Doing Good? How Nonprofits Exploit the Tax System, Pay Low Wages, and Undermine Labor Rights

The American nonprofit sector, comprising everything from social justice nonprofits to right-wing think tanks, is widely seen as a moral compass in public life. These organizations claim to serve the common good, benefiting from tax-exempt status under Section 501(c)(3) or 501(c)(4) of the U.S. tax code. But beneath the image of benevolence lies a complex ecosystem where low wages, union resistance, and the concentration of wealth and power are all too common. Whether left-leaning or conservative, many nonprofits operate like corporations in all but name—exploiting public subsidies while avoiding the labor and tax obligations of the private sector.

While liberal nonprofits often claim moral high ground, conservative nonprofits such as the Heritage Foundation, Federalist Society, and Turning Point USA are even more explicit in using their nonprofit status for ideological gain. These organizations are generously funded by a network of wealthy donors and dark money, benefiting from laws that shield donor identities while still providing tax breaks. The New York Times and ProPublica have both documented how right-wing nonprofit networks use complex legal structures to move billions in untraceable funds through donor-advised funds and shell charities to influence elections, judiciary appointments, and public policy—while maintaining nonprofit status.

The 2018 creation of the Marble Freedom Trust, which received $1.6 billion in a single donation from electronics magnate Barre Seid, is one of the most striking examples of how conservative nonprofits benefit from the tax system. The money went to Leonard Leo, architect of the conservative judicial movement, and is being used to reshape American courts and governance—all tax-exempt. These conservative nonprofits rarely face scrutiny from the IRS, while progressive nonprofits, especially those tied to activism or labor organizing, often face intense bureaucratic hurdles or audits.

Despite their wealth, conservative nonprofits are not known for paying living wages to their rank-and-file employees. Just as with liberal nonprofits, a culture of ideological commitment is often used to justify stagnant salaries, limited benefits, and the absence of unions. At places like the Leadership Institute or the Intercollegiate Studies Institute, workers may be expected to accept lower compensation for the “privilege” of advancing a conservative mission. Few, if any, of these organizations are unionized. Interns and entry-level employees are often underpaid, even as their organizations maintain multi-million-dollar budgets and highly paid executive teams.

Meanwhile, liberal and progressive nonprofits often mirror this dynamic. The Southern Poverty Law Center, the ACLU, and the Sierra Club have all faced internal revolts from underpaid and overworked staff seeking union protections and better pay. Despite progressive missions, many of these organizations have resisted unionization, hired union-busting consultants, and continued to pay senior leadership six- or seven-figure salaries. The exploitation is bipartisan, rooted not in ideology but in structure: the tax system enables and incentivizes this behavior.

Across the political spectrum, nonprofits depend heavily on unpaid or underpaid labor. Interns, volunteers, and junior staff are routinely told that their sacrifices serve a greater cause, whether that cause is climate justice or dismantling “woke” education. The result is the same: a hollowing out of labor rights under the banner of purpose. The nonprofit sector has become a vehicle for elite influence—liberal and conservative alike—rather than a true instrument of public good.

Unionization in the nonprofit world remains low. According to the U.S. Bureau of Labor Statistics, nonprofit union membership has barely increased over the past three decades. And while there has been an uptick in union drives at liberal nonprofits, conservative organizations have largely avoided these movements altogether. In fact, many conservative nonprofits are actively hostile to organized labor as a matter of principle. The Heritage Foundation, for example, has long opposed the expansion of labor rights and has advised Republican administrations on how to weaken collective bargaining in the public sector.

As nonprofit wealth grows—particularly through endowments, real estate holdings, and tax-exempt investments—workers at the bottom continue to struggle. In higher education, many private nonprofit colleges and universities pay adjunct professors poverty wages while top administrators earn corporate-level compensation. Religious nonprofits, too, have been found to exploit workers under the guise of spiritual service. Megachurches and faith-based charities sometimes use volunteer labor as a substitute for paid employment, all while claiming tax benefits and avoiding federal labor laws.

Reform is urgently needed. Tax exemption should come with clear standards for labor rights, wage equity, and financial transparency. The IRS must enforce restrictions on political spending by nonprofits, particularly those masquerading as educational institutions while operating as partisan arms. Donor disclosure laws should apply across the board, and tax deductions for mega-donations should be limited unless tied to measurable public benefit. If nonprofits are to retain their privileged legal status, they must meet basic ethical and democratic standards.

