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4.76.11  Educational Organizations Other Than Schools

Manual Transmittal

January 28, 2015


(1) This transmits revised IRM 4.76.11, Exempt Organization Examination Guidelines, Educational Organizations Other than Schools.

Material Changes

(1) Revised the manual to conform to the Plain Writing Act of 2010. For more information, see

(2) Replaced references to examinations and examiners with audits and agents.

(3) Created a new introduction section, moving the previous introduction to IRM, Audit Scope.

(4) Substantially revised IRM, removing the bullet list of IRM (1).

(5) Inserted new section, IRM, Educational Activities. Renumbered the remainder of the manual.

(6) Inserted new example at IRM (1), Organizational and Operational Requirements.

Effect on Other Documents

This IRM supersedes IRM 4.76.11, Educational Organizations Other than Schools, dated October 27, 2010.


Tax Exempt and Government Entities
Exempt Organizations

Effective Date


Tamera L. Ripperda
Director, Exempt Organizations
Tax Exempt and Government Entities  (01-28-2015)

  1. Treas. Reg. 1.501 (c)(3) – 1(d)(3)(i) defines education as:

    • The instruction and training of the individual for the purpose of improving or developing his or her capabilities.

    • The instruction of the public on subjects useful to the individual and beneficial to the community.

  2. Treas. Reg. 1.501(c)(3)-1(d)(2) carries this concept further by defining the term "charitable" as including the "advancement of education." This broader regulatory language allows for the inclusion of those organizations that provide some type of support service for educational organizations, but whose actual activities cannot be defined as educational.

  3. An organization may highlight its educational purposes and activities yet really pursue a commercial purpose or serve private rather than public interests.

  4. As in the case with all IRC 501(c)(3) organizations, an organization will not qualify for exemption if more than an insubstantial part of their activities is in furtherance of a non-exempt purpose.

  5. This manual section doesn't discuss IRC 501(q), which deals with credit counseling. For information on IRC 501(q), see IRM, Procedures for Resolution of Credit Counseling Cases.

  6. The term agent refers to the EO employee assigned to the case, regardless of whether the employee is in the GS-0512, GS-0526, GS-592, or GS-987 series.  (01-28-2015)
Audit Scope

  1. Educational purposes under IRC 501(c)(3) are broader than presenting formal classroom instruction. This gives rise to ancillary activities such as the granting of scholarships. This also includes advocating a particular position or viewpoint resulting in some type of public dissemination, which may take the form of published literature, media presentations, or the dramatic arts.

  2. Some organizations that educate the public may do so by disseminating information to the public using commercial methods. Such dissemination by itself does not pose a problem provided that the activity furthers one or more of an organization’s exempt purposes and provided that the organization is not operated for the primary purpose of conducting an unrelated trade or business, as defined in IRC 513. As with all exempt organizations, the mere absence of a profit motive does not guarantee an educational organization as opposed to a marketable entity.

  3. During your audit, maintain a position of disinterested neutrality with respect to the beliefs advocated by an organization. Do not attempt to judge the merits of an organization's educational or artistic efforts. Focus the audit on whether the organization carries out its purposes in an educational or charitable manner.

  4. Remain professional and objective at all times. Ensure that your personal beliefs or opinions on the educational or artistic merit of an organization's activities do not influence the audit in any manner.  (01-28-2015)
Educational Activities

  1. Among the activities of an educational organization, you may come across:

    1. Presentations of public discussion groups, forums, panels, lectures or similar programs (on radio, TV or the internet.)

    2. Instructional courses presented by means of correspondence, or via radio, TV or the internet.

    3. Museums, zoos, planetariums, symphony orchestras and other arts organizations.

    4. University bookstores and other organizations with school-related functions, such as selling school supplies, or operating a cafeteria promote educational activities (provided they only operate for the convenience of students and faculty.)

    5. Alumni associations may receive rulings as educational organizations even though engaged in social and recreational activities, provided these activities prove incidental to the exempt purpose (advancing the interests of the university.)


    Fraternities and sororities usually pursue recreational purposes with some incidental educational aspects and (with the exception of some honor societies) do not qualify as educational.

  2. Fraternity Foundations. Fraternities primarily serve social purposes and they don’t meet the definitions under IRC 501(c)(3). (See Rev. Rul. 69-573, 1969-2 C.B. 125.) To support social fraternities in conducting their educational activities, fraternities formed national fraternity foundations under IRC 501(c)(3). These foundations primarily make charitable grants to both their university and their fraternities (provided that such distributions are in furtherance of its 501(c)(3) purposes.) The foundation must "retain control and discretion as to the use of the funds and maintain records establishing that the funds were used for section 501(c)(3) purposes" (Rev. Rul. 68-489,1968-2 C.B. 210.)


