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No. 81-3
Argued October 12, 1982
Decided May 24, 1983 *
461 U.S. 574
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE FOURTH CIRCUIT
Syllabus

Section 501(c)(3) of the Internal Revenue Code of 1954 (IRC) provides
that "[c]orporations . . . organized and operated exclusively for
religious, charitable . . . or educational purposes" are entitled to tax
exemption.  Until 1970, the Internal Revenue Service (IRS) granted
tax-exempt status under  501(c)(3) to private schools, independent of
racial admissions policies, and granted charitable deductions for
contributions to such schools under  170 of the IRC.  But in 1970, the
IRS concluded that it could no longer justify allowing tax-exempt status
under  501(c)(3) to private schools that practiced racial
discrimination, and in 1971 issued Revenue Ruling 71-447 providing that
a private school not having a racially nondiscriminatory policy as to
students is not "charitable" within the common law concepts reflected in
 170 and 501(c)(3).  In No. 81-3, petitioner Bob Jones University, while
permitting unmarried Negroes to enroll as students, denies admission to
applicants engaged in an interracial marriage or known to advocate
interracial marriage or dating.  Because of this admissions policy, the
IRS revoked the University's tax-exempt status.  After paying a portion
of the federal unemployment taxes for a certain taxable year, the
University filed a refund action in Federal District Court, and the
Government counterclaimed for unpaid taxes for that and other taxable
years.  Holding that the IRS exceeded its powers in revoking the
University's tax-exempt status and violated the University's rights
under the Religion Clauses of the First Amendment, the District Court
ordered the IRS to refund the taxes paid and rejected the counterclaim.
The Court of Appeals reversed.  In No. 81-1, petitioner Goldsboro
Christian Schools maintains a racially discriminatory admissions policy
based upon its interpretation of the Bible, accepting for the most part
only Caucasian students.  The IRS determined that Goldsboro was not an
organization described in  501(c)(3), and hence was required to pay
federal social security and unemployment taxes.  After paying a portion
of such taxes for certain years, Goldsboro filed a refund suit in
Federal District Court, and the IRS counterclaimed for unpaid taxes. 
The District Court entered summary judgment for [461 U.S. 575] the IRS,
rejecting Goldsboro's claim to tax-exempt status under  501(c) (3) and
also its claim that the denial of such status violated the Religion
Clauses of the First Amendment.  The Court of Appeals affirmed.

Held:  Neither petitioner qualifies as a tax-exempt organization under 
501(c)(3).

(a) An examination of the IRC's framework and the background of
congressional purposes reveals unmistakable evidence that, underlying
all relevant parts of the IRC, is the intent that entitlement to tax
exemption depends on meeting certain common law standards of charity --
namely, that an institution seeking tax-exempt status must serve a
public purpose and not be contrary to established public policy.  Thus,
to warrant exemption under  501(c)(3), an institution must fall within a
category specified in that section, and must demonstrably serve and be
in harmony with the public interest, and the institution's purpose must
not be so at odds with the common community conscience as to undermine
any public benefit that might otherwise be conferred.

(b) The IRS's 1970 interpretation of  501(c)(3) was correct.  It would
be wholly incompatible with the concepts underlying tax exemption to
grant tax-exempt status to racially discriminatory private educational
entities.  Whatever may be the rationale for such private schools'
policies, racial discrimination in education is contrary to public
policy.  Racially discriminatory educational institutions cannot be
viewed as conferring a public benefit within the above "charitable"
concept or within the congressional intent underlying  501(c)(3).

(c) The IRS did not exceed its authority when it announced its
interpretation of  501(c)(3) in 1970 and 1971.  Such interpretation is
wholly consistent with what Congress, the Executive, and the courts had
previously declared.  And the actions of Congress since 1970 leave no
doubt that the IRS reached the correct conclusion in exercising its
authority.

(d) The Government's fundamental, overriding interest in eradicating
racial discrimination in education substantially outweighs whatever
burden denial of tax benefits places on petitioners' exercise of their
religious beliefs.  Petitioners' asserted interests cannot be
accommodated with that compelling governmental interest, and no less
restrictive means are available to achieve the governmental interest.

(e) The IRS properly applied its policy to both petitioners.  Goldsboro
admits that it maintains racially discriminatory policies, and, contrary
to Bob Jones University's contention that it is not racially
discriminatory, discrimination on the basis of racial affiliation and
association is a form of racial discrimination.

No. 81-1, 644 F.2d 879, and No. 81-3, 639 F.2d 147, affirmed. [461 U.S.
576]

BURGER, C.J., delivered the opinion of the Court, in which BRENNAN,
WHITE, MARSHALL, BLACKMUN, STEVENS, and O'CONNOR, JJ., joined, and in
Part III of which POWELL, J., joined.  POWELL, J., filed an opinion
concurring in part and concurring in the judgment, post,   REHNQUIST,
J., filed a dissenting opinion, post,  [461 U.S. 577] BURGER, J., lead
opinion

CHIEF JUSTICE BURGER delivered the opinion of the Court.

We granted certiorari to decide whether petitioners, nonprofit private
schools that prescribe and enforce racially discriminatory admissions
standards on the basis of religious doctrine, qualify as tax-exempt
organizations under  501(c)(3) of the Internal Revenue Code of 1954. I A

Until 1970, the Internal Revenue Service granted tax-exempt status to
private schools, without regard to their racial admissions policies,
under  501(c)(3) of the Internal Revenue Code, 26 U.S.C.  501(c)(3), and
granted charitable [461 U.S. 578] deductions for contributions to such
schools under  170 of the Code, 26 U.S.C.  170.

On January 12, 1970, a three-judge District Court for the District of
Columbia issued a preliminary injunction prohibiting the IRS from
according tax-exempt status to private schools in Mississippi that
discriminated as to admissions on the basis of race.  Green v. Kennedy,
309 F.Supp. 1127, appeal dism'd sub nom. Cannon v. Green, 398 U.S. 956
(1970).  Thereafter, in July, 1970, the IRS concluded that it could "no
longer legally justify allowing tax-exempt status [under  501(c)(3)] to
private schools which practice racial discrimination."  IRS News
Release, July 7, 1970, reprinted in App. in No. 81-3, p. A235.  At the
same time, the IRS announced that it could not "treat gifts to such
schools as charitable deductions for income tax purposes [under  170]." 
Ibid.  By letter dated November 30, 1970, the IRS formally notified
private schools, including those involved in this litigation, of this
change in policy, "applicable to all private schools in the United
States at all levels of education."  See id. at A232.

On June 30, 1971, the three-judge District Court issued its opinion on
the merits of the Mississippi challenge.  Green v. Connally, 330 F.Supp.
1150, summarily aff'd sub nom. Coit v. Green, 404 U.S. 997 (1971).  That
court approved the IRS's amended construction of the Tax Code.  The
court also held that racially discriminatory private schools were not
entitled to exemption under  501(c)(3) and that donors were not entitled
to deductions for contributions to such schools under  170.  The court
permanently enjoined the Commissioner of [461 U.S. 579] Internal Revenue
from approving tax-exempt status for any school in Mississippi that did
not publicly maintain a policy of nondiscrimination.

The revised policy on discrimination was formalized in Revenue Ruling
71-447, 1971-2 Cum.Bull. 230: Both the courts and the Internal Revenue
Service have long recognized that the statutory requirement of being
"organized and operated exclusively for religious, charitable, . . . or
educational purposes" was intended to express the basic common law
concept [of "charity"]. . . .  All charitable trusts, educational or
otherwise, are subject to the requirement that the purpose of the trust
may not be illegal or contrary to public policy. Based on the "national
policy to discourage racial discrimination in education," the IRS ruled
that a [private] school not having a racially nondiscriminatory policy
as to students is not 'charitable' within the common law concepts
reflected in sections 170 and 501(c)(3) of the Code. Id. at 231.

The application of the IRS construction of these provisions to
petitioners, two private schools with racially discriminatory admissions
policies, is now before us. B No. 81-3, Bob Jones University v. United
States

Bob Jones University is a nonprofit corporation located in Greenville,
S.C.  Its purpose is "to conduct an institution [461 U.S. 580] of
learning . . giving special emphasis to the Christian religion and the
ethics revealed in the Holy Scriptures."  Certificate of Incorporation,
Bob Jones University, Inc., of Greenville, S.C. reprinted in App. in No.
81-3, p. A119.  The corporation operates a school with an enrollment of
approximately 5,000 students, from kindergarten through college and
graduate school.  Bob Jones University is not affiliated with any
religious denomination, but is dedicated to the teaching and propagation
of its fundamentalist Christian religious beliefs.  It is both a
religious and educational institution.  Its teachers are required to be
devout Christians, and all courses at the University are taught
according to the Bible.  Entering students are screened as to their
religious beliefs, and their public and private conduct is strictly
regulated by standards promulgated by University authorities.

The sponsors of the University genuinely believe that the Bible forbids
interracial dating and marriage.  To effectuate these views, Negroes
were completely excluded until 1971.  From 1971 to May, 1975, the
University accepted no applications from unmarried Negroes, but did
accept applications from Negroes married within their race.

Following the decision of the United States Court of Appeals for the
Fourth Circuit in McCrary v. Runyon, 515 F.2d 1082 (1975), aff'd, 427
U.S. 160 (1976), prohibiting racial exclusion from private schools, the
University revised its policy.  Since May 29, 1975, the University has
permitted unmarried Negroes to enroll; but a disciplinary rule prohibits
interracial dating and marriage.  That rule reads: There is to be no
interracial dating.

1. Students who are partners in an interracial marriage will be
expelled. [461 U.S. 581]

2. Students who are members of or affiliated with any group or
organization which holds as one of its goals or advocates interracial
marriage will be expelled.

3. Students who date outside of their own race will be expelled.

4. Students who espouse, promote, or encourage others to violate the
University's dating rules and regulations will be expelled. App. in No.
81-3, p. A197.  The University continues to deny admission to applicants
engaged in an interracial marriage or known to advocate interracial
marriage or dating.  Id. at A277.

Until 1970, the IRS extended tax-exempt status to Bob Jones University
under  501(c)(3).  By the letter of November 30, 1970, that followed the
injunction issued in Green v. Kennedy, 309 F.Supp. 1127 (DC 1970), the
IRS formally notified the University of the change in IRS policy, and
announced its intention to challenge the tax-exempt status of private
schools practicing racial discrimination in their admissions policies.

After failing to obtain an assurance of tax exemption through
administrative means, the University instituted an action in 1971
seeking to enjoin the IRS from revoking the school's tax-exempt status. 
That suit culminated in Bob Jones University v. Simon, 416 U.S. 725
(1974), in which this Court held that the Anti-Injunction Act of the
Internal Revenue Code, 26 U.S.C.  7421(a), prohibited the University
from obtaining judicial review by way of injunctive action before the
assessment or collection of any tax.

Thereafter, on April 16, 1975, the IRS notified the University of the
proposed revocation of its tax-exempt status.  On January 19, 1976, the
IRS officially revoked the University's tax-exempt status, effective as
of December 1, 1970, the day after the University was formally notified
of the change in IRS policy.  The University subsequently filed returns
under the Federal Unemployment Tax Act for the period from December 1,
1970, to December 31, 1975, and paid a tax [461 U.S. 582] totalling $21
on one employee for the calendar year of 1975.  After its request for a
refund was denied, the University instituted the present action, seeking
to recover the $21 it had paid to the IRS.  The Government
counterclaimed for unpaid federal unemployment taxes for the taxable
years 1971 through 1975, in the amount of $489,675.59, plus interest.

