Recently, President Trump has made efforts to revoke Harvard University’s tax-exemption status. He has been citing their lack of combating antisemitism on campus for why he is doing this. Throughout the country, nonprofit organizations hold the title of being a 501(c)(3) organization by the Internal Revenue Service (IRS). This means two things: the organizations are non-for-profit, and they don’t have to pay federal taxes to the government. This article will examine the questions should this happen to Pace as various parties will face different effects.
The Elisabeth Haub School of Law, Pace’s law school in White Plains, recently hosted a seminar diving into the context of why a tax-exempt organization might lose this status. In 1983, Bob Jones University, a school in South Carolina, was sued for discrimination against Black students. The U.S. Supreme Court ruled that because Bob Jones University was found to have been guilty of discrimination, they would lose their tax-exempt status violating public policy. Pace had a pro-Palestine protest take place on April 25, 2024 that was captured by photographers on X and it was peaceful.
Bridget Crawford, the President of the American Policy Tax Institute (APTI) and a professor at the Haub School of Law in White Plains, speculated on what could happen.
“The likelihood of Pace’s tax exemption being revoked is infinitesimally small and would be subject to legal challenge. But if Harvard’s tax exemption is revoked, that will have a ripple effect on the entire nonprofit sector, including tax-exempt organizations like Pace University. But it is difficult to imagine a universe in which the educational purpose of Pace University could be questioned. Educational purposes are squarely within the exempt purposes recognized by the US tax law.” If the school loses its federal tax exemption, the school would have to pay income tax on any tuition revenue and its endowment.”
The information for this is on the school’s Form 990 showing numerous statements which can then be used to calculate the university’s income tax liability. According to Crawford, “we would want to look at total operating revenue and do a back-of-the-envelope calculation assuming a 21 percent corporate rate.”
Pace, being a private university like Harvard, does not receive funding from the federal government, but rather gets it from other sources such as tuition, donations, endowments, and more. Harvard is also classified as an R1 Doctoral University, meaning it has “very high research activity” according to the Carnegie Classification of Institutions of Higher Education. However, Pace did get the Research College & University and Opportunity College & University designations in the 2025 Carnegie Classifications, declaring on LinkedIn “we’re proud to be recognized for advancing research and expanding access.” Details about Pace’s research activities can be accessed via this link yet are no match for Harvard. As Crawford points out, “Pace receives a very tiny portion of funding from federal grants, and thus is not similarly situated.”
With regards to alumni donations and contributions, parties can donate with or without exempt status. Crawford notes, “exempt status only impacts the extent to which a contribution is deductible for federal income tax purposes. And contributions are deductible only if a taxpayer is among the approximately 11 percent of all Americans who itemized their tax returns. In other words, 89 percent of all taxpayers do not get a tax benefit from donating under current law, and yet we see that Americans are very generous people. I would expect that there would be very little impact on alumni contributions to Pace.”
While Pace may not be under immediate threat, there is still a lot of concern for what could happen rather than what will. Crawford asks, “we are witnessing an unprecedented attack on higher education. This moment also challenges us to re-imagine what higher education can be: more affordable, more equitable, and more responsive to the needs of all students. How can we use this moment not to merely defend the status quo, but to build something better?”
Pace’s Legal Studies and Taxation Department declined to comment.