    While awarding scholarships to qualified members of their fraternity can clearly serve a 501(c)(3) purpose, the foundation grants to a fraternity for the building or general renovation of a fraternity would clearly not serve a charitable purpose. (See Rev. Rul. 64-118, 1964-1 C.B. 182, also, refer to Rev. Rul. 75-196, 1975-1 C.B. 155.)

  3. Travel Tours. Travel tour activities of any educational entity must first establish a substantial relationship to the organization’s exempt purposes. Each tour will undergo an analysis to determine the facts and circumstances as to its primary purpose, whether educational or social. When applying the facts and circumstances to the tour activity, please consider:

    1. Existence of a legitimate educational methodology. Is it subject to a structured intent to educate, as opposed to the casual receipt of knowledge? Is the presentation of the subject organized? Are any reports presented? If yes, do they constitute lectures? Are any tests administered?

    2. Tour structure and design. Are participants made aware they are entering a structured program of study? Are there daily lectures and classroom study with minimal free time?

    3. Indications of intensive study of subjects on the tour. Is there evidence of substantial class time as opposed to other (i.e. "leisure" ) activities? Is there evidence that the tour requirement is part of a college semester course?

    4. Tour selected for its educational value and qualification of tour leaders. Is the tour location primarily an educational or recreational destination? Are tour leaders certified in their fields of study?

  4. Publishing. The publication of books, magazines, and other literature may have an educational or commercial purpose. Please consider:

    1. The content of the material. Reported advertising income as taxable unrelated business income?

    2. The preparation of the material. Prepared by scholars with valid credentials? Properly documented as to its sources?

    3. Does distribution indicate an educational purpose as opposed to ordinary commercial publishing practices?

    4. Does the dissemination of the material promote its educational value? Does it promote further study and research of the topic?

    5. How do they compile their subscription lists?

    6. How does the material reach its targeted audience? Is it distributed to bring the greatest assistance to its targeted audience?


    The Doe Cancer Research Institute published scholarly research, distributing copies of its research papers at cancer conferences and hospitals.

  5. Athletic Education. We normally associate youth athletics with the molding of character and the prevention of juvenile delinquency. An organization that focuses on teaching and learning and less on competition and recreation can establish itself as an educational organization within IRC 501(c)(3). (See Rev. Rul. 77-365, 1977-2 C.B. 192, where an organization that conducts clinics, workshops, and seminars at municipal parks and recreational areas to instruct individuals in a particular sport, merited 501(c)(3) status.)


    The promotion of athletic activities may merit exempt status, albeit under another code section. (See Rev. Rul. 70-4, 1970-1 C.B. 126.)

  6. Hobbies. Depending upon its form and method of operation, analyze hobby clubs on a facts and circumstances basis to distinguish between educational and social purposes.


    A coin club, primarily engaged in scholarly meetings including the presentation of historical research into the origins of historical coins, can merit exemption as an educational society under IRC 501(c)(3). (See Rev. Rul. 66-179, 1966-1 C.B. 139, which discusses how a garden club may qualify under IRC 501(c)(3) as an educational organization, a civic organization under IRC 501(c)(4), a horticultural organization under IRC 501(c)(5), or a social club under 501(c)(7).)  (01-28-2015)
Methodology Test to Distinguish Education from Propaganda

  1. In Big Mama Rag, Inc. v. United States, 631 F.2d 1030 (D.C. Cir. 1980), the U.S. Court of Appeals (D.C. Circuit) held that the IRC 501(c)(3) educational regulations violated the First Amendment to the Constitution. In order to more effectively assert the validity of the educational regulations, the Service developed a test with four criteria. These criteria reflected its long-standing position that the method used by an organization in advocating its position, rather than the position itself, sets the standard for determining whether an organization has educational purposes. Rev. Proc. 86-43, 1986-2 C.B 729, sets out the methodology test for determining if an organization's materials constitute an educational purpose rather than a finding of propaganda. It focuses on the method used by the organization in advocating its position, rather than the position itself. It requires a review of the organization's materials for factors that show whether it fails to provide a:

    1. Factual foundation for the viewpoint it advocates.

    2. Development from the relevant facts that would materially aid a listener or reader in a learning process.

  2. Review the materials issued by the organization for the following factors, any of which may suggest that the organization may be engaged in propaganda rather than education:

    1. The presentation of viewpoints unsupported by facts represents a significant portion of the organization's communications.

