With 2nd O'Keefe Video, Is NPR's Tax-Exempt Status at Risk?

NPR can and will survive the firings of execs Ron and Vivian Schiller. It can even survive Congressional “defunding.” But NPR could never survive the loss of its tax-exempt status…and that is the issue implicated in James O’Keefe’s second undercover video in which NPR tells Muslim radical poseurs how to conceal donations from government audits.

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The “star” of this second sting video is Betsy Liley, the Senior Director of Institutional Giving at NPR, who reported directly to the recently fired Ron Schiller, who himself starred in O’Keefe’s first NPR video laughing over lunch at Jews, whites, and racist Tea Partiers, and dismissively saying NPR doesn’t need public funding. And he may be right.

Turns out roughly 2% of NPR’s funding comes from public coffers. The real money comes from charitable donations to NPR and its public radio affiliates who rely on the NPR “brand” to attract charitable donors and then, in return, pay back to NPR the lion’s share of its operating budget.

So the real threat – the thermonuclear threat – posed by O’Keefe’s video may be the loss of NPR’s all-important tax exempt status. Without tax-exempt status, NPR’s charitable donation well runs dry.

In O’Keefe’s latest video, Ms. Liley reassured the actor posing as a Muslim Brotherhood front group that NPR could legally accept the $5 million dollar gift anonymously to shield the group from government audits disclosing the donor’s identity. On March 1, 2011, she confirmed this in writing via email, as you can see in the video.

NPR’s schmoozing for money from a group claiming ties to the Muslim Brotherhood clearly constitutes a moral outrage, but does it imperil its tax exempt status as a 501(c)(3) non-profit corporation?

The IRS makes clear that “leaders of 501(c)(3)s must not make partisan comments in official organization publications or at official functions,” and that NPR must comply with information reporting obligations … [generally] met by filing Form 990.” Tax lawyers and CPAs may quibble and debate whether the O’Keefe videos expose prohibited conduct, but NPR unmistakably appreciates the dire threat.

Thus, barely hours after O’Keefe’s video posted, NPR responded:

The statement made by Betsy Liley in the audio tapes released today regarding the possibility of making an anonymous gift that would remain invisible to tax authorities is factually inaccurate and not reflective of NPR’s gift practices. All donations – anonymous and named – are fully reported to the IRS. NPR complies with all financial, tax and disclosure regulations. (emphasis added)

NPR’s statement unambiguously addresses the video’s threat to its tax-exempt status. But this statement fails to clarify potentially critical tax issues, such as: whether NPR unlawfully conspired to cover up the true identity of a donor or otherwise violate IRS reporting requirements, and whether NPR executives’ bashing of the Tea Party movement, the Republican Party, and Jews while soliciting donations constituted “partisan comments” in NPR’s official capacity. Even if the Make-Believe Media miss (or obscure) that point, NPR does not.

NPR’s best hope may be to depict Betsy Liley as an unsophisticated rube, another liberal slackjaw who didn’t check with legal before doing her best to separate these Muslims from their money. Hard to say if she’ll soon join Ron Schiller and Vivian Schiller under the NPR bus — a cynical person might wonder if she knows where too many “anonymous” skeletons are hiding in NPR’s donor closet for that to happen.

Footnote: NPR may have company. It’s been reported that PBS also met with O’Keefe’s Muslim posers. Batten down the hatches, Big Bird.

So now that O’Keefe has toured us inside the moral sausage factory that is NPR, perhaps Representative Peter T. King should consider expanding his domestic terrorist hearings to ask NPR about its “anonymous” donor program.