The United States District Court for the District of South Carolina held
that revocation of the University's tax-exempt status exceeded the
delegated powers of the IRS, was improper under the IRS rulings and
procedures, and violated the University's rights under the Religion
Clauses of the First Amendment.  468 F.Supp. 890, 907 (1978).  The court
accordingly ordered the IRS to pay the University the $21 refund it
claimed and rejected the IRS's counterclaim.

The Court of Appeals for the Fourth Circuit, in a divided opinion,
reversed.  639 F.2d 147 (1980).  Citing Green v. Connally, 330 F.Supp.
1150 (DC 1971), with approval, the Court of Appeals concluded that 
501(c)(3) must be read against the background of charitable trust law. 
To be eligible for an exemption under that section, an institution must
be "charitable" in the common law sense, and therefore must not be
contrary to public policy.  In the court's view, Bob Jones University
did not meet this requirement, since its racial policies violated the
clearly defined public policy, rooted in our Constitution, condemning
racial discrimination and, more specifically, the government policy
against subsidizing racial discrimination in education, public or
private. 639 F.2d at 151.  The court held that the IRS acted within its
statutory authority in revoking the University's tax-exempt status. 
Finally, the Court of Appeals rejected petitioner's arguments that the
revocation of the tax exemption violated the Free Exercise and
Establishment Clauses of the First Amendment.  The case was remanded to
the District Court with instructions to dismiss the University's claim
for a refund and to reinstate the IRS's counterclaim. [461 U.S. 583] C
No. 81-1, Goldsboro Christian Schools, Inc. v. United States

Goldsboro Christian Schools is a nonprofit corporation located in
Goldsboro, N.C.  Like Bob Jones University, it was established to
conduct an institution or institutions of learning . . . giving special
emphasis to the Christian religion and the ethics revealed in the Holy
scriptures. Articles of Incorporation  3(a); see Complaint  6, reprinted
in App. in No. 81-1, pp. 5-6.  The school offers classes from
kindergarten through high school, and, since at least 1969, has
satisfied the State of North Carolina's requirements for secular
education in private schools.  The school requires its high school
students to take Bible-related courses, and begins each class with
prayer.

Since its incorporation in 1963, Goldsboro Christian Schools has
maintained a racially discriminatory admissions policy based upon its
interpretation of the Bible.  Goldsboro has for the most part accepted
only Caucasians.  On occasion, however, the school has accepted children
from racially mixed marriages in which one of the parents is Caucasian.

Goldsboro never received a determination by the IRS that it was an
organization entitled to tax exemption under  501(c)(3).  Upon audit of
Goldsboro's records for the years 1969 through 1972, the IRS determined
that Goldsboro was not an organization described in  501(c)(3), and
therefore was required to pay taxes under the Federal Insurance
Contribution Act and the Federal Unemployment Tax Act. [461 U.S. 584]

Goldsboro paid the IRS $3,459.93 in withholding, social security, and
unemployment taxes with respect to one employee for the years 1969
through 1972.  Thereafter, Goldsboro filed a suit seeking refund of that
payment, claiming that the school had been improperly denied  501(c)(3)
exempt status.  The IRS counterclaimed for $160,073.96 in unpaid social
security and unemployment taxes for the years 1969 through 1972,
including interest and penalties.

The District Court for the Eastern District of North Carolina decided
the action on cross-motions for summary judgment.  436 F.Supp. 1314
(1977).  In addressing the motions for summary judgment, the court
assumed that Goldsboro's racially discriminatory admissions policy was
based upon a sincerely held religious belief.  The court nevertheless
rejected Goldsboro's claim to tax-exempt status under  501(c) (3),
finding that private schools maintaining racially discriminatory
admissions policies violate clearly declared federal policy, and
therefore must be denied the federal tax benefits flowing from
qualification under Section 501(c)(3). Id. at 1318.  The court also
rejected Goldsboro's arguments that denial of tax-exempt status violated
the Free Exercise and Establishment Clauses of the First Amendment. 
Accordingly, the court entered summary judgment for the IRS on its
counterclaim.

The Court of Appeals for the Fourth Circuit affirmed, 644 F.2d 879
(1981) (per curiam).  That court found an "identity for present
purposes" between the Goldsboro case and the Bob Jones University case,
which had been decided shortly [461 U.S. 585] before by another panel of
that court, and affirmed for the reasons set forth in Bob Jones
University.

We granted certiorari in both cases, 454 U.S. 892 (1981), and we affirm
in each. II A

In Revenue Ruling 71-447, the IRS formalized the policy, first announced
in 1970, that  170 and  501(c)(3) embrace the common law "charity"
concept.  Under that view, to qualify for a tax exemption pursuant to 
501(c)(3), an institution must show, first, that it falls within one of
the eight categories expressly set forth in that section, and second,
that its activity is not contrary to settled public policy.

Section 501(c)(3) provides that "[c]orporations . . . organized and
operated exclusively for religious, charitable . . . or educational
purposes" are entitled to tax exemption.  Petitioners argue that the
plain language of the statute guarantees them tax-exempt status.  They
emphasize the absence of any language in the statute expressly requiring
all exempt organizations to be "charitable" in the common law sense, and
they contend that the disjunctive "or" separating the categories in 
501(c)(3) precludes such a reading.  Instead, they argue that, if an
institution falls within one or more of [461 U.S. 586] the specified
categories it is automatically entitled to exemption, without regard to
whether it also qualifies as "charitable."  The Court of Appeals
rejected that contention and concluded that petitioners' interpretation
of the statute "tears section 501(c)(3) from its roots."  639 F.2d at
151.

It is a well-established canon of statutory construction that a court
should go beyond the literal language of a statute if reliance on that
language would defeat the plain purpose of the statute: The general
words used in the clause . . . , taken by themselves, and literally
construed, without regard to the object in view, would seem to sanction
the claim of the plaintiff.  But this mode of expounding a statute has
never been adopted by any enlightened tribunal -- because it is evident
that, in many cases, it would defeat the object which the Legislature
intended to accomplish.  And it is well-settled that, in interpreting a
statute, the court will not look merely to a particular clause in which
general words may be used, but will take in connection with it the whole
statute . . . and the objects and policy of the law. . . . Brown v.
Duchesne, 19 How. 183, 194 (1857) (emphasis added).

Section 501(c)(3) therefore must be.analyzed and construed within the
framework of the Internal Revenue Code and against the background of the
congressional purposes.  Such an examination reveals unmistakable
evidence that, underlying all relevant parts of the Code, is the intent
that entitlement to tax exemption depends on meeting certain common law
standards of charity -- namely, that an institution seeking tax-exempt
status must serve a public purpose and not be contrary to established
public policy.

This "charitable" concept appears explicitly in  170 of the Code.  That
section contains a list of organizations virtually identical to that
contained in  501(c)(3).  It is apparent that Congress intended that
list to have the same meaning in both [461 U.S. 587] sections.{10}  In 
170, Congress used the list of organizations in defining the term
"charitable contributions."  On its face, therefore,  170 reveals that
Congress' intention was to provide tax benefits to organizations serving
charitable purposes.{11}  The form of  170 simply makes plain what
common sense and history tell us:  in enacting both  170 and [461 U.S.
588]  501(c)(3), Congress sought to provide tax benefits to charitable
organizations, to encourage the development of private institutions that
serve a useful public purpose or supplement or take the place of public
institutions of the same kind.

Tax exemptions for certain institutions thought beneficial to the social
order of the country as a whole, or to a particular community, are
deeply rooted in our history, as in that of England.  The origins of
such exemptions lie in the special privileges that have long been
extended to charitable trusts.{12}

More than a century ago, this Court announced the caveat that is
critical in this case: [I]t has now become an established principle of
American law that courts of chancery will sustain and protect . . . a
gift . . . to public charitable uses, provided the same is consistent
with local laws and public policy. . . . Perin v. Carey, 24 How. 465,
501 (1861) (emphasis added).  Soon after that, in 1877, the Court
commented: A charitable use, where neither law nor public policy
forbids, may be applied to almost any thing that tends to promote the
well-doing and well-being of social man. Ould v. Washington Hospital for
Foundlings, 95 U.S. 303, 311 (emphasis added). [461 U.S. 589]

See also e.g., Jackson v. Phillips, 96 Mass. 539, 556 (1867).  In 1891,
in a restatement of the English law of charity{13} which has long been
recognized as a leading authority in this country, Lord MacNaghten
stated: "Charity," in its legal sense, comprises four principal
divisions:  trusts for the relief of poverty; trusts for the advancement
of education; trusts for the advancement of religion; and trusts for
other purposes beneficial to the community, not falling under any of the
preceding heads. Commissioners v. Pemsel, [1891] A. C. 531, 583
(emphasis added).  See, e.g., 4 A. Scott, Law of Trusts  368, pp.
2853-2854 (3d ed.1967) (hereinafter Scott).  These statements clearly
reveal the legal background against which Congress enacted the first
charitable exemption statute in 1894:{14}  charities were to be given
preferential treatment because they provide a benefit to society.

What little floor debate occurred on the charitable exemption provision
of the 1894 Act and similar sections of later statutes leaves no doubt
that Congress deemed the specified organizations entitled to tax
benefits because they served desirable public purposes.  See, e.g., 26
Cong.Rec. 585-586 [461 U.S. 590] (1894); id. at 1727.  In floor debate
on a similar provision in 1917, for example, Senator Hollis articulated
the rationale: For every dollar that a man contributes for these public
charities, educational, scientific, or otherwise, the public gets 100
per cent. 55 Cong.Rec. 6728.  See also e.g., 44 Cong.Rec. 4150 (1909);
50 Cong.Rec. 1305-1306 (1913).  In 1924, this Court restated the common
understanding of the charitable exemption provision: Evidently, the
exemption is made in recognition of the benefit which the public derives
from corporate activities of the class named, and is intended to aid
them when not conducted for private gain. Trinidad v. Sagrada Orden, 263
U.S. 578, 581.{15}

In enacting the Revenue Act of 1938, ch. 289, 52 Stat. 447, Congress
expressly reconfirmed this view with respect to the charitable deduction
provision: The exemption from taxation of money or property devoted to
charitable and other purposes is based upon the theory that the
Government is compensated for the loss of revenue by its relief from
financial burdens which would otherwise have to be met by appropriations
from other public funds, and by the benefits resulting from the
promotion of the general welfare. H.R.Rep. No. 1860, 75th Cong., 3d
Sess., 19 (1938).{16} [461 U.S. 591]

A corollary to the public benefit principle is the requirement, long
recognized in the law of trusts, that the purpose of a charitable trust
may not be illegal or violate established public policy.  In 1861, this
Court stated that a public charitable use must be "consistent with local
laws and public policy," Perin v. Carey, 24 How. at 501.  Modern
commentators and courts have echoed that view.  See, e.g., Restatement
(Second) of Trusts  377, Comment c (1959); 4 Scott  377, and cases cited
therein; Bogert  378, at 191-192.{17}

When the Government grants exemptions or allows deductions all taxpayers
are affected; the very fact of the exemption or deduction for the donor
means that other taxpayers can be said to be indirect and vicarious
"donors."  Charitable exemptions are justified on the basis that the
exempt entity confers a public benefit -- a benefit which the society or
the community may not itself choose or be able to provide, or which
supplements and advances the work of public institutions already
supported by tax revenues.{18}  History buttresses [461 U.S. 592] logic
to make clear that, to warrant exemption under  501(c)(3), an
institution must fall within a category specified in that section and
must demonstrably serve and be in harmony with the public interest.{19} 
The institution's purpose must not be so at odds with the common
community conscience as to undermine any public benefit that might
otherwise be conferred. B

We are bound to approach these questions with full awareness that
determinations of public benefit and public policy are sensitive matters
with serious implications for the institutions affected; a declaration
that a given institution is not "charitable" should be made only where
there can be no doubt that the activity involved is contrary to a
fundamental public policy.  But there can no longer be any doubt that
racial discrimination in education violates deeply and widely accepted
views of elementary justice.  Prior to 1954, public education in many
places still was conducted under the pall of [461 U.S. 593] Plessy v.
Ferguson, 163 U.S. 537 (1896); racial segregation in primary and
secondary education prevailed in many parts of the country.  See, e.g.,
Segregation and the Fourteenth Amendment in the States (B. Reams & P.
Wilson eds.1975).{20}  This Court's decision in Brown v. Board of
Education, 347 U.S. 483 (1954), signalled an end to that era.  Over the
past quarter of a century, every pronouncement of this Court and myriad
Acts of Congress and Executive Orders attest a firm national policy to
prohibit racial segregation and discrimination in public education.

