The video of an inexcusable racist chant by members of the University of Oklahoma chapter of the Sigma Alpha Epsilon fraternity came as a shock to most viewers. The fraternity’s national headquarters acted swiftly to close the chapter, and the university quickly removed the fraternity from its campus. But the discussion seems to end there.
Treating this as an isolated incident, rather than as a symptom of a larger problem, is shortsighted. It was not that long ago that the Alpha Gamma Delta sorority made the news for its discriminatory actions in recruiting new members. We are not cherry-picking a couple of isolated incidents. We can point to the “Compton Cookout” of the Pi Kappa Alpha fraternity of UC–San Diego or the “Blood and Crips” party at the Alpha Delta fraternity of Dartmouth College.
These incidents show structural inequities in the Greek system. But universities and the national fraternity and sorority organizations seem to want to address the problems only on an ad hoc basis, and only when an incident comes to light. If universities and the Greek system will not address the inequitable nature of the organizations, other systems need to step up. Unless universities, fraternities, and sororities address the problem head on, next pledge season we will likely be presented with another incident of this same kind of injustice.
And the system is clearly not interested in addressing the root problem. While it removed SAE, the University of Oklahoma still hosts a chapter of Kappa Alpha, perhaps the most outwardly troublesome fraternity at the university. For those unfamiliar with Kappa Alpha, the fraternity reveres Robert E. Lee as its “spiritual founder.” Its members call themselves Southern Gentlemen, dress up in Confederate garb both for “Old South” days as well as for dances and other events. If the University of Oklahoma sees no problems in these activities and attitudes, the system is at best apathetic.
As tax law professors, we naturally see solutions through the prism of the tax law. Policymakers often use the tax law to provide both carrots and sticks, encouraging certain societally beneficial behavior while deterring behavior we deem detrimental. With apparently endemic discrimination bubbling to the surface of Greek organizations, the tax law may be able to help nudge these organizations to either integrate or clearly signal their discriminatory tendency.
What does tax law have to do with discriminatory fraternities and sororities? All these Greek organizations have been granted tax-exempt status. The SAE chapter in Oklahoma files under the national SAE grant of tax-exemption. By granting a tax-exemption to the fraternity, we, as a society, are subsidizing actions we purport to despise.
If these actions are not societally acceptable, we should not be granting this tax benefit to the organizations. In 1983, the Supreme Court ruled that tax-exempt organizations could lose their tax-exempt status when their practices are contrary to a compelling public policy. One such policy is preventing racial discrimination. Under the Reagan administration, the IRS revoked Bob Jones University’s tax exemption because of its racially discriminatory policies, including not admitting black students. In Bob Jones University v. U.S., the university contested the IRS’s decision. The Supreme Court upheld the IRS’s revocation, deciding that, notwithstanding the university’s sincere interpretation of biblical mandates, the government’s “overriding interest in eradicating racial discrimination in education” outweighed any burden on the university from denial of tax-exempt status based on its exercise of its religious beliefs.
Bob Jones University was exempt from tax as a public charity; fraternities are exempt as social clubs. And, in fact, in the 1970s, the same district court that originally found racial discrimination to be inappropriate for universities found it permissible for tax-exempt social clubs. Congress disagreed, changing the law to expressly forbid social clubs with official policies condoning or requiring racial discrimination from qualifying as tax-exempt. It should be noted that in both examples, the raced-based policies were explicit. In the events at hand, we have the other version, de facto discrimination. The Supreme Court has found both versions of discrimination equally pernicious.
How can the tax law operate, then, to effect structural change? It can dangle the carrot of their tax exemption in front of them while, at the same time, threatening them with its loss if they do not eliminate discriminatory behavior. We would propose that the IRS begin sending letters to all Greek organizations putting them on notice that if they discriminate, their tax-exempt status will be revoked. They can retain their tax exemption if they demonstrate that they do not discriminate based on race. This provides Greek organizations with a choice. If they are willing to comply with the norms of society, then they can enjoy the benefit of their tax exemption. If they do not wish to conform, they can explicitly signal that desire by forgoing the public subsidy implicit in being exempt from taxation.
This signal and delineation would be especially consequential in the university setting. By forgoing their tax exemption in favor of engaging in racially discriminatory practices, the fraternities would risk their university funding. By following this road, a fraternal organization would be solely reliant on like-minded individuals to fund its operations and on students who were willing to live in a parallel universe outside of university operations. We could only guess that the magnitude of this chilling effect would be large.
Finally, if we are correct that we should leverage the tax law to combat fraternities’ and sororities’ institutional discrimination, then we should also leverage the universities’ tax exemptions. The time is long past for universities to condone—or, at best, turn a blind eye to—this type of behavior. If a university wants to ignore the discriminatory behavior, then it should also be required to clearly signal where it stands.