Oakwood University’s Official Statement Regarding OUAA’s Loss of Tax Exemption Status

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On March 29, 2018, the Integrated Marketing and Public Relations department of Oakwood University released the following statement. Oakwood University is a Seventh-day Adventist institution, an official entity of the North American Division, and is recognized as a Historically Black College and University (HBCU).

Due to a number of requests and inquiries from OAKWOOD UNIVERSITY alumni for the University to make a statement to current and prospective donors regarding the issue below, the leadership of the University Board of Trustees feels compelled to clarify the facts for our publics.

On May 15, 2017 the Internal Revenue Service revoked the 501(c)(3) tax exempt status of the Oakwood College National Alumni Association d/b/a Oakwood University Alumni Association (OUAA) . This fact was brought to the attention of the University through a third party on Feb 23, 2018.

  • OUAA’s stated purpose is to raise funds to support OAKWOOD UNIVERSITY’s mission. This makes the Association an “institution-related organization” under the governing accreditation standards.
  • The SACSCOC Accreditation Standards seek to ensure the institution’s academic and financial integrity. To achieve this goal, the 2018 Accreditation Standards require that the institution control fundraising activities conducted by “Institution-related organizations”. (Section 5.3 of the 2018 Accreditation Standards).
  • As an accredited institution of higher learning, OAKWOOD UNIVERSITY complies with the accreditation standards issued by the SACSCOC (i.e., Southern Association of Colleges and Schools – Commission on Colleges), including standards regulating fundraising by groups declaring themselves organized for the purpose of supporting the University.
  • Compliance with these regional accreditation standards is of vital importance to OAKWOOD UNIVERSITY. In the event of a failure to retain accreditation, OAKWOOD UNIVERSITY’s continuation as an accredited institution of higher learning is jeopardized–access to federal funding is denied and access to HBCU/UNCF funding would be forfeited.
  • On February 23, 2018, the Board of Trustees learned that OUAA’s 501(c)(3) tax exempt status had been revoked, a fact that was confirmed on the IRS website. (See attached information from the IRS site). The Board’s understanding is that the OUAA is actively seeking reinstatement of its exempt status. However, the revocation remains in place at the current time.
  • The loss of OUAA’s non-profit tax-exempt status has a significant effect on its fundraising activities. Because OUAA is an institution-related organization under the SACSCOC Accreditation Standards 5.3, OAKWOOD UNIVERSITY has an obligation to control the OUAA’s fundraising in the name of OAKWOOD UNIVERSITY.
  • The Board met several times over recent weeks about these matters. It requested information and action from the OUAA concerning its tax-exempt status and financial operations.
  • With the issues unresolved and Alumni Weekend approaching rapidly, the Board decided to seek an interim understanding between OAKWOOD UNIVERSITY and the OUAA to handle issues through Alumni Weekend and then make any final decisions concerning the future of the parties’ relationship after Alumni Weekend. The efforts by the Board and Administration to come to an interim understanding have failed.
  • After OUAA engaged an attorney to represent its interests, the Board asked OAKWOOD UNIVERSITY’s attorney to confer with him in an attempt to resolve issues relating to fundraising during Alumni Weekend. These efforts were not successful, either.
  • With regard to fundraising by the OUAA during Alumni Weekend, the University’s request was reasonable and straight-forward: It asked that any funds raised or received by the OUAA before and during Alumni Weekend be given/made payable to OAKWOOD UNIVERSITY. The University agreed that it would disburse any such funds to programs or purposes as reasonably requested by the OUAA. With this simple arrangement, OAKWOOD UNIVERSITY’s interim concerns about the propriety of the fundraising efforts by a party whose tax-exempt status has been revoked would be addressed. However, OUAA rejected this proposal, insisting instead on using a third-party organization to receive and hold the funds until its status is reinstated. OAKWOOD UNIVERSITY could not agree to this arrangement in light of its obligations under the Accreditation Standards and its duty to donors.
  • OUAA’s decisions to ignore the Board of Trustees’ counsel has placed the University in a difficult position. OUAA through its website continues to solicit funds without regard to the institution’s wishes/instructions and during a time in which their tax-exempt status has been revoked. The University had hoped to avoid commenting on this situation until after Alumni Weekend, but has decided that the current circumstances warrant this statement and other appropriate actions.
  • OAKWOOD UNIVERSITY has determined that, for as long as OUAA’s tax-exempt status remains revoked, it cannot have OAKWOOD UNIVERSITY’s permission to raise funds in the University’s name, and OAKWOOD UNIVERSITY cannot accept funds raised by OUAA after February 12, 2018, including funds raised during Alumni Weekend, unless such fundraising conforms to the receipting request made by the University.
  • In addition, OAKWOOD UNIVERSITY informed the OUAA that the Board will meet to further discuss the current situation. Members of the Board with conflicts of interest will be recused from these deliberations.
  • In the meantime, OAKWOOD UNIVERSITY encourages its Alumni and any other potential donors to the OUAA to consider all information before making any donation to the OUAA. If any donor has a question about the tax deductibility of any donation to the OUAA, he/she should consult with a tax professional.
  • To all of our Oakwood Alumni, please be assured that the University’s tax-exempt status is unaffected by the current situation. OAKWOOD UNIVERSITY appreciates your years of support. If you wish to make a tax-deductible donation directly to OAKWOOD UNIVERSITY, please visit the website at OUgiving.com. Your years of love and support for OAKWOOD UNIVERSITY are deeply appreciated.