Until these changes occur, the nonprofit sector will remain a shadow version of the for-profit world—reaping public subsidies while delivering low wages, avoiding unions, and deepening political inequality. Whether the name on the letterhead reads “Heritage Foundation” or “ACLU,” the structure of exploitation is the same. It's not just a crisis of values. It's a crisis of accountability.

Sources

ProPublica. “How a Billionaire’s Donation Exploded the Conservative Nonprofit World.” August 2022. https://www.propublica.org/article/dark-money-leonard-leo-barre-seid

New York Times. “They Legally Moved Billions to Fund Conservatives.” October 2021. https://www.nytimes.com/2021/10/05/us/politics/dark-money-nonprofits.html

Associated Press. “Why Workers at a Growing Number of Nonprofits Are Unionizing.” June 2023. https://apnews.com/article/7fd961c88c614db47db63ffcd80e084e

PayScale. “Nonprofit Pay Cut: How Much Are You Losing to Do Good?” https://www.payscale.com/research-and-insights/nonprofit-pay-cut

Teen Vogue. “The Nonprofit Industrial Complex: What Is It and How Does It Work?” https://www.teenvogue.com/story/non-profit-industrial-complex-what-is

Bureau of Labor Statistics. “Nonprofit Earnings and Sectoral Employment in the United States Since 1994.” https://www.bls.gov/opub/mlr/2024/article/nonprofit-earnings-and-sectoral-employment-in-the-united-states-since-1994.htm

San Francisco Chronicle. “One of the Bay Area’s Most Progressive Nonprofits Is Warring with Itself.” https://www.sfchronicle.com/opinion/soleilho/article/nonprofit-unions-workers-20038770.php

Reddit. “Antiwork Nonprofit Volunteer Testimonies.” https://www.reddit.com/r/antiwork/comments/uhnrfd 

U‑6 Unemployment Rate Inching Up: A Broader Look at Labor Market Strain

The U‑6 unemployment rate, the broadest measure of labor underutilization reported by the Bureau of Labor Statistics (BLS), is showing signs of upward pressure. Unlike the headline U‑3 rate, which only includes those actively seeking work, the U‑6 figure captures a more complete picture of employment. It includes discouraged workers, marginally attached individuals, and those working part-time for economic reasons.

According to the most recent data from the BLS and the Federal Reserve Bank of St. Louis, the U‑6 rate inched up from 7.7 percent in June 2024 to a recent peak of 8.0 percent in February 2025. Since then, it has remained elevated, recording 7.9 percent in March and 7.8 percent in both April and May. The June 2025 figure dropped slightly to 7.7 percent but remains among the highest levels seen since 2023.

The U‑6 rate tends to rise when more people are involuntarily working part-time or when marginally attached workers reenter the job search but fail to secure full-time employment. These dynamics suggest that while headline unemployment may appear stable—hovering around 4.1 percent in June—the underlying labor market may be more fragile than it seems.

This persistence in underemployment raises concerns about the quality of jobs available, wage stagnation, and economic resilience, particularly for lower-income workers and those in precarious positions. A growing number of Americans want full-time employment but are unable to find it. Others are technically outside the labor force but remain discouraged or marginally attached to it.

In the broader context, the U‑6 rate serves as a counterbalance to optimistic economic narratives. The apparent stability in the U‑3 rate masks lingering vulnerabilities, especially as sectors like retail, hospitality, and education continue to rely heavily on part-time labor or are facing budgetary constraints. For those watching the post-pandemic economy, particularly in relation to student debt, workforce readiness, and higher education policy, these indicators suggest a structural weakness in job creation and labor absorption.

The gradual rise of U‑6 is not just a statistical footnote. It signals that the labor market is not fully healed and that a portion of the population remains economically sidelined. It is a metric worth monitoring as debates around economic recovery, fiscal policy, and employment strategies continue.

For readers of the Higher Education Inquirer, this trend reinforces the need to consider broader employment conditions when evaluating the health of the U.S. economy, particularly for recent graduates, contingent faculty, and other workers navigating a precarious job landscape.

