Tax exemptions are the equivalent of government subsidies under the commonly accepted “tax-expenditure theory,” relied upon by the U.S. Supreme Court. Legally, under the theory, tax exemption is considered as much a benefit as an outright grant or the tax-deductibility of contributions to nonprofit organizations.
Under this reasoning, the government can attach certain conditions to its subsidies — to a grant, to tax exemption, to eligibility for tax deductions. It does this all the time, of course. If nonprofit organizations do not want to voluntarily consent to a condition, they don't have to do so; they can decide to simply forego the benefit.
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