He may be focused on Harvard’s status as a tax-exempt entity under the federal Internal Revenue Code. Harvard is among the vast majority of public and private universities and colleges that are tax-exempt.

It is huge. It means the charitable contributions it receives and its investment income on its $50 billion-plus endowment are not subject to federal income tax. It also means other income it receives is exempt.

Section 501(c)(3) is not exclusive to educational institutions. Organizations that are organized and operated exclusively for the following purposes may qualify for tax exemption: educational, religious, charitable, scientific or literary.

Broadly speaking, such organizations must operate exclusively for educational or other exempt purposes.

The IRS says on its website that charitable causes include “relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erection or maintenance of public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.”

The IRS is wary of any substantial private benefit flowing to any member of an organization, excessive expenditures on lobbying, and political campaign activity. Exempt organizations and their representatives acting in an official capacity may not campaign for or against candidates for elected office.

The IRS grants 501(c)(3) status and monitors compliance with regulations.

Under the law, the IRS initiates investigations based on established criteria and procedures, not based on presidential directives. The IRS is expected to operate independently and without political pressure.

The IRS defines a political organization as a party, committee, association, fund or other organization organized and operated primarily for the purpose of directly or indirectly accepting contributions or making expenditures, or both, for an exempt function.

Some income is taxable and some isn’t. Not taxable are contributions of money or other property; membership dues and fees from a member of the political organization; and proceeds from political fundraising or entertainment events or from the sale of political campaign materials.

Investment income, or income from a trade or business, such as renting excess office space to an unrelated organization.

Harvard University is generally exempt from property taxes due to its status as a non-profit educational institution under state, rather than federal, law. Like other colleges and universities in Massachusetts, Harvard makes voluntary “payment in lieu of taxes” to Cambridge and Boston.

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