Sources
Bureau of Labor Statistics, Table A-15. Alternative measures of labor underutilization: https://www.bls.gov/news.release/empsit.t15.htm
Federal Reserve Bank of St. Louis (FRED), U‑6 Unemployment Rate: https://fred.stlouisfed.org/series/U6RATE
TradingEconomics, U‑6 Unemployment Rate: https://tradingeconomics.com/united-states/u6-unemployment-rate

Labor Notes

 

IN THIS ISSUE: Philadelphia Municipal Workers Strike Before July 4 Celebrations LISTEN: Labor Notes Podcast—How to Win a Strong Contract Social Justice Artists: Apply for an Anne Feeney Hellraiser Grant Reactions to the GOP Budget Legislation UPCOMING EVENTS Workshop: Winning a Strong Contract Parts I & II: July 7 & 14 Who Has the Power? A Mapping Tool to Build our Movement: July 16 Webinar: Building Power Through Coordinated Bargaining and Contract Alignment: July 21 Stewards’ Workshop: Build a Steward Network: July 23 Secrets of a Successful Organizer: Sept. 8, 15, 22 North Carolina Troublemakers School: Sept. 20 Milwaukee Troublemakers School: Oct. 4 Philadelphia Municipal Workers Strike Before July 4 Celebrations by Paul Prescod Nine thousand blue-collar workers who make Philadelphia run went on strike July 1. After sacrificing through the pandemic and years of bruising inflation, they say they’re on strike so they can afford to live in the city they serve. Already, uncollected garbage is piling up as the workers, members of AFSCME District Council 33, defend their strike lines. SHOW FULL ARTICLE LISTEN: Labor Notes Podcast—"How to Win a Strong Contract" by Labor Notes Staff What's the secret of winning a strong contract? Hint: You won't find it at the negotiations table! In our "Winning a Strong Contract" workshop series, we talk about how we can build power away from the table to win our demands in bargaining.   Labor Notes Organizer Lisa Xu joins pod co-hosts Danielle Smith and Natascha Elena Ulhmann for an overview of the workshop, including concepts like the campaign mountain and campaign power spiral. SHOW EPISODE You can also listen to The Labor Notes Podcast on Spotify, Apple Podcasts and on our YouTube channel. Please rate and review our podcast wherever you listen! "Winning a Strong Contract Parts I & II" will be running the next two Mondays (July 7 and July 14th), and you can sign up at labornotes.org/events. Social Justice Artists: Apply for an Anne Feeney Hellraiser Grant by Natascha Elena Uhlmann Friends and family of legendary folk musician and “hellraiser” Anne Feeney have come together to announce a new round of grants for artists “on the frontlines of the fight against fascism.” The Anne Feeney Hellraiser Memorial Fund will provide three grants of up to $1,000 for emerging artists of any discipline who create art in support of social movements for justice. LEARN MORE AND APPLY Reactions to the GOP Budget Legislation  Economic Policy Institute president Heidi Shierholz denounces passage of GOP budget bill:  The Republican budget will gut Medicaid, slash food aid for families, and shutter rural hospitals—just to give tax breaks that will go overwhelmingly to the wealthy. It is a staggering upward redistribution of income. The bill also turbocharges an authoritarian-style immigration regime—funding internment camps, mass surveillance, and waves of deportations that will kill millions of jobs. SHOW FULL EPI STATEMENT North America’s Building Trades Unions (NABTU) President Sean McGarvey issued the following statement on the Senate Republican Proposed Budget Bill:  If enacted, this stands to be the biggest job-killing bill in the history of this country. Simply put, it is the equivalent of terminating more than 1,000 Keystone XL pipeline projects. In some cases, it worsens the already harmful trajectory of the House-passed language, threatening an estimated 1.75 million construction jobs and over 3 billion work hours, which translates to $148 billion in lost annual wages and benefits. SHOW FULL NABTU STATEMENT Upcoming Events Visit labornotes.org/events for updates. Nobody will be turned away from a Labor Notes event, virtual or in-person, for lack of funds—if the registration fee is a barrier, email us. Workshop: Winning a Strong Contract Parts I & II We will cover the basics of building a Contract Action Team (CAT), putting together an escalating campaign (potentially culminating in a strike), and dynamics between the bargaining committee, CAT, and the membership. When: Mondays, July 7 & 14 Time: 7 p.m. - 8:30 p.m. ET / 4 p.m. - 5:30 p.m. PT Where: This is an online workshop and will be held via Zoom. Registration fee $15 - Regular Registration REGISTER HERE Prerequisites for this workshop: We strongly encourage workshop participants to also first attend our upcoming "Secrets of a Successful Organizer" workshop series in June.  