Orville Pitts was an African-American who applied for membership in a Milwaukee nonprofit organization in 1969. He was denied membership because the organization's national by-laws specifically excluded non-Caucasians. Pitts sued the Wisconsin Department of Revenue, claiming that it was unconstitutional for the department to grant tax exemptions to organizations that were not open to citizens of all races. On October 19, 1971, the U.S. District Court for the Eastern District of Wisconsin ruled in favor of Pitts, concluding that Wisconsin's tax exemption statutes [§§ 70.11(4) and 71.01(3)(a), Wis. Stats.]
confer special advantages in the form of preferential tax treatment on the organizations they describe. Insofar as they afford benefits to organizations which discriminate in their membership on the basis of race, they are violative of the equal protection clause of the Fourteenth Amendment. Pitts vs. Wisconsin Department of Revenue, 333 F. Supp. 662, 670 (E.D. Wis. 1971)
The court ordered the Department of Revenue to “[question] organizations claiming an exemption about whether their constitutions, by-laws or actual practices require discrimination in membership on the basis of race and [deny] exemptions to organizations which answer those questions affirmatively.” Pitts, 333 F. Supp. at 670.
To comply with this order the Department of Revenue created the “Pitts Project.” The Pitts Project staff mailed a one page questionnaire to all tax-exempt non-profit organizations in the state. The questionnaire contained six yes/no questions regarding membership practices (e.g. “Is a prospective candidate for admission to your organization requested to indicate his or her race?”). The project staff also requested copies of the following documents from each organization: 1) national constitution; 2) local constitution; 3) by-laws; 4) application for membership form; 5) articles of incorporation. Project staff examined these materials for evidence of membership practices that discriminated on the basis of race.
In most cases they found no such evidence. Organizations that were suspected of racial discrimination, however, were investigated further. If discrimination was confirmed the Department of Revenue revoked the tax exempt status of the offending organization. The organization then had the opportunity to take remedial action to have its tax exempt status reinstated. In some cases organizations challenged the revocations in civil court. By the 1990s most cases were closed and the project was only sporadically active.