An unbroken line of cases following Brown v. Board of Education
establishes beyond doubt this Court's view that racial discrimination in
education violates a most fundamental national public policy, as well as
rights of individuals. The right of a student not to be segregated on
racial grounds in schools . . . is indeed so fundamental and pervasive
that it is embraced in the concept of due process of law. Cooper v.
Aaron, 358 U.S. 1, 19 (1958).  In Norwood v. Harrison, 413 U.S. 455,
(1973), we dealt with a nonpublic institution: [A] private school --
even one that discriminates -- fulfills an important educational
function; however, . . . [that] legitimate educational function cannot
be isolated from [461 U.S. 594] discriminatory practices. . . . 
[D]iscriminatory treatment exerts a pervasive influence on the entire
educational process. (Emphasis added.)  See also Runyon v. McCrary, 427
U.S. 160 (1976); Griffin v. County School Board, 377 U.S. 218 (1964).

Congress, in Titles IV and VI of the Civil Rights Act of 1964, Pub.L.
88-352, 78 Stat. 241, 42 U.S.C.  2000c, 2000c-6, 2000d, clearly
expressed its agreement that racial discrimination in education violates
a fundamental public policy.  Other sections of that Act, and numerous
enactments since then, testify to the public policy against racial
discrimination.  See, e.g., the Voting Rights Act of 1965, Pub.L.
89-110, 79 Stat. 437, 42 U.S.C.  1973 et seq. (1976 ed. and Supp. V);
Title VIII of the Civil Rights Act of 1968, Pub.L. 90-284, 82 Stat. 81,
42 U.S.C.  3601 et seq. (1976 ed. and Supp. V); the Emergency School Aid
Act of 1972, Pub.L. 92-318, 86 Stat. 354 (repealed effective Sept. 30,
1979; replaced by similar provisions in the Emergency School Aid Act of
1978, Pub.L. 95-561, 92 Stat. 2252, 20 U.S.C.  3191-3207 (1976 ed.,
Supp. V)).

The Executive Branch has consistently placed its support behind
eradication of racial discrimination.  Several years before this Court's
decision in Brown v. Board of Education, supra, President Truman issued
Executive Orders prohibiting racial discrimination in federal employment
decisions, Exec.Order No. 9980, 3 CFR 720 (1943-1948 Comp.), and in
classifications for the Selective Service, Exec.Order No. 9988, 3 CFR
726, 729 (1943-1948 Comp.).  In 1957, President Eisenhower employed
military forces to ensure compliance with federal standards in school
desegregation programs.  Exec.Order No. 10730, 3 CFR 389 (1954-1958
Comp.).  And in 1962, President Kennedy announced: [T]he granting of
Federal assistance for . . . housing and related facilities from which
Americans are excluded because of their race, color, creed, or national
origin is unfair, unjust, and inconsistent with the public policy of
[461 U.S. 595] the United States as manifested in its Constitution and
laws. Exec.Order No. 11063, 3 CFR 652 (1959-1963 Comp.).  These are but
a few of numerous Executive Orders over the past three decades
demonstrating the commitment of the Executive Branch to the fundamental
policy of eliminating racial discrimination.  See, e.g., Exec.Order No.
11197, 3 CFR 278 (1964-1965 Comp.); Exec.Order No. 11478, 3 CFR 803
(1966-1970 Comp.); Exec.Order No. 11764, 3 CFR 849 (1971-1975 Comp.);
Exec.Order No. 12250, 3 CFR 298 (1981).

Few social or political issues in our history have been more vigorously
debated and more extensively ventilated than the issue of racial
discrimination, particularly in education.  Given the stress and anguish
of the history of efforts to escape from the shackles of the "separate
but equal" doctrine of Plessy v. Ferguson, 163 U.S. 537 (1896), it
cannot be said that educational institutions that, for whatever reasons,
practice racial discrimination, are institutions exercising "beneficial
and stabilizing influences in community life," Walz v. Tax Comm'n, 397
U.S. 664, 673 (1970), or should be encouraged by having all taxpayers
share in their support by way of special tax status.

There can thus be no question that the interpretation of  170 and 
501(c)(3) announced by the IRS in 1970 was correct.  That it may be seen
as belated does not undermine its soundness.  It would be wholly
incompatible with the concepts underlying tax exemption to grant the
benefit of tax-exempt status to racially discriminatory educational
entities, which "exer[t] a pervasive influence on the entire educational
process."  Norwood v. Harrison, supra, at 469.  Whatever may be the
rationale for such private schools' policies, and however sincere the
rationale may be, racial discrimination in education is contrary to
public policy.  Racially discriminatory educational institutions cannot
be viewed as conferring a public benefit within the "charitable" concept
discussed earlier, [461 U.S. 596] or within the congressional intent
underlying  170 and  501(c)(3).{21} C

Petitioners contend that, regardless of whether the IRS properly
concluded that racially discriminatory private schools violate public
policy, only Congress can alter the scope of  170 and  501(c)(3). 
Petitioners accordingly argue that the IRS overstepped its lawful bounds
in issuing its 1970 and 1971 rulings.

Yet ever since the inception of the Tax Code, Congress has seen fit to
vest in those administering the tax laws very broad authority to
interpret those laws.  In an area as complex as the tax system, the
agency Congress vests with administrative responsibility must be able to
exercise its authority to meet changing conditions and new problems. 
Indeed, as early as 1918, Congress expressly authorized the Commissioner
"to make all needful rules and regulations for the enforcement" of the
tax laws.  Revenue Act of 1918, ch. 18,  1309, 40 Stat. 1143.  The same
provision, so essential to efficient and fair administration of the tax
laws, has appeared in Tax Codes ever since, see 26 U.S.C.  7805(a); and
this Court has long recognized the primary authority of the IRS and its
predecessors in construing the Internal Revenue Code, see, e.g.,
Commissioner v. Portland Cement Co. of Utah, 450 U.S. 156, 169 (1981);
United States v. Correll, 389 U.S. 299, (1967); Boske v. Comingore, 177
U.S. 459, 469-470 (1900).

Congress, the source of IRS authority, can modify IRS rulings it
considers improper; and courts exercise review over IRS actions.  In the
first instance, however, the responsibility [461 U.S. 597] for
construing the Code falls to the IRS.  Since Congress cannot be expected
to anticipate every conceivable problem that can arise or to carry out
day-to-day oversight, it relies on the administrators and on the courts
to implement the legislative will.  Administrators, like judges, are
under oath to do so.

In  170 and  501(c)(3), Congress has identified categories of
traditionally exempt institutions and has specified certain additional
requirements for tax exemption.  Yet the need for continuing
interpretation of those statutes is unavoidable.  For more than 60
years, the IRS and its predecessors have constantly been called upon to
interpret these and comparable provisions, and in doing so have referred
consistently to principles of charitable trust law.  In Treas.Regs. 45,
Art. 517(1) (1921), for example, the IRS's predecessor denied charitable
exemptions on the basis of proscribed political activity before the
Congress itself added such conduct as a disqualifying element.  In other
instances, the IRS has denied charitable exemptions to otherwise
qualified entities because they served too limited a class of people,
and thus did not provide a truly "public" benefit under the common law
test.  See, e.g., Crellin v. Commissioner, 46 B. T. A. 1152, 1155-1156
(1942); James Sprunt Benevolent Trust v. Commissioner, 20 B. T. A.19,
24-25 (1930).  See also Treas.Reg.  1.501(c)(3)(d)(1)(ii) (1959).  Some
years before the issuance of the rulings challenged in these cases, the
IRS also ruled that contributions to community recreational facilities
would not be deductible, and that the facilities themselves would not be
entitled to tax-exempt status, unless those facilities were open to all
on a racially nondiscriminatory basis.  See Rev.Rul. 67-325, 1967-2
Cum.Bull. 113.  These rulings reflect the Commissioner's continuing duty
to interpret and apply the Internal Revenue Code.  See also Textile
Mills Securities Corp. v. Commissioner, 314 U.S. 326, 337-338 (1941).

Guided, of course, by the Code, the IRS has the responsibility, in the
first instance, to determine whether a particular [461 U.S. 598] entity
is "charitable" for purposes of  170 and  501(c)(3).{22}  This in turn
may necessitate later determinations of whether given activities so
violate public policy that the entities involved cannot be deemed to
provide a public benefit worthy of "charitable" status.  We emphasize,
however, that these sensitive determinations should be made only where
there is no doubt that the organization's activities violate fundamental
public policy.

On the record before us, there can be no doubt as to the national
policy.  In 1970, when the IRS first issued the ruling challenged here,
the position of all three branches of the Federal Government was
unmistakably clear.  The correctness of the Commissioner's conclusion
that a racially discriminatory private school "is not `charitable'
within the common law concepts reflected in . . . the Code," Rev.Rul.
71-447, 1971-2 Cum.Bull., at 231, is wholly consistent with what
Congress, the Executive, and the courts had repeatedly declared before
1970.  Indeed, it would be anomalous for the Executive, Legislative, and
Judicial Branches to reach conclusions that add up to a firm public
policy on racial discrimination, and at the same time have the IRS
blissfully ignore what all three branches of the Federal Government had
declared.{23}  Clearly an educational institution engaging in [461 U.S.
599] practices affirmatively at odds with this declared position of the
whole Government cannot be seen as exercising a "beneficial and
stabilizing influenc[e] in community life," Walz v. Tax Comm'n, 397 U.S.
at 673, and is not "charitable," within the meaning of  170 and 
501(c)(3).  We therefore hold that the IRS did not exceed its authority
when it announced its interpretation of  170 and  501(c)(3) in 1970 and
1971.{24} D

The actions of Congress since 1970 leave no doubt that the IRS reached
the correct conclusion in exercising its authority.  It is, of course,
not unknown for independent agencies or the Executive Branch to
misconstrue the intent of a statute; Congress can and often does correct
such misconceptions, if the courts have not done so.  Yet, for a dozen
years, Congress has been made aware -- acutely aware -- of the IRS
rulings of 1970 and 1971.  As we noted earlier, few issues have been the
subject of more vigorous and widespread debate and discussion in and out
of Congress than those related to racial segregation in education. 
Sincere adherents advocating contrary views have ventilated the subject
for well over three decades.  Failure of Congress to modify the IRS
rulings of 1970 and 1971, of which Congress was, by its own studies and
by public discourse, constantly reminded, and Congress' awareness of the
denial of tax-exempt status for racially discriminatory schools when
enacting other and related legislation make out an unusually strong case
of legislative acquiescence in and ratification by implication of the
1970 and 1971 rulings. [461 U.S. 600]

Ordinarily, and quite appropriately, courts are slow to attribute
significance to the failure of Congress to act on particular
legislation.  See, e.g., Aaron v. SEC, 446 U.S. 680, 694, n. 11 (1980). 
We have observed that "unsuccessful attempts at legislation are not the
best of guides to legislative intent," Red Lion Broadcasting Co. v. FCC,
395 U.S. 367, 382, n. 11 (1969).  Here, however, we do not have an
ordinary claim of legislative acquiescence.  Only one month after the
IRS announced its position in 1970, Congress held its first hearings on
this precise issue.  Equal Educational Opportunity:  Hearings before the
Senate Select Committee on Equal Educational Opportunity, 91st Cong., 2d
Sess., 1991 (1970).  Exhaustive hearings have been held on the issue at
various times since then.  These include hearings in February. 1982,
after we granted review in this case.  Administration's Change in
Federal Policy Regarding the Tax Status of Racially Discriminatory
Private Schools:  Hearing before the House Committee on Ways and Means,
97th Cong., 2d Sess. (1982).