Who Has the Power? A Mapping Tool to Build our Movement This workshop will teach skills to analyze power in the present moment to strategically build the workers movement we need. We’ll be joined by labor educator Stephanie Luce. This is an advanced workshop for those organizers who are already part of a union or other worker organizations. When: Wednesday, July 16 Time: 7:30 p.m. to 9:00 p.m. Eastern (4:30 p.m. to 6:00 p.m. Pacific) Where: This is an online workshop and will be held via Zoom. Registration fee $10 - Regular Registration REGISTER HERE Webinar: Building Power Through Coordinated Bargaining and Contract Alignment Join us for a discussion about how unions are coordinating bargaining and even aligning their contracts to maximize leverage in negotiations. We'll also discuss takeaways for workers seeking to align contracts leading up to the UAW's call for unified action on May Day 2028. When: Monday July 21 Time: 7 p.m. to 8:30 pm ET Registration: $10 This panel will feature: - Francisco Ortiz, the president of United Teachers Richmond in California - Jane Fox, a unit chair in UAW Local 2325, the Association of Legal Aid Attorneys - Chris Spurlock, a steward in Teamsters Local 135 at Zenith Logistics, a third-party operator for Kroger REGISTER HERE Stewards’ Workshop: Build a Steward Network Stewards are the backbone of the union! Learn how to build a strong stewards structure that helps workers use their power in the workplace to effectively fight the boss. When: Wednesday, July 23 Time: 7:30 p.m. to 9:00 p.m. Eastern (4:30 p.m. to 6:00 p.m. Pacific) Where: This is an online workshop and will be held via Zoom. Registration fee $10 - Regular registration REGISTER HERE Secrets of a Successful Organizer  Secrets of a Successful Organizer is Labor Notes' core organizing training, in three sessions full of lively participatory exercises. We welcome first-timers and repeat attendees looking to sharpen their skills. These workshops are based on our widely acclaimed book Secrets of a Successful Organizer. These trainings will be held via Zoom. When: Mondays, September 8, 15 and 22 Time: 7:30 p.m. to 9:30 p.m. Eastern / 4:30 p.m. to 6:30 p.m. Pacific Cost: $15 for the whole series. Includes access to all three sessions. REGISTER HERE North Carolina Troublemakers School Join labor activists from around North Carolina—and the whole region—to strategize, share skills, and learn how to organize to win. Whether you're new to unions or are an experienced union activist, there's something there for you. We encourage local unions to send a group of members. Date: September 20 Time: 10 am - 5 pm Location: Jordan High School, 6806 Garrett Rd., Durham, NC Registration fee $35 - Regular registration $15 - Low-income registration  REGISTER HERE   Milwaukee Troublemakers School Bringing together union members, labor activists, and local officers, a Labor Notes Troublemakers School is a space for building solidarity, and sharing successes, strategy, and inspiration. It’s a real shot in the arm for newbies and seasoned activists alike. When: 9:30 a.m. - 4 p.m. on Saturday, October 4, 2025 Where: Steamfitters Local 601 3300 S 103rd Street Milwaukee, WI 53227 Registration fee $30 - Regular registration $15 - Low-income registration  REGISTER HERE Event We Recommend: UALE 2025 Women's Southern Summer School At the Southern Summer School, women workers come together to learn about labor and leadership development, experience labor history and culture, and share stories. Contact Amanda Pacheco with questions at amanda_pacheco@ibew.org. When: Thursday, July 31 to Sunday, Aug. 3 Where: Port Authority 200 Port Authority Way, Charleston, SC Registration Price: $230 REGISTER HERE KEEP IN TOUCH! Subscribe to receive our monthly magazine ($30 a year).  Order a bundle subscription of five copies a month ($50 a year) or more to give out to your stewards and co-workers. Keep the organizing going. Donate to Labor Notes. Help us keep on reporting and organizing. Make a one-time donation or become a monthly donor at labornotes.org/donate. Write for Labor Notes. When you discover a good tactic, share the news! Thousands of readers in other workplaces can put the information to use. Email editors@labornotes.org. Visit the Labor Notes Store for books, knit caps, hoodies, T-shirts and more! Check it out at labornotes.org/store.

