In the 1945 case of Better Business Bureau of Washington, D.C., Inc. v. United States, the Supreme Court ruled that a non-profit organization could be subject to federal income tax if its activities were not exclusively charitable or educational in nature. The Better Business Bureau (BBB) had claimed exemption from taxation under Section 101(6) of the Internal Revenue Code on grounds that it was an educational and charitable entity. However, upon review, it was found that BBB's primary activity involved promoting ethical business practices among its members - a service which directly benefited these businesses rather than serving public interest alone. Therefore, while some aspects of their work could be considered educational or beneficial to society at large, this did not exempt them entirely from taxation as they also served private interests.

In the dissenting opinion for Better Business Bureau of Washington, D.C., Inc. v. United States (1945), Justice Frank Murphy argued that the majority's decision to deny tax-exempt status to the Better Business Bureau was a misinterpretation of federal law and could have far-reaching implications for other nonprofit organizations. He contended that while some activities of the organization may be seen as benefiting private interests, its primary purpose remained public service - promoting honesty and fairness in business practices which is beneficial to both businesses and consumers alike. Therefore, it should qualify for tax exemption under Section 101(6) of the Federal Revenue Act which allows exemptions for corporations organized and operated exclusively for charitable purposes or those fostering national or international amateur sports competition. The majority’s interpretation would exclude many worthy organizations from obtaining tax exempt status simply because they indirectly benefit private interests.