Nonaction by Congress is not often a useful guide, but the nonaction
here is significant.  During the past 12 years. there have been no fewer
than 13 bills introduced to overturn the IRS interpretation of 
501(c)(3).{25}  Not one of these bills has emerged from any committee,
although Congress has enacted numerous other amendments to  501 during
this same period, including an amendment to  501(c)(3) itself.  Tax
Reform Act of 1976, Pub.L. 94-455,  1313(a), 90 Stat. 1730.  It is
hardly conceivable that Congress -- and in this setting, any Member of
Congress -- was not abundantly [461 U.S. 601] aware of what was going
on.  In view of its prolonged and acute awareness of so important an
issue, Congress' failure to act on the bills proposed on this subject
provides added support for concluding that Congress acquiesced in the
IRS rulings of 1970 and 1971.  See, e.g., Merrill Lynch, Pierce, Fenner
& Smith, Inc. v. Curran, 456 U.S. 353, (1982); Haig v. Agee, 453 U.S.
280, (1981); Herman & MacLean v. Huddleston, 459 U.S. 375, (1983);
United States v. Rutherford, 442 U.S. 544, 554, n. 10 (1979).

The evidence of congressional approval of the policy embodied in Revenue
Ruling 71-447 goes well beyond the failure of Congress to act on
legislative proposals.  Congress affirmatively manifested its
acquiescence in the IRS policy when it enacted the present  501(i) of
the Code, Act of Oct. 20, 1976, Pub.L. 94-568, 90 Stat. 2697.  That
provision denies tax-exempt status to social clubs whose charters or
policy statements provide for "discrimination against any person on the
basis of race, color, or religion."{26}  Both the House and Senate
Committee Reports on that bill articulated the national policy against
granting tax exemptions to racially discriminatory private clubs. 
S.Rep. No. 94-1318, p. 8 (1976); H.R.Rep. No. 94-1353, p. 8 (1976).

Even more significant is the fact that both Reports focus on this
Court's affirmance of Green v. Connally, 330 F.Supp. 1150 (DC 1971), as
having established that "discrimination on account of race is
inconsistent with an educational institution's tax-exempt status." 
S.Rep. No. 94-1318, supra, at 7-8, and n. 5; H.R.Rep. No. 94-1353, supra
at 7-8, and n. 5 (emphasis added).  These references in congressional
Committee Reports on an enactment denying tax exemptions to racially
discriminatory private social clubs cannot be read [461 U.S. 602] other
than as indicating approval of the standards applied to racially
discriminatory private schools by the IRS subsequent to 1970, and
specifically of Revenue Ruling 71-447.{27} III

Petitioners contend that, even if the Commissioner's policy is valid as
to nonreligious private schools, that policy cannot constitutionally be
applied to schools that engage in racial discrimination on the basis of
sincerely held religious beliefs.{28}  [461 U.S. 603] As to such
schools, it is argued that the IRS construction of  170 and  501(c)(3)
violates their free exercise rights under the Religion Clauses of the
First Amendment.  This contention presents claims not heretofore
considered by this Court in precisely this context.

This Court has long held the Free Exercise Clause of the First Amendment
to be an absolute prohibition against governmental regulation of
religious beliefs, Wisconsin v. Yoder, 406 U.S. 205, 219 (1972);
Sherbert v. Verner, 374 U.S. 398, 402 (1963); Cantwell v. Connecticut,
310 U.S. 296, 303 (1940).  As interpreted by this Court, moreover, the
Free Exercise Clause provides substantial protection for lawful conduct
grounded in religious belief, see Wisconsin v. Yoder, supra, at 220;
Thomas v. Review Board of Indiana Employment Security Div., 450 U.S. 707
(1981); Sherbert v. Verner, supra, at   However, [n]ot all burdens on
religion are unconstitutional. . . .  The state may justify a limitation
on religious liberty by showing that it is essential to accomplish an
overriding governmental interest. United States v. Lee, 455 U.S. 252,
(1982).  See, e.g., McDaniel v. Paty, 435 U.S. 618, 628, and n. 8
(1978); Wisconsin v. Yoder, supra, at 215; Gillette v. United States,
401 U.S. 437 (1971).

On occasion, this Court has found certain governmental interests so
compelling as to allow even regulations prohibiting religiously based
conduct.  In Prince v. Massachusetts, 321 U.S. 158 (1944), for example,
the Court held that neutrally cast child labor laws prohibiting sale of
printed materials on public streets could be applied to prohibit
children from dispensing religious literature.  The Court found no
constitutional infirmity in "excluding [Jehovah's Witness children] from
doing there what no other children may do."  Id. at 171.  See also
Reynolds v. United States, 98 U.S. 145 (1879); United States v. Lee,
supra; Gillette v. United States, supra.  Denial of tax benefits will
inevitably have a substantial [461 U.S. 604] impact on the operation of
private religious schools, but will not prevent those schools from
observing their religious tenets.

The governmental interest at stake here is compelling.  As discussed in
Part II-B, supra, the Government has a fundamental, overriding interest
in eradicating racial discrimination in education{29} -- discrimination
that prevailed, with official approval, for the first 165 years of this
Nation's constitutional history.  That governmental interest
substantially outweighs whatever burden denial of tax benefits places on
petitioners' exercise of their religious beliefs.  The interests
asserted by petitioners cannot be accommodated with that compelling
governmental interest, see United States v. Lee, supra, at  and no "less
restrictive means," see Thomas v. Review Board of Indiana Employment
Security Div., supra, at 718, are available to achieve the governmental
interest.{30} [461 U.S. 605] IV

The remaining issue is whether the IRS properly applied its policy to
these petitioners.  Petitioner Goldsboro Christian Schools admits that
it "maintain[s] racially discriminatory policies," Brief for Petitioner
in No. 81-1, p. 10, but seeks to justify those policies on grounds we
have fully discussed.  The IRS properly denied tax-exempt status to
Goldsboro Christian Schools.

Petitioner Bob Jones University, however, contends that it is not
racially discriminatory.  It emphasizes that it now allows all races to
enroll, subject only to its restrictions on the conduct of all students,
including its prohibitions of association between men and women of
different races, and of interracial marriage.{31}  Although a ban on
intermarriage or interracial dating applies to all races, decisions of
this Court firmly establish that discrimination on the basis of racial
affiliation and association is a form of racial discrimination, see,
e.g., Loving v. Virginia, 388 U.S. 1 (1967); McLaughlin v. Florida, 379
U.S. 184 (1964); Tillman v. Wheaton-Haven Recreation Assn., 410 U.S. 431
(1973).  We therefore find that the IRS properly applied Revenue Ruling
71-447 to Bob Jones University.{32}

The judgments of the Court of Appeals are, accordingly,

Affirmed. [461 U.S. 606] POWELL, J., concurring

JUSTICE POWELL, concurring in part and concurring in the judgment.

I join the Court's judgment, along with Part III of its opinion, holding
that the denial of tax exemptions to petitioners does not violate the
First Amendment.  I write separately because I am troubled by the
broader implications of the Court's opinion with respect to the
authority of the Internal Revenue Service (IRS) and its construction of 
170(c) and 501(c)(3) of the Internal Revenue Code. I

Federal taxes are not imposed on organizations "operated exclusively for
religious, charitable, scientific, testing for public safety, literary,
or educational purposes. . . ."  26 U.S.C.  501(c)(3).  The Code also
permits a tax deduction for contributions made to these organizations. 
170(c).  It is clear that petitioners, organizations incorporated for
educational purposes, fall within the language of the statute.  It also
is clear that the language itself does not mandate refusal of tax-exempt
status to any private school that maintains a racially discriminatory
admissions policy.  Accordingly, there is force in JUSTICE REHNQUIST's
argument that  170(c) and 501(c)(3) should be construed as setting forth
the only criteria Congress has established for qualification as a
tax-exempt organization.  See post at (REHNQUIST, J., dissenting). 
Indeed, were we writing prior to the history detailed in the Court's
opinion, this could well be the construction I would adopt.  But there
has been a decade of acceptance that is persuasive in the circumstances
of these cases, and I conclude that there are now sufficient reasons for
accepting the IRS's construction of the Code as proscribing [461 U.S.
607] tax exemptions for schools that discriminate on the basis of race
as a matter of policy.

I cannot say that this construction of the Code, adopted by the IRS in
1970 and upheld by the Court of Appeals below, is without logical
support.  The statutory terms are not self-defining, and it is plausible
that, in some instances, an organization seeking a tax exemption might
act in a manner so clearly contrary to the purposes of our laws that it
could not be deemed to serve the enumerated statutory purposes.  And, as
the Court notes, if any national policy is sufficiently fundamental to
constitute such an overriding limitation on the availability of
tax-exempt status under  501(c)(3), it is the policy against racial
discrimination in education.  See ante at   Finally, and of critical
importance for me, the subsequent actions of Congress present "an
unusually strong case of legislative acquiescence in and ratification by
implication of the [IRS's] 1970 and 1971 rulings" with respect to
racially discriminatory schools.  Ante at 599.  In particular, Congress'
enactment of  501(i) in 1976 is strong evidence of agreement with these
particular IRS rulings. [461 U.S. 608] II

I therefore concur in the Court's judgment that tax-exempt status under 
170(c) and 501(c)(3) is not available to private schools that concededly
are racially discriminatory.  I do not agree, however, with the Court's
more general explanation of the justifications for the tax exemptions
provided to charitable organizations.  The Court states: Charitable
exemptions are justified on the basis that the exempt entity confers a
public benefit -- a benefit which the society or the community may not
itself choose or be able to provide, or which supplements and advances
the work of public institutions already supported by tax revenues. 
History buttresses logic to make clear that, to warrant exemption under 
501(c)(3), an institution must fall within a category specified in that
section, and must demonstrably serve and be in harmony with the public
interest.  The institution's purpose must not be so at odds with the
common community conscience as to undermine any public benefit that
might otherwise be conferred. Ante at (footnotes omitted).  Applying
this test to petitioners, the Court concludes that [c]learly an
educational institution engaging in practices affirmatively at odds with
[the] declared position of the whole Government cannot be seen as
exercising a "beneficial and stabilizing influenc[e] in community life,"
. . . and is not "charitable," within the meaning of  170 and 
501(c)(3). Ante at (quoting Walz v. Tax Comm'n, 397 U.S. 664, 673
(1970)).