Below is Section 5 of the SACSCOC Standards for anyone interested in reading them:

This press release originally appeared on the Oakwood University website. Images courtesy of Oakwood University.

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This is a companion discussion topic for the original entry at http://spectrummagazine.org/node/8661
#2

I am still not clear why the 501©(3) tax exempt status was lost. Did some one drop the ball and miss filling the necessary yearly documents? It is not that hard to maintain. I run a non profit organization myself and am careful to maintain that status. How hard could it be??!

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#3

From the section that is highlighted it seems to indicate that there might not have been clear enough (formal) distinctions made. The organizational standards were a little too loosey goosey for the IRS authorities.

#4

Such a bummer to have to follow the law and accreditation standards. OUAA has the right idea, to just ignore them. It seems to be working out quite well.

It’s repeatedly been the church’s position that it doesn’t have to follow the rules. Has something changed?

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#5

trump and AG jeff sessions are what have changed…sessions is from alabama…one wonders if there’s a racist component to all of this…

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https://www.worldslastchance.com/end-time-prophecy/state-controlled-churches-the-501c3-deception.html

I have received on Facebook some paranoia-tinged right wing religious material about 501c3. The gist of the Facebook post was that if a church had 501c3 status it was giving up its independence and in danger of being inappropriately controlled by the government. The authors of the post didn’t seem to think it was significant that this tax exempt rule has been around since the Johnson administration and that churches in the USA have seemed to function adequately without undo interference from the government thus far.

In support of its claims, the Facebook post stated there were churches who lost their tax exempt status, and in describing one such case, it seemed that that church was vocal and in-your-face in its refusal to provide the basic information that was required by 501c3.

I’m not suggesting that the denial of status to Oakwood was related to the above in any way.

I’ve included a web address above to give some idea of the thinking of some religious communities here in the USA.

#7

I’m in a secular women’s club which is part of a national network of clubs. The club is nearly 90 years old and there are affiliated clubs all over the US. This year our treasurer let us know that we were going to have to drastically change the way we had been using our tax exempt status or risk losing it. This came as a surprise to many of us who had been recent officers and we questioned how we could have been unaware of these requirements when we had regularly attended state and regional meetings for leadership. The answer was that every club was in jeopardy and some had more or less savvy treasurers who took their jobs seriously. We are lucky to have ours. Volunteers are not always so dedicated.
I’ve heard similar issues at my local SDA church in the last couple years and about 5 years ago sat on a conference board where we were told that the IRS was specifically watching some church organizations that were known for flaunting tax laws.
My first reaction to reading this is that the more complicated requirements for non-profits which have arisen recently may not have been understood or taken seriously by someone who might have been in a position for a number of years. Just a guess.

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#8

Agreed, Anne. The two 501c3 organizations of which I currently chair are proactively reviewing the current IRS requirements.

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