Neoliberal Elites Win One Against Trump — And Now, Labor Is Under Siege

In a dramatic policy shift that took just hours, the Trump administration reversed its position on reciprocal tariffs, caving to pressure from corporate America. In an unexpected retreat, President Donald Trump, Commerce Secretary Howard Lutnick, and Trade Advisor Peter Navarro reversed course on their “non-negotiable” tariffs, opting for a 90-day pause after facing a chorus of condemnation from CEOs and Wall Street titans. Despite the administration’s spin on the decision as a “win,” the retreat highlighted the deep sway that neoliberal elites hold over U.S. economic policy, even when faced with populist rhetoric.

While the immediate concern was the stock market plunge—$6.5 trillion lost in just two days—the larger narrative was the growing influence of corporate America in shaping trade policy. Business leaders from Jamie Dimon of JP Morgan to Larry Fink of BlackRock spoke out against the tariffs, urging the President to change course. In an organized show of power, corporate CEOs, including those from tech giants like Tesla and Ford, sided with the broader economic establishment over the administration’s protectionist policies.

However, what is not often discussed in these corporate circles is the broader attack on workers' rights and labor organizing taking place across the country—particularly in higher education, where private universities are increasingly using the courts and political arguments to undermine labor organizing efforts.

In a striking example of this trend, the University of Southern California (USC) has launched a direct challenge to the National Labor Relations Board (NLRB), an independent federal agency that has long protected workers’ rights to organize and bargain collectively. The university is attempting to block a unionization effort by its non-tenure-track faculty members, echoing the anti-union rhetoric pushed by corporations like SpaceX, Amazon, and Trader Joe’s, which have previously argued that the NLRB is unconstitutional.

In December, over 2,500 non-tenure-track faculty members at USC filed a petition to form a union with the United Faculty-United Auto Workers (UFW-UAW). This move came after a majority of faculty members expressed support for unionization. But ten days after the petition was filed, USC took the unprecedented step of arguing that the NLRB itself is unconstitutional. This argument hinges on claims that the NLRB’s structure—specifically, its independence and the protection of its members from presidential dismissal—violates constitutional principles.

This tactic mirrors the legal arguments advanced by corporations like SpaceX, which in 2020 challenged the NLRB’s constitutionality in court, claiming that the board's authority to issue decisions in labor disputes violated the separation of powers. Amazon, too, has tried to undermine the NLRB’s authority, arguing that the board’s structure infringes upon its rights as an employer.

While corporate interests have long resisted unionization—fearing the erosion of their unchecked power—USC’s stance is particularly noteworthy because it highlights how elite institutions, even those within academia, are increasingly willing to side with corporate interests to suppress workers’ rights. The university’s argument that non-tenure-track faculty cannot unionize because they are “managers” or “supervisors” is a familiar refrain in the corporate world, where businesses often claim that certain employees lack the right to unionize due to their purported managerial roles. This is despite the fact that faculty members have little to no influence over university policy.

Jennifer Abruzzo, former general counsel for the NLRB, emphasized that the university could voluntarily recognize the faculty union without needing to rely on the NLRB’s authority. She argued that USC’s challenge is a direct attempt to subvert workers' rights to organize, asserting, “Whether the NLRB is unconstitutional or not does not preclude USC from recognizing and bargaining with their workers’ chosen representative.”

The significance of USC’s challenge extends beyond the university itself. If successful, this legal strategy could have wide-reaching implications for labor rights in the U.S. In a climate where conservative forces are already pushing to dismantle federal regulatory agencies, a ruling against the NLRB’s constitutionality could decimate the labor rights of nearly 170 million American workers.

For faculty members at USC, the stakes are personal and immediate. Sanjay Madhav, an associate professor and union activist at USC, pointed out that the push for unionization is especially critical as the university faces budget cuts and hiring freezes in response to financial uncertainty. Faculty members like Madhav are advocating for greater bargaining power, particularly around merit pay and benefits—issues that have become more pressing as the economic landscape becomes increasingly volatile.