With all respect, I am unconvinced that the critical question in
determining tax-exempt status is whether an individual organization
provides a clear "public benefit" as defined by the Court.  Over 106,000
organizations filed  501(c)(3) returns in 1981.  Internal Revenue
Service, 1982 Exempt [461 U.S. 609] Organization/Business Master File. 
I find it impossible to believe that all or even most of those
organizations could prove that they "demonstrably serve and [are] in
harmony with the public interest," or that they are "beneficial and
stabilizing influences in community life."  Nor am I prepared to say
that petitioners, because of their racially discriminatory policies,
necessarily contribute nothing of benefit to the community.  It is clear
from the substantially secular character of the curricula and degrees
offered that petitioners provide educational benefits.

Even more troubling to me is the element of conformity that appears to
inform the Court's analysis.  The Court asserts that an exempt
organization must "demonstrably serve and be in harmony with the public
interest," must have a purpose that comports with "the common community
conscience," and must not act in a manner "affirmatively at odds with
[the] declared position of the whole Government."  Taken together, these
passages suggest that the primary function of a tax-exempt organization
is to act on behalf of the Government in carrying out governmentally
approved policies.  In my opinion, such a view of  501(c)(3) ignores the
important role played by tax exemptions in encouraging diverse, indeed
often sharply conflicting, activities and viewpoints.  As JUSTICE
BRENNAN has observed, private, nonprofit groups receive tax exemptions
because "each group contributes to the diversity of association,
viewpoint, and enterprise essential to a vigorous, pluralistic society."
 Walz, supra, at 689 (concurring opinion).  Far from representing an
effort to reinforce any perceived "common community conscience," the
provision of tax exemptions to nonprofit groups is one indispensable
means of limiting the influence of governmental orthodoxy on important
areas of community life. [461 U.S. 610]

Given the importance of our tradition of pluralism, "[t]he interest in
preserving an area of untrammeled choice for private philanthropy is
very great."  Jackson v. Statler Foundation, 496 F.2d 623, 639 (CA2
1974) (Friendly, J., dissenting from denial of reconsideration en banc).

I do not suggest that these considerations always are or should be
dispositive.  Congress, of course, may find that some organizations do
not warrant tax-exempt status.  In these cases, I agree with the Court
that Congress has determined that the policy against racial
discrimination in education should override the countervailing interest
in permitting unorthodox private behavior. [461 U.S. 611]

I would emphasize, however, that the balancing of these substantial
interests is for Congress to perform.  I am unwilling to join any
suggestion that the Internal Revenue Service is invested with authority
to decide which public policies are sufficiently "fundamental" to
require denial of tax exemptions.  Its business is to administer laws
designed to produce revenue for the Government, not to promote "public
policy."  As former IRS Commissioner Kurtz has noted, questions
concerning religion and civil rights "are far afield from the more
typical tasks of tax administrators -- determining taxable income." 
Kurtz, Difficult Definitional Problems in Tax Administration:  Religion
and Race, 23 Catholic Lawyer 301 (1978).  This Court often has expressed
concern that the scope of an agency's authorization be limited to those
areas in which the agency fairly may be said to have expertise, and this
concern applies with special force when the asserted administrative
power is one to determine the scope of public policy.  As JUSTICE
BLACKMUN has noted: [W]here the philanthropic organization is concerned,
there appears to be little to circumscribe the almost unfettered power
of the Commissioner.  This may be very well so long as one subscribes to
the particular brand of social policy the Commissioner happens to be
advocating [461 U.S. 612] at the time . . . , but application of our tax
laws should not operate in so fickle a fashion.  Surely, social policy
in the first instance is a matter for legislative concern. Commissioner
v. "Americans United" Inc., 416 U.S. 752, (1974) (dissenting opinion).
III

The Court's decision upholds IRS Revenue Ruling 71-447, and thus
resolves the question whether tax-exempt status is available to private
schools that openly maintain racially discriminatory admissions
policies.  There no longer is any justification for Congress to hesitate
-- as it apparently has -- in articulating and codifying its desired
policy as to tax exemptions for discriminatory organizations.  Many
questions remain, such as whether organizations that violate other
policies should receive tax-exempt status under  501(c)(3).  These
should be legislative policy choices.  It is not appropriate to leave
the IRS "on the cutting edge of developing national policy."  Kurtz,
supra, at 308.  The contours of public policy should be determined by
Congress, not by judges or the IRS. REHNQUIST, J., dissenting

JUSTICE REHNQUIST, dissenting.

The Court points out that there is a strong national policy in this
country against racial discrimination.  To the extent that the Court
states that Congress, in furtherance of this policy, could deny
tax-exempt status to educational institutions that promote racial
discrimination, I readily agree.  But, unlike the Court, I am convinced
that Congress simply has failed to take this action and, as this Court
has said over and over again, regardless of our view on the propriety of
Congress' failure to legislate, we are not constitutionally empowered to
act for it.

In approaching this statutory construction question, the Court quite
adeptly avoids the statute it is construing.  This I am sure is no
accident, for there is nothing in the language [461 U.S. 613] of 
501(c)(3) that supports the result obtained by the Court.  Section
501(c)(3) provides tax-exempt status for: Corporations, and any
community chest, fund, or foundation, organized and operated exclusively
for religious, charitable, scientific, testing for public safety,
literary, or educational purposes, or to foster national or
international amateur sports competition (but only if no part of its
activities involve the provision of athletic facilities or equipment),
or for the prevention of cruelty to children or animals, no part of the
net earnings of which inures to the benefit of any private shareholder
or individual, no substantial part of the activities of which is
carrying on propaganda, or otherwise attempting, to influence
legislation (except as otherwise provided in subsection (h)), and which
does not participate in, or intervene in (including the publishing or
distributing of statements), any political campaign on behalf of any
candidate for public office. 26 U.S.C.  501(c)(3).  With undeniable
clarity, Congress has explicitly defined the requirements for  501(c)(3)
status.  An entity must be (1) a corporation, or community chest, fund,
or foundation, (2) organized for one of the eight enumerated purposes,
(3) operated on a nonprofit basis, and (4) free from involvement in
lobbying activities and political campaigns.  Nowhere is there to be
found some additional, undefined public policy requirement.

The Court first seeks refuge from the obvious reading of  501(c)(3) by
turning to  170 of the Internal Revenue Code, which provides a tax
deduction for contributions made to  501(c)(3) organizations.  In
setting forth the general rule,  170 states: There shall be allowed as a
deduction any charitable contribution (as defined in subsection (c))
payment of which is made within the taxable year.  A charitable
contribution shall be allowable as a deduction only if verified [461
U.S. 614] under regulations prescribed by the Secretary. 26 U.S.C. 
170(a)(1).  The Court seizes the words "charitable contribution" and
with little discussion concludes that "[o]n its face, therefore,  170
reveals that Congress' intention was to provide tax benefits to
organizations serving charitable purposes," intimating that this implies
some unspecified common law charitable trust requirement.  Ante at 587.

The Court would have been well advised to look to subsection (c) where,
as  170(a)(1) indicates, Congress has defined a "charitable
contribution": For purposes of this section, the term "charitable
contribution" means a contribution or gift to or for the use of . . .
[a] corporation, trust, or community chest, fund, or foundation . . .
organized and operated exclusively for religious, charitable,
scientific, literary, or educational purposes, or to foster national or
international amateur sports competition (but only if no part of its
activities involve the provision of athletic facilities or equipment),
or for the prevention of cruelty to children or animals; . . . no part
of the net earnings of which inures to the benefit of any private
shareholder or individual; and . . . which is not disqualified for tax
exemption under section 501(c) (3) by reason of attempting to influence
legislation, and which does not participate in, or intervene in
(including the publishing or distributing of statements), any political
campaign on behalf of any candidate for public office. 26 U.S.C. 
170(c).  Plainly,  170(c) simply tracks the requirements set forth in 
501(c)(3).  Since  170 is no more than a mirror of  501(c)(3) and, as
the Court points out,  170 followed  501(c)(3) by more than two decades,
ante at 587, n. 10, it is, at best, of little usefulness in finding the
meaning of  501(c)(3).

Making a more fruitful inquiry, the Court next turns to the legislative
history of  501(c)(3) and finds that Congress intended [461 U.S. 615] in
that statute to offer a tax benefit to organizations that Congress
believed were providing a public benefit.  I certainly agree.  But then
the Court leaps to the conclusion that this history is proof Congress
intended that an organization seeking  501(c)(3) status "must fall
within a category specified in that section and must demonstrably serve
and be in harmony with the public interest."  Ante at 592 (emphasis
added).  To the contrary, I think that the legislative history of 
501(c)(3) unmistakably makes clear that Congress has decided what
organizations are serving a public purpose and providing a public
benefit within the meaning of  501(c)(3), and has clearly set forth in 
501(c)(3) the characteristics of such organizations.  In fact, there are
few examples which better illustrate Congress' effort to define and
redefine the requirements of a legislative Act.

The first general income tax law was passed by Congress in the form of
the Tariff Act of 1894.  A provision of that Act provided an exemption
for "corporations, companies, or associations organized and conducted
solely for charitable, religious, or educational purposes."  Ch. 349, 
32, 28 Stat. 556 (1894).  The income tax portion of the 1894 Act was
held unconstitutional by this Court, see Pollock v. Farmers' Loan &
Trust Co., 158 U.S. 601 (1895), but a similar exemption appeared in the
Tariff Act of 1909 which imposed a tax on corporate income.  The 1909
Act provided an exemption for any corporation or association organized
and operated exclusively for religious, charitable, or educational
purposes, no part of the net income of which inures to the benefit of
any private stockholder or individual. Ch. 6,  38, 36 Stat. 113 (1909).

With the ratification of the Sixteenth Amendment, Congress again turned
its attention to an individual income tax with the Tariff Act of 1913. 
And again, in the direct predecessor of  501(c)(3), a tax exemption was
provided for any corporation or association organized and operated
exclusively for religious, charitable, scientific, or educational
purposes, [461 U.S. 616] no part of the net income of which inures to
the benefit of any private stockholder or individual. Ch. 16, II(G)(a),
38 Stat. 172 (1913).  In subsequent Acts, Congress continued to broaden
the list of exempt purposes.  The Revenue Act of 1918 added an exemption
for corporations or associations organized "for the prevention of
cruelty to children or animals."  Ch. 18,  231(6), 40 Stat. 1057, 1076
(1918).  The Revenue Act of 1921 expanded the groups to which the
exemption applied to include "any community chest, fund, or foundation"
and added "literary" endeavors to the list of exempt purposes.  Ch. 136,
 231(6), 42 Stat. 263 (1921).  The exemption remained unchanged in the
Revenue Acts of 1924, 1926, 1928, and 1932.  In the Revenue Act of 1934,
Congress added the requirement that no substantial part of the
activities of any exempt organization can involve the carrying on of
"propaganda" or "attempting to influence legislation."  Ch. 277, 
101(6), 48 Stat. 700 (1934).  Again, the exemption was left unchanged by
the Revenue Acts of 1936 and 1938.  The tax laws were overhauled by the
Internal Revenue Code of 1939, but this exemption was left unchanged. 
Ch. 1,  101(6), 53 Stat. 33 (1939).  When the 1939 Code was replaced
with the Internal Revenue Code of 1954, the exemption was adopted in
full in the present  501(c)(3) with the addition of "testing for public
safety" as an exempt purpose and an additional restriction that
tax-exempt organizations could not participate in, or intervene in
(including the publishing or distributing of statements), any political
campaign on behalf of any candidate for public office. Ch. 1,  501(c)
(3), 68A Stat. 163 (1954).  Then, in 1976, the statute was again amended
adding to the purposes for which an exemption would be authorized, "to
foster national or international amateur [461 U.S. 617] sports
competition," provided the activities did not involve the provision of
athletic facilities or equipment.  Tax Reform Act of 1976, Pub.L.
94-455,  1313(a), 90 Stat. 1730 (1976).