    2. The facts that purport to support the viewpoints appear distorted.

    3. The organization's presentations make substantial use of inflammatory and disparaging terms and express conclusions more on the basis of strong emotional feelings than of objective evaluations.

    4. The approach used in the organization's presentations is not aimed at developing an understanding on the part of the intended audience or readership because it does not consider their background or training on the subject matter.

  3. Two court cases, The Nationalist Movement v. Commissioner, 102 T.C. 558 (1994), affirmed per curium, 37 F.3d 216 (5th Cir. 1994), cert. denied, 513 U.S. 1192 (1995), and National Alliance v. United States, 710 F.2d 868 (D.C. Cir. 1983), upheld denial of exemption to organizations on the grounds that they failed to operate exclusively for charitable or educational purposes. They provide excellent examples how to apply the factors to determine if an organization's methodology furthers educational purposes.

  4. An organization merits the designation educational in exceptional circumstances even if one or more of the factors in IRM (2) appears. Review all facts and circumstances that may help clarify the organization's methodology, including internal (non-published) or external publicized materials such as:

    1. Minutes of meetings of the Board of Directors, editorial boards, or other committees that affect the organization's program.

    2. Contracts with researchers, authors, or other persons the organization engages to develop materials.

    3. Materials the organization rejected.

    4. Correspondence files.

    5. Fund-raising materials, if not already reviewed as part of the organization's program output.

    6. Materials represented on the organization's official website(s).

  5. Determine if the organization merits an "action" organization designation as defined in Treas. Regs. 1.501(c)(3)-1(c)(3). (See IRM , Action Organizations.) Even if an organization's materials seem educational rather than propaganda, they may still constitute lobbying. Apply both the "ends" test and the "means" test set out in the regulations, which consist of:

    1. The organization achieves its main or primary objective or objectives only by passage or defeat of legislation.

    2. The organization advocates, or campaigns for, attainment of its main or primary objectives as distinguished from engaging in nonpartisan analysis, study, or research and making the results available to the public.

  6. Determine if the organization otherwise satisfies the requirements for exemption under IRC 501(c)(3). If the organization has royalty income, review the cash disbursement and receipt journals to identify cash advanced to authors and income received from publishers in the type of arrangement described in Rev. Rul. 66-104, 1966-1 C.B. 135. (A nonprofit organization which makes funds available to authors and editors for preparing teaching materials and writing textbooks, and, under the terms of the contract with the publisher, receives royalties from sales of the published materials and then shares them with those individuals.)  (01-28-2015)
Educational Scholarships

  1. Public charities do not have to meet the requirements of IRC 4945(d)(3), required of private foundations. See IRM, IRC 4945(d)(3) Grants to Individuals.

  2. However, a public charity's scholarship program must serve charitable and educational purposes rather than private interests. Thus, an audit of an organization's scholarship or fellowship program should verify that it does not serve private interests. Accordingly;

    1. Look for "thank you" letters that may indicate the payment of a scholarship awarded on a personal rather than objective basis to a child of a friend, officer, employee, or trustee of an organization.

    2. Check payroll records for names.

    3. Ask other employees, directors, trustees, officers, and volunteers, if aware, of how the organization selects recipients.

  3. Determine who meets eligibility for the scholarships or fellowships. Verify that restrictions do not provide benefits to designated individuals or members of a group too small to be a charitable class.

  4. Look for any relationship between contributors to the organization and scholarship recipients. If found, look further to see if the program allows individuals to claim contribution deductions for otherwise non-deductible tuition payments.

  5. Review the organization's methods and criteria for soliciting applicants and awarding scholarship or fellowship grants, as well as selecting recipients on an objective and non-discriminatory basis.

  6. Review published announcements, brochures, minutes of selection committee, as well as applications. Verify that standards for merit or financial need are legitimate. If the organization awards grants for reasons other than merit or financial need, determine if the criteria limits grants to individuals from private groups.  (01-28-2015)
Organizational and Operational Requirements

  1. Although the organization may meet all the requirements of an educational organization, it may still not qualify as an IRC 501(c)(3) organization.


    The Metropolitan Journal of Computer Science publishes ground breaking research into advances made in the computer industry. While publishing content deemed undeniably educational and they accept no advertisements, you can purchase the journal at city newsstands and bookstores. Their methods of distribution may bar them from qualifying under IRC 501(c)(3).

  2. Therefore, in order to determine whether to sustain exemption, determine if the organization meets the organizational and operational tests. See IRM 4.76.3, Public Charities.

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