attempt to influence legislation. Moreover, according to the application, Project Veritas said it would “not participate in, or intervene in … any political campaign on behalf of or in opposition to any candidate for public office.”

But isn’t this what Veritas is doing by setting up “sting” operations to help make conservative candidates look good? It’s possible to make that argument, but in reality it’s a legally gray area.

The only way for Project Veritas to lose its status is if it becomes audited by the IRS, but that usually only happens when an organization stops submitting its required annual documents or if something reported doesn’t add up. What generally spurs an audit is the information provided (or not provided) in the required annual documentation. It’s hard to imagine IRS auditors furiously Googling an already-approved organization’s updates and judging whether they fall outside the nonprofit bounds.

An IRS spokesperson told me that the agency “can’t comment on specific organizations.”

Seemed Kosher At The Time

When Project Veritas first received its 501(c)(3) status, many wondered how O’Keefe–given his known partisan stances and past actions–could be eligible to create a nonprofit in his own image. Some experts, however, maintained that designation seemed kosher. “Project Veritas’s leading stories have a certain direction in which they lean, and they could all be used by this organization and others for lobbying campaigns or even political campaign activities,” nonprofit attorney Jeffrey S. Tenebaum told the New York Times in 2011. “But in and of themselves, the things I saw on the Web site don’t do that.”

I reached out to Tenenbaum about whether his analysis has changed over the last six years and he declined to comment. Meanwhile, Project Veritas and O’Keefe are eligible to solicit millions of dollars in donations and pay no tax on them. In 2016, it received nearly $5 million in donations, and O’Keefe himself took home a salary of $317,391, up from $235,471 in 2015.


Instead of focusing on Veritas, Cross said she would prefer to highlight the number of nonprofit journalism organizations dedicated to doing good work. “We believe there are about 250 in the United States,” she says, adding that the number continually grows. “They all have editorial standards,” and most commit to complete transparency.

Indeed, she believes there will be significant growth in nonprofit news in the coming years. “There are a lot of advocacy organizations that may say ‘Oh, what we do is journalism,’ when it’s really not,” says Cross. “But I think consumers are pretty smart.”

She concludes: “I think Veritas is an outlier; I don’t think it’s going to fool many people.”

About the author

Cale is a Brooklyn-based reporter. He writes about business, technology, leadership, and anything else that piques his interest.