One way to read the opinion handed down by the Court today leads to the
conclusion that this long and arduous refining process of  501(c)(3) was
certainly a waste of time, for when enacting the original 1894 statute,
Congress intended to adopt a common law term of art, and intended that
this term of art carry with it all of the common law baggage which
defines it.  Such a view, however, leads also to the unsupportable idea
that Congress has spent almost a century adding illustrations simply to
clarify an already defined common law term.

Another way to read the Court's opinion leads to the conclusion that,
even though Congress has set forth some of the requirements of a 
501(c)(3) organization, it intended that the IRS additionally require
that organizations meet a higher standard of public interest, not stated
by Congress, but to be determined and defined by the IRS and the courts.
 This view I find equally unsupportable.  Almost a century of statutory
history proves that Congress itself intended to decide what  501(c)(3)
requires.  Congress has expressed its decision in the plainest of terms
in  501(c)(3) by providing that tax-exempt status is to be given to any
corporation, or community chest, fund, or foundation that is organized
for one of the eight enumerated purposes, operated on a nonprofit basis,
and uninvolved in lobbying activities or political campaigns.  The IRS
certainly is empowered to adopt regulations for the enforcement of these
specified requirements, and the courts have authority to resolve
challenges to the IRS's exercise of this power, but Congress has left it
to neither the IRS nor the courts to select or add to the requirements
of  501(c)(3).

The Court suggests that, unless its new requirement be added to 
501(c)(3), nonprofit organizations formed to teach pickpockets and
terrorists would necessarily acquire tax-exempt [461 U.S. 618] status. 
Ante at 592, n. 18.  Since the Court does not challenge the
characterization of petitioners as "educational" institutions within the
meaning of  501(c)(3), and in fact states several times in the course of
its opinion that petitioners are educational institutions, see, e.g.,
ante at 580, 583, 604, n. 29, 606, n. 32, it is difficult to see how
this argument advances the Court's reasoning for disposing of
petitioners' cases.

But simply because I reject the Court's heavy-handed creation of the
requirement that an organization seeking 501(c)(3) status must "serve
and be in harmony with the public interest," ante at 592, does not mean
that I would deny to the IRS the usual authority to adopt regulations
further explaining what Congress meant by the term "educational."  The
IRS has fully exercised that authority in Treas.Reg.  1.501(c)(3) -
1(d)(3), 26 CFR  1.501(c)(3) - 1(d)(3) (1982), which provides:

(3) Educational defined -- (i) In general.  The term "educational," as
used in section 501(c)(3), relates to --

(a) The instruction or training of the individual for the purpose of
improving or developing his capabilities; or

(b) The instruction of the public on subjects useful to the individual
and beneficial to the community.

An organization may be educational even though it advocates a particular
position or viewpoint so long as it presents a sufficiently full and
fair exposition of the pertinent facts as to permit an individual or the
public to form an independent opinion or conclusion.  On the other hand,
an organization is not educational if its principal function is the mere
presentation of unsupported opinion.

(ii) Examples of educational organizations.  The following are examples
of organizations which, if they otherwise meet the requirements of this
section, are educational: [461 U.S. 619]

Example (1).  An organization, such as a primary or secondary school, a
college, or a professional or trade school, which has a regularly
scheduled curriculum, a regular faculty, and a regularly enrolled body
of students in attendance at a place where the educational activities
are regularly carried on.

Example (2).  An organization whose activities consist of presenting
public discussion groups, forums, panels, lectures, or other similar
programs.  Such programs may be on radio or television.

Example (3).  An organization which presents a course of instruction by
means of correspondence or through the utilization of television or
radio.

Example (4).  Museums, zoos, planetariums, symphony orchestras, and
other similar organizations. I have little doubt that neither the "Fagin
School for Pickpockets" nor a school training students for guerrilla
warfare and terrorism in other countries would meet the definitions
contained in the regulations.

Prior to 1970, when the charted course was abruptly changed, the IRS had
continuously interpreted  501(c)(3) and its predecessors in accordance
with the view I have expressed above.  This, of course, is of
considerable significance in determining the intended meaning of the
statute.  NLRB v. Boeing Co., 412 U.S. 67, 75 (1973); Power Reactor
Development Co. v. Electrical Workers, 367 U.S. 396, 408 (1961).

In 1970, the IRS was sued by parents of black public school children
seeking to enjoin the IRS from according tax-exempt status under 
501(c)(3) to private schools in Mississippi that discriminated against
blacks.  The IRS answered, consistent with its longstanding position, by
maintaining a lack of authority to deny the tax exemption if the schools
met the specified requirements of  501(c)(3).  Then, "[i]n the midst of
this litigation," Green v. Connally, 330 F.Supp. 1150, 1156 (DC),
summarily aff'd sub nom. Coit v. Green, 404 U.S. 997 (1971), and in the
face of a preliminary injunction, [461 U.S. 620] the IRS changed its
position and adopted the view of the plaintiffs.

Following the close of the litigation, the IRS published its new
position in Revenue Ruling 71-447, stating that a school asserting a
right to the benefits provided for in section 501(c)(3) of the Code as
being organized and operated exclusively for educational purposes must
be a common law charity in order to be exempt under that section.
Rev.Rul. 71-447, 1971-2 Cum.Bull. 230.  The IRS then concluded that a
school that promotes racial discrimination violates public policy, and
therefore cannot qualify as a common law charity.  The circumstances
under which this change in interpretation was made suggest that it is
entitled to very little deference.  But even if the circumstances were
different, the latter-day wisdom of the IRS has no basis in  501(c)(3).

Perhaps recognizing the lack of support in the statute itself, or in its
history, for the 1970 IRS change in interpretation, the Court finds that
"[t]he actions of Congress since 1970 leave no doubt that the IRS
reached the correct conclusion in exercising its authority," concluding
that there is "an unusually strong case of legislative acquiescence in
and ratification by implication of the 1970 and 1971 rulings."  Ante at
599.  The Court relies first on several bills introduced to overturn the
IRS interpretation of  501(c)(3).  Ante at 600, and n. 25.  But we have
said before, and it is equally applicable here, that this type of
congressional inaction is of virtually no weight in determining
legislative intent.  See United States v. Wise, 370 U.S. 405, 411
(1962); Waterman S.S. Corp. v. United States, 381 U.S. 252, 269 (1965). 
These bills and related hearings indicate little more than that a
vigorous debate has existed in Congress concerning the new IRS position.

The Court next asserts that "Congress affirmatively manifested its
acquiescence in the IRS policy when it enacted the present  501(i) of
the Code," a provision that "denies tax-exempt status to social clubs
whose charters or policy statements [461 U.S. 621] provide for" racial
discrimination.  Ante at 601.  Quite to the contrary, it seems to me
that, in  501(i), Congress showed that, when it wants to add a
requirement prohibiting racial discrimination to one of the tax-benefit
provisions, it is fully aware of how to do it.  Cf. Commissioner v.
Tellier, 383 U.S. 687, 693, n. 10 (1966).

The Court intimates that the Ashbrook and Dornan Amendments also reflect
an intent by Congress to acquiesce in the new IRS position.  Ante at
602, n. 27. T he amendments were passed to limit certain enforcement
procedures proposed by the IRS in 1978 and 1979 for determining whether
a school operated in a racially nondiscriminatory fashion.  The Court
points out that, in proposing his amendment, Congressman Ashbrook
stated:  "`My amendment very clearly indicates on its face that all the
regulations in existence as of August 22, 1978, would not be touched.'" 
Ibid.  The Court fails to note that Congressman Ashbrook also said: The
IRS has no authority to create public policy. . . .  So long as the
Congress has not acted to set forth a national policy respecting denial
of tax exemptions to private schools, it is improper for the IRS or any
other branch of the Federal Government to seek denial of tax-exempt
status. . . .  There exists but a single responsibility which is proper
for the Internal Revenue Service:  To serve as tax collector. 125
Cong.Rec. 18444 (1979).  In the same debate, Congressman Grassley
asserted: Nobody argues that racial discrimination should receive
preferred tax status in the United States.  However, the IRS should not
be making these decisions on the agency's own discretion.  Congress
should make these decisions. Id. at 18448.  The same debates are filled
with other similar statements.  While on the whole these debates do not
show conclusively that Congress believed the IRS had exceeded its
authority with the 1970 change in position, they likewise are [461 U.S.
622] far less than a showing of acquiescence in and ratification of the
new position.

This Court continuously has been hesitant to find ratification through
inaction.  See United States v. Wise, supra.  This is especially true
where such a finding would result in a construction of the statute which
not only is at odds with the language of the section in question and the
pattern of the statute taken as a whole, but also is extremely far
reaching in terms of the virtually untrammeled and unreviewable power it
would vest in a regulatory agency. SEC v. Sloan, 436 U.S. 103, 121
(1978).  Few cases would call for more caution in finding ratification
by acquiescence than the present ones.  The new IRS interpretation is
not only far less than a longstanding administrative policy, it is at
odds with a position maintained by the IRS, and unquestioned by
Congress, for several decades prior to 1970.  The interpretation is
unsupported by the statutory language, it is unsupported by legislative
history, the interpretation has led to considerable controversy in and
out of Congress, and the interpretation gives to the IRS a broad power
which, until now, Congress had kept for itself.  Where in addition to
these circumstances Congress has shown time and time again that it is
ready to enact positive legislation to change the Tax Code when it
desires, this Court has no business finding that Congress has adopted
the new IRS position by failing to enact legislation to reverse it.

I have no disagreement with the Court's finding that there is a strong
national policy in this country opposed to racial discrimination.  I
agree with the Court that Congress has the power to further this policy
by denying  501(c)(3) status to organizations that practice racial
discrimination.  But as of yet, Congress has failed to do so.  Whatever
the reasons for the failure, this Court should not legislate for
Congress. [461 U.S. 623]

Petitioners are each organized for the "instruction or training of the
individual for the purpose of improving or developing his capabilities,"
26 CFR  1.501(c)(3) - 1(d)(3) (1982), and thus are organized for
"educational purposes" within the meaning of  501(c)(3).  Petitioners'
nonprofit status is uncontested.  There is no indication that either
petitioner has been involved in lobbying activities or political
campaigns.  Therefore, it is my view that, unless and until Congress
affirmatively amends  501(c)(3) to require more, the IRS is without
authority to deny petitioners  501(c)(3) status.  For this reason, I
would reverse the Court of Appeals. Footnotes BURGER, J., lead opinion
(Footnotes)

* Together with No. 81-1, Goldsboro Christian Schools, Inc. v.  United
States, also on certiorari to the same court.

