Educational organizations qualify for tax-exempt status as entities described in Section 501(c)(3) of the Internal Revenue Code (IRC). Can a group espousing a viewpoint be characterized as educational? If so, does it have to provide factual information to support its statements? Relatedly, is there some standard for truthfulness and accuracy? Rather, the term is defined by a Treasury regulation. The regulation goes on to address the heart of the matter about the term's scope:
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. In 1986, the Internal Revenue Service (IRS) developed the "methodology test" to supplement the regulation's "full and fair exposition" standard. Under the test, a method is not educational if it fails to provide a "factual foundation" for the position or viewpoint or "a development from the relevant facts that would materially aid a listener or reader in a learning process." Constitutional Implications of Definition

There are constitutional implications as to how the term "educational" is defined. In particular, the denial of tax-exempt status to an organization on the basis of its speech could raise issues under the First Amendment. Thus, there appears to be no constitutional requirement that the term "educational" encompass every communication protected by the First Amendment. At the same time, courts will examine the IRS's denial of a tax exemption or other benefit when it is based on the content of the taxpayer's speech in order to ensure the denial was not done for an impermissible reason. Groups that promote controversial positions may be particularly vulnerable to an interpretation of "educational" that permits a subjective determination by the IRS as to whether a group's methods of presenting its views are educational. Concern over these issues has led to questions about whether the "educational" standard is unconstitutionally vague. In Nationalist Movement v. Commissioner , the court rejected the argument that the methodology test was overly vague.
Concern is sometimes expressed that certain entities which qualify for tax-exempt 501(c)(3) status as "educational" organizations have abused their exemption by advocating a policy viewpoint. The argument is that these entities should have to present information on both sides of an issue equally and neutrally, without opinion.
The term "educational" is not defined in the Internal Revenue Code (IRC). It is defined by regulation to encompass individual instruction, as well as public instruction "on subjects useful to the individual and beneficial to the community."
The question here is how far can the term "educational" be extended? Can a group espousing a viewpoint (i.e., only one side of an issue) be characterized as educational? If so, does the group have to provide factual information to support its statements? Is there some standard for truthfulness and accuracy?
The answers are rooted in a Treasury regulation, which provides that an organization that advocates a position or viewpoint can qualify as educational if it presents "a sufficiently full and fair exposition of the pertinent facts" so that people can form their own opinions or conclusions. To supplement the regulation's "full and fair exposition" standard, the Internal Revenue Service (IRS) has developed the "methodology test." Under it, a method is not "educational" if it fails to provide a "factual foundation" for the position or viewpoint or "a development from the relevant facts that would materially aid a listener or reader in a learning process."
There are constitutional implications in how the term "educational" is defined. In particular, the denial of tax-exempt status on the basis of an organization's speech could raise issues under the First Amendment. While there is no constitutional requirement that the term "educational" encompass every communication protected by the First Amendment, courts will examine the IRS's denial of a tax exemption or other benefit when it is based on the content of the taxpayer's speech in order to ensure the denial was not done for an impermissible reason. Groups that promote controversial positions may be particularly vulnerable to an interpretation of "educational" that permits a subjective determination by the IRS as to whether a group's methods of presenting its views are educational.
Concern over these issues has led to questions about whether the "educational" standard is unconstitutionally vague. While the IRS's methodology test was held to be unconstitutionally vague by a federal appellate court, subsequent court decisions have suggested that the test passes constitutional muster.