Ironically, the pushback from USC against unionization underscores the very corporate mindset that has driven much of the resistance to Trump’s trade policies. Just as CEOs have leveraged their financial and political influence to halt tariffs that threatened their profits, private universities like USC are wielding legal arguments and political influence to protect their control over faculty and suppress the possibility of meaningful labor negotiations.

This broader context of corporate resistance to workers’ rights—both in trade policy and labor organizing—raises critical questions for higher education. It signals a growing trend where powerful interests are not only challenging the rights of workers but are also attempting to reframe the debate around collective bargaining and labor rights as unconstitutional or undesirable. This echoes a deeper, neoliberal agenda that seeks to hollow out democratic mechanisms of worker representation, whether in trade, the workplace, or the classroom.

As faculty at USC and other institutions wait to hear whether they will be allowed to proceed with their union election, the broader question remains: What happens when the very institutions that are meant to foster critical thinking and social mobility also align themselves with forces that seek to dismantle workers’ rights? And what does it mean for the future of labor and democracy when both corporate America and elite universities are so aggressively working to undermine the rights of those who power their institutions?

---

How Can Unions Defend Worker Power Under Trump 2.0? (Labor Notes)

 

WATCH: How Can Unions Defend Worker Power Under Trump 2.0? With an emboldened Trump in the White House for a second term, the ground has shifted dramatically for unions. The labor movement, like many institutions, is scrambling to devise strategies to build power—or even just survive—during these challenging times. This authoritarian consolidation of power is testing unions. What can unions do to survive in the second Trump presidency? What tactics and strategies can help unions organize larger numbers of new members and survive an all-out assault on labor and other rights? Here's how Jackson Potter, Vice President of the Chicago Teachers Union, put it at our Roundtable Series webinar this month with Haymarket Books and The American Prospect: "The labor movement is not even close to being extinguished. It just takes some spark, effort, initiative, and some vision and imagination to revive what seems to be dormant. We did that with CTU—in 2012, we engaged structures that had been moribund and petrified in bad practice, and revived them to a point where we were able to take on one of the most powerful politicians and beat him in Chicago. And that lent itself to a whole set of teachers taking action—even in red states, with the Red for Ed movement—and people were able to win big things that way." Read the articles so far in our Roundtable Series WATCH THE FULL WEBINAR HERE (Program starts at the 11:25 mark) Subscribe to the Labor Notes Magazine! In the December issue:  New York's Working Class Elects a Movement Mayor, by Luis Feliz Leon Zohran Kwame Mamdani, a Democratic Socialist and the Democratic nominee, will be New York City’s next mayor, after trouncing former Governor Andrew Cuomo in a primary and general election double whammy. Volunteers were galvanized by Mamdani’s relentless focus on the affordability crisis and principled stand against Israel’s unfolding genocide in Gaza. Canadian Postal Workers Strike Again, by Danielle Smith Canadian postal workers are back on strike—again—as they fight to save a vital public service. “By staying on the job and continuing to wait for demoralizing offers, we show that we accept this, we’re not going to fight. So we decided we’re going out,” said Nova Scotia letter carrier Basia Sokal.  Indiana Casino Dealers Are Bringing Back the Recognition Strike, by Alexandra Bradbury There are no clocks in a casino, so the dealers all set their phone alarms for noon. Everyone was a bundle of nerves. Before work, a couple of people threw up. But when the cacophony of alarms sounded, everyone lifted their hands in the air, slammed down the lids on their games of baccarat, blackjack, craps, and roulette, and announced they were on strike. “It was more powerful than anything I’ve ever felt in my life,” said dealer Tera Arnold. “I had goosebumps head to toe.” PLUS: Articles published so far in our Roundtable Series: How Can Unions Defend Worker Power Under Trump 2.0?, a Stewards' Corner on welcoming immigrant members into the union, and more!  Get the Labor Notes Magazine — $30 a year for 11 issues.  If you'd like a bunch of copies to share with co-workers and members of your community, order a bundle, which starts at $50 a year to receive 5 copies a month! Subscribe by Tuesday, December 9, to receive our January issue!  Get Your Copy of the Labor Notes Magazine! In solidarity, Labor Notes Staff