1. Section 501(c)(3) lists the following organizations, which, pursuant
to  501(a), are exempt from taxation unless denied tax exemptions under
other specified sections of the Code: Corporations, and any community
chest, fund, or foundation, organized and operated exclusively for
religious, charitable, scientific, testing for public safety, literary,
or educational purposes, or to foster national or international amateur
sports competition (but only if no part of its activities involve the
provision of athletic facilities or equipment), or for the prevention of
cruelty to children or animals, no part of the net earnings of which
inures to the benefit of any private shareholder or individual, no
substantial part of the activities of which is carrying on propaganda,
or otherwise attempting, to influence legislation . . . and which does
not participate in, or intervene in (including the publishing or
distributing of statements), any political campaign on behalf of any
candidate for public office. (Emphasis added.)

2. Section 170(a) allows deductions for certain "charitable
contributions."  Section 170(c)(2)(B) includes within the definition of
"charitable contribution" a contribution or gift to or for the use of a
corporation "organized and operated exclusively for religious,
charitable, scientific, literary, or educational purposes. . . ."

3. Revenue Ruling 71-447, 1971-2 Cum.Bull. 230, defined "racially
nondiscriminatory policy as to students" as meaning that the school
admits the students of any race to all the rights, privileges, programs,
and activities generally accorded or made available to students at that
school, and that the school does not discriminate on the basis of race
in administration of its educational policies, admissions policies,
scholarship and loan programs, and athletic and other
school-administered programs.

4. Bob Jones University was founded in Florida in 1927.  It moved to
Greenville, S.C., in 1940, and has been incorporated as an eleemosynary
institution in South Carolina since 1952.

5. Beginning in 1973, Bob Jones University instituted an exception to
this rule, allowing applications from unmarried Negroes who had been
members of the University staff for four years or more.

6. According to the interpretation espoused by Goldsboro, race is
determined by descendance from one of Noah's three sons -- Ham, Shem,
and Japheth.  Based on this interpretation, Orientals and Negroes are
Hamitic, Hebrews are Shemitic, and Caucasians are Japhethitic.  Cultural
or biological mixing of the races is regarded as a  violation of God's
command.   App. in No. 81-1, pp. 40-41.

7. Goldsboro also asserted that it was not obliged to pay taxes on
lodging furnished to its teachers.  It does not ask this Court to review
the rejection of that claim.

8. By stipulation, the IRS agreed to abate its assessment for 1969 and
most of 1970 to reflect the fact that the IRS did not begin enforcing
its policy of denying tax-exempt status to racially discriminatory
private schools until November 30, 1970.  As a result, the amount of the
counterclaim was reduced to $116,190.99.  Id. at 104, 110.

9. After the Court granted certiorari, the Government filed a motion to
dismiss, informing the Court that the Department of the Treasury
intended to revoke Revenue Ruling 71-447 and other pertinent rulings and
to recognize  501(c)(3) exemptions for petitioners.  The Government
suggested that these actions were therefore moot.  Before this Court
ruled on that motion, however, the United States Court of Appeals for
the District of Columbia Circuit enjoined the Government from granting 
501(c)(3) tax-exempt status to any school that discriminates on the
basis of race.  Wright v. Regan, No. 80-1124 (Feb. 18, 1982) (per curiam
order).  Thereafter, the Government informed the Court that it would not
revoke the Revenue Rulings, and withdrew its request that the actions be
dismissed as moot.  The Government continues to assert that the IRS
lacked authority to promulgate Revenue Ruling 71-447, and does not
defend that aspect of the rulings below.

10. The predecessor of  170 originally was enacted in 1917, as part of
the War Revenue Act of 1917, ch. 63,  1201(2), 40 Stat. 330, whereas the
predecessor of  501(c)(3) dates back to the income tax law of 1894, Act
of Aug. 27, 1894, ch. 349, 28 Stat. 509, see n. 14, infra.  There are
minor differences between the lists of organizations in the two
sections, see generally Liles & Blum, Development of the Federal Tax
Treatment of Charities, 39 Law & Contemp. Prob. 6, 24-25 (No. 4, 1975)
(hereinafter Liles & Blum).  Nevertheless, the two sections are closely
related; both seek to achieve the same basic goal of encouraging the
development of certain organizations through the grant of tax benefits. 
The language of the two sections is in most respects identical, and the
Commissioner and the courts consistently have applied many of the same
standards in interpreting those sections.  See 5 J. Mertens, Law of
Federal Income Taxation  31.12 (1980); 6 id.  34.01-34.13 (1975); B.
Bittker & L. Stone, Federal Income Taxation 220-222 (5th ed.1980).  To
the extent that  170 "aids in ascertaining the meaning" of  501(c)(3),
therefore, it is "entitled to great weight," United States v. Stewart,
311 U.S. 60, 64-65 (1940).  See Harris v. Commissioner, 340 U.S. 106,
107 (1950).

11. The dissent suggests that the Court "quite adeptly avoids the
statute it is construing," post at 612, and "seeks refuge . . . by
turning to  170," post at 613.  This assertion dissolves when one sees
that  501(c)(3) and  170 are construed together, as they must be.  The
dissent acknowledges that the two sections are "mirror" provisions;
surely there can be no doubt that the Court properly looks to  170 to
determine the meaning of  501(c)(3).  It is also suggested that  170 is
"at best of little usefulness in finding the meaning of  501(c)(3),"
since " 170(c) simply tracks the requirements set forth in  501(c)(3),"
post at 614.  That reading loses sight of the fact that  170(c) defines
the term "charitable contribution."  The plain language of  170 reveals
that Congress' objective was to employ tax exemptions and deductions to
promote certain charitable purposes.  While the eight categories of
institutions specified in the statute are indeed presumptively
charitable in nature, the IRS properly considered principles of
charitable trust law in determining whether the institutions in question
may truly be considered "charitable" for purposes of entitlement to the
tax benefits conferred by  170 and  501(c)(3).

12. The form and history of the charitable exemption and deduction
sections of the various income tax Acts reveal that Congress was guided
by the common law of charitable trusts.  See Simon, The Tax-Exempt
Status of Racially Discriminatory Religious Schools, 36 Tax L.Rev. 477,
485-489 (1981) (hereinafter Simon).  Congress acknowledged as much in
1969.  The House Report on the Tax Reform Act of 1969, Pub.L. 91-172, 83
Stat. 487, stated that the  501(c)(3) exemption was available only to
institutions that served "the specified charitable purposes," H.R.Rep.
No. 91-413, pt. 1, p. 35 (1969), and described "charitable" as "a term
that has been used in the law of trusts for hundreds of years."  Id. at
43.  We need not consider whether Congress intended to incorporate into
the Internal Revenue Code any aspects of charitable trust law other than
the requirements of public benefit and a valid public purpose.

13. The draftsmen of the 1894 income tax law, which included the first
charitable exemption provision, relied heavily on English concepts of
taxation, and the list of exempt organizations appears to have been
patterned upon English income tax statutes.  See 26 Cong.Rec. 584-588,
6612-6615 (1894)

14.. Act of Aug. 27, 1894, ch. 349,  32, 28 Stat. 556-557.  The income
tax system contained in the 1894 Act was declared unconstitutional,
Pollock v. Farmers' Loan & Trust Co., 158 U.S. 601 (1895), for reasons
unrelated to the charitable exemption provision.  The terms of that
exemption were, in substance, included in the corporate income tax
contained in the Payne-Aldrich Tariff Act of 1909, ch. 6,  38, 36 Stat.
112.  A similar exemption has been included in every income tax Act
since the adoption of the Sixteenth Amendment, beginning with the
Revenue Act of 1913, ch. 16,  II(G), 38 Stat. 172.  See generally
Reiling, Federal Taxation:  What Is a Charitable Organization?, 44
A.B.A.J. 525 (1958); Liles & Blum.

15. That same year, the Bureau of Internal Revenue expressed a similar
view of the charitable deduction section of the estate tax contained in
the Revenue Act of 1918, ch. 18,  403(a)(3), 40 Stat. 1098.  The
Solicitor of Internal Revenue looked to the common law of charitable
trusts in construing that provision, and noted that "generally bequests
for the benefit and advantage of the general public are valid as
charities."  Sol.Op. 159, III-1 Cum.Bull. 480, 482 (1924).

16. The common law requirement of public benefit is universally
recognized by commentators on the law of trusts.  For example, the
Bogerts state: In return for the favorable treatment accorded charitable
gifts which imply some disadvantage to the community, the courts must
find in the trust which is to be deemed "charitable" some real
advantages to the public which more than offset the disadvantages
arising out of special privileges accorded charitable trusts. G. Bogert
& G. Bogert, Law of Trusts and Trustees  361, p. 3 (rev.2d ed.1977)
(hereinafter Bogert).  For other statements of this principle, see,
e.g., 4 Scott  348, at 2770; Restatement (Second) of Trusts  368,
Comment  (1959); E. Fisch, D. Freed, & E. Schachter, Charities and
Charitable Foundations  256 (1974)

17. Cf. Tank Truck Rentals, Inc. v. Commissioner, 356 U.S. 30, 35
(1958), in which this Court referred to "the presumption against
congressional intent to encourage violation of declared public policy"
in upholding the Commissioner's disallowance of deductions claimed by a
trucking company for fines it paid for violations of state maximum
weight laws.

18. The dissent acknowledges that "Congress intended . . . to offer a
tax benefit to organizations . . . providing a public benefit," post at 
but suggests that Congress itself fully defined what organizations
provide a public benefit, through the list of eight categories of exempt
organizations contained in  170 and  501(c)(3).  Under that view, any
nonprofit organization that falls within one of the specified categories
is automatically entitled to the tax benefits, provided it does not
engage in expressly prohibited lobbying or political activities.  Post
at 617.  The dissent thus would have us conclude, for example, that any
nonprofit organization that does not engage in prohibited lobbying
activities is entitled to tax exemption as an "educational" institution
if it is organized for the "`instruction or training of the individual
for the purpose of improving or developing his capabilities,'" 26 CFR 
1.501(c)(3) - 1(d)(3) (1982).  See post at 623.  As Judge Leventhal
noted in Green v. Connally, 330 F.Supp. 1150, 1160 (DC), summarily aff'd
sub nom. Coit v. Green, 404 U.S. 997 (1971), Fagin's school for
educating English boys in the art of picking pockets would be an
"educational" institution under that definition.  Similarly, a band of
former military personnel might well set up a school for intensive
training of subversives for guerrilla warfare and terrorism in other
countries; in the abstract, that "school" would qualify as an
"educational" institution.  Surely Congress had no thought of affording
such an unthinking, wooden meaning to  170 and  501(c)(3) as to provide
tax benefits to "educational" organizations that do not serve a public,
charitable purpose.

19. The Court's reading of  501(c)(3) does not render meaningless
Congress' action in specifying the eight categories of presumptively
exempt organizations, as petitioners suggest.  See Brief for Petitioner
in No. 811, pp. 18-24.  To be entitled to tax-exempt status under 
501(c)(3), an organization must first fall within one of the categories
specified by Congress, and in addition must serve a valid charitable
purpose.

20. In 1894, when the first charitable exemption provision was enacted,
racially segregated educational institutions would not have been
regarded as against public policy.  Yet contemporary standards must be
considered in determining whether given activities provide a public
benefit and are entitled to the charitable tax exemption.  In Walz v.
Tax Comm'r, 397 U.S. 664, 673 (1970), we observed: Qualification for tax
exemption is not perpetual or immutable; some tax-exempt groups lose
that status when their activities take them outside the classification
and new entities can come into being and qualify for exemption.
Charitable trust law also makes clear that the definition of "charity"
depends upon contemporary standards.  See, e.g., Restatement (Second) of
Trusts  374, Comment a (1959); Bogert  369, at 65-67; 4 Scott  368, at
2855-2856.

21. In view of our conclusion that racially discriminatory private
schools violate fundamental public policy and cannot be deemed to confer
a benefit on the public, we need not decide whether an organization
providing a public benefit and otherwise meeting the requirements of 
501(c)(3) could nevertheless be denied tax-exempt status if certain of
its activities violated a law or public policy.

22. In the present case, the IRS issued its rulings denying exemptions
to racially discriminatory schools only after a three-judge District
Court had issued a preliminary injunction.  See supra at

23. JUSTICE POWELL misreads the Court's opinion when he suggests that
the Court implies that the Internal Revenue Service is invested with
authority to decide which public policies are sufficiently "fundamental"
to require denial of tax exemptions, post at 611.  The Court's opinion
does not warrant that interpretation.  JUSTICE POWELL concedes that, if
any national policy is sufficiently fundamental to constitute such an
overriding limitation on the availability of tax-exempt status under 
501(c)(3), it is the policy against racial discrimination in education.
Post at 607.  Since that policy is sufficiently clear to warrant JUSTICE
POWELL's concession and for him to support our finding of longstanding
congressional acquiescence, it should be apparent that his concerns
about the Court's opinion are unfounded.

24. Many of the amici curiae, including amicus Wiilliam T. Coleman, Jr.
(appointed by the Court), argue that denial of tax-exempt status to
racially discriminatory schools is independently required by the equal
protection component of the Fifth Amendment.  In light of our resolution
of this litigation, we do not reach that issue.  See, e.g., United
States v. Clark, 445 U.S. 23, 27 (190); NLRB v. Catholic Bishop of
Chicago, 440 U.S. 490, 504 (1979).

25. H.R. 1096, 97th Cong., 1st Sess. (1981); H.R. 802, 97th Cong., 1st
Sess. (1981); H.R. 498, 97th Cong., 1st Sess. (1981); H.R. 332, 97th
Cong., 1st Sess. (1981); H.R. 95, 97th Cong., 1st Sess. (1981); S. 995,
96th Cong., 1st Sess. (1979); H.R.1905, 96th Cong., 1st Sess. (1979);
H.R. 96, 96th Cong., 1st Sess. (1979); H.R. 3225, 94th Cong., 1st Sess.
(1975); H.R. 1394, 93d Cong., 1st Sess. (1973); H.R. 5350, 92d Cong.,
1st Sess. (1971); H.R. 2352, 92d Cong., 1st Sess. (1971); H.R. 68, 92d
Cong., 1st Sess. (1971).

26. Prior to the introduction of this legislation, a three-judge
District Court had held that segregated social clubs were entitled to
tax exemptions.  McGlotten v. Connally, 338 F.Supp. 448 (DC 1972). 
Section 501(i) was enacted primarily in response to that decision.  See
S.Rep. No. 94-1318, pp. 7-8 (1976); H.R.Rep. No. 94-1353, p. 8 (1976).

27. Reliance is placed on scattered statements in floor debate by
Congressmen critical of the IRS's adoption of Revenue Ruling 71-447. 
See, e.g., Brief for Petitioner in No. 81-1, pp. 27-28.  Those views did
not prevail.  That several Congressmen, expressing their individual
views, argued that the IRS had no authority to take the action in
question is hardly a balance for the overwhelming evidence of
congressional awareness of and acquiescence in the IRS rulings of 1970
and 1971.  Petitioners also argue that the Ashbrook and Dornan
Amendments to the Treasury, Postal Service, and General Government
Appropriations Act of 1980, Pub.L. 96-74,  103, 614, 615, 93 Stat. 559,
562, 576-577, reflect congressional opposition to the IRS policy
formalized in Revenue Ruling 71-447.  Those amendments, however, are
directly concerned only with limiting more aggressive enforcement
procedures proposed by the IRS in 1978 and 1979 and preventing the
adoption of more stringent substantive standards.  The Ashbrook
Amendment,  103 of the Act, applies only to procedures, guidelines, or
measures adopted after August 22, 1978, and thus in no way affects the
status of Revenue Ruling 71-447.  In fact, both Congressman Dornan and
Congressman Ashbrook explicitly stated that their amendments would have
no effect on prior IRS policy, including Revenue Ruling 71-447, see 125
Cong.Rec. 18815 (1979) (Cong. Dornan:  "[M]y amendment will not affect
existing IRS rules which IRS has used to revoke tax exemptions of white
segregated academies under Revenue Ruling 71-447. . . ."); id. at 18446
(Cong. Ashbrook:  "My amendment very clearly indicates on its face that
all the regulations in existence as of August 22, 1978, would not be
touched").  These amendments therefore do not indicate congressional
rejection of Revenue Ruling 71-447 and the standards contained therein.

28. The District Court found, on the basis of a full evidentiary record,
that the challenged practices of petitioner Bob Jones University were
based on a genuine belief that the Bible forbids interracial dating and
marriage.  468 F.Supp. at 894.  We assume, as did the District Court,
that the same is true with respect to petitioner Goldsboro Christian
Schools.  See 436 F.Supp. at 1317.

29. We deal here only with religious schools -- not with churches or
other purely religious institutions; here, the governmental interest is
in denying public support to racial discrimination in education.  As
noted earlier, racially discriminatory schools "exer[t] a pervasive
influence on the entire educational process," outweighing any public
benefit that they might otherwise provide, Norwood v. Harrison, 413 U..S.
455, 469 (1973).  See generally Simon, 495-496.

30. Bob Jones University also contends that denial of tax exemption
violates the Establishment Clause by preferring religions whose tenets
do not require racial discrimination over those which believe racial
intermixing is forbidden.  It is well settled that neither a state nor
the Federal Government may pass laws which "prefer one religion over
another," Everson v. Board of Education, 330 U.S. 1, 15 (1947), but
"[i]t is equally true" that a regulation does not violate the
Establishment Clause merely because it "happens to coincide or harmonize
with the tenets of some or all religions."  McGowan v. Maryland, 366
U.S. 420, 442 (1961).  See Harris v. McRae, 448 U.S. 297, (1980).  The
IRS policy at issue here is founded on a "neutral, secular basis,"
Gillette v. United States, 401 U.S. 437, 452 (1971), and does not
violate the Establishment Clause.  See generally U.S. Comm'n on Civil
Rights, Discriminatory Religious Schools and Tax Exempt Status 10-17
(1982).  In addition, as the Court of Appeals noted, the uniform
application of the rule to all religiously operated schools avoids the
necessity for a potentially entangling inquiry into whether a racially
restrictive practice is the result of sincere religious belief. 639 F.2d
147, 155 (CA4 1980) (emphasis in original).  Cf. NLRB v. Catholic Bishop
of Chicago, 440 U.S. 490 (1979).  But see generally Note, 90 Yale L.J.
350 (1980).

31. This argument would, in any event, apply only to the final eight
months of the five tax years at issue in this case.  Prior to May, 1975,
Bob Jones University's admissions policy was racially discriminatory on
its face, since the University excluded unmarried Negro students while
admitting unmarried Caucasians.

32. Bob Jones University also argues that the IRS policy should not
apply to it, because it is entitled to exemption under  501(c)(3) as a
"religious" organization, rather than as an "educational" institution. 
The record in this case leaves no doubt, however, that Bob Jones
University is both an educational institution and a religious
institution.  As discussed previously, the IRS policy properly extends
to all private schools, including religious schools.  See n. 29, supra. 
The IRS policy thus was properly applied to Bob Jones University.
POWELL, J., concurring (Footnotes)

1. I note that the Court has construed other provisions of the Code as
containing narrowly defined public policy exceptions.  See Commissioner
v. Tellier, 383 U.S. 687, 693-694 (1966); Tank Truck Rentals, Inc. v.
Commissioner, 356 U.S. 30, 35 (1958).

2. The District Court for the District of Columbia in Green v. Connally,
330 F.Supp. 1150 (three-judge court), summarily aff'd sub nom. Coit v.
Green, 404 U.S. 997 (1971), held that racially discriminatory private
schools were not entitled to tax-exempt status.  The same District
Court, however, later ruled that racially segregated social clubs could
receive tax exemptions under  501(c)(7) of the Code.  See McGlotten v.
Connally, 338 F.Supp. 448 (1972) (three-judge court).  Faced with these
two important three-judge court rulings, Congress expressly overturned
the relevant portion of McGlotten by enacting  501(i), thus conforming
the policy with respect to social clubs to the prevailing policy with
respect to private schools.  This affirmative step is a persuasive
indication that Congress has not just silently acquiesced in the result
of Green.  Cf. Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran,
456 U.S. 353, 402 (1982) (POWELL, J., dissenting) (rejecting theory
"that congressional intent can be inferred from silence, and that
legislative inaction should achieve the force of law").

3. Certainly  501(c)(3) has not been applied in the manner suggested by
the Court's analysis.  The 1,100-page list of exempt organizations
includes -- among countless examples -- such organizations as American
Friends Service Committee, Inc., Committee on the Present Danger,
Jehovahs Witnesses in the United States, Moral Majority Foundation,
Inc., Friends of the Earth Foundation, Inc., Mountain States Legal
Foundation, National Right to Life Educational Foundation, Planned
Parenthood Federation of America, Scientists and Engineers for Secure
Energy, Inc., and Union of Concerned Scientists Fund, Inc.  See Internal
Revenue Service, Cumulative List of Organizations Described in Section
170(C) of the Internal Revenue Code of 1954, Pp. 31, 221, 376, 518, 670,
677, 694, 795, 880, 1001, 1073 (Revised Oct.1981).  It would be
difficult indeed to argue that each of these organizations reflects the
views of the "common community conscience" or "demonstrably . . . [is]
in harmony with the public interest."  In identifying these
organizations, largely taken at random from the tens of thousands on the
list, I of course do not imply disapproval of their being exempt from
taxation.  Rather, they illustrate the commendable tolerance by our
Government of even the most strongly held divergent views, including
views that at least from time to time are "at odds" with the position of
our Government.  We have consistently recognized that such disparate
groups are entitled to share the privilege of tax exemption.

4. A distinctive feature of America's tradition has been respect for
diversity.  This has been characteristic of the peoples from numerous
lands who have built our country.  It is the essence of our democratic
system. Mississippi University for Women v. Hogan, 458 U.S. 718, 745
(1982) (POWELL, J., dissenting).  Sectarian schools make an important
contribution to this tradition, for they "have provided an educational
alternative for millions of young Americans" and "often afford wholesome
competition with our public schools."  Wolman v. Walter, 433 U.S. 229,
262 (1977) (POWELL, J., concurring in part, concurring in judgment in
part, and dissenting in part).

5. See, e.g., Community Television of Southern California v. Gottfried,
459 U.S. 498,  n. 17 (1983) ("[A]n agency's general duty to enforce the
public interest does not require it to assume responsibility for
enforcing legislation that is not directed at the agency"); Hampton v.
Mow Sun Wong, 426 U.S. 88, 114 (1976) ("It is the business of the Civil
Service Commission to adopt and enforce regulations which will best
pro