It...defeats the entire point of nonprofit status? Are you talking about legal status or mission? Special legal status is afforded to nonprofits because (ideally) they are pursuing something that is in the public's best interest, providing some kind of service that the government does not. Should the red cross pay taxes because they pushed private blood banks and first aid companies out of business? Taxes (ideally) are used to pursue the public good, so if an organization is using their labor and/or products to further the public good, they why should they be double taxed?
I'm not saying that's how it always works, but that's how it's designed to work. So if the system is being abused, then I think your issue might be with the system, not with Wikipedia in particular. They're just an example of the abuse of the system (which I don't think they are).
You are correct to question the premise. I don't care about Wikipedia, I am asking about some systemic decisions from decades ago that most people take for granted these days. The Red Cross doesn't need defending because the AMA backs it up due to tax deductions and medical licensing/lobbying overlap. Yet, in this political thread, Wikipedia moderators argue that their curation is the value and that it's not political and not the contribution, similar to Stack Overflow moderators hollowing out their site.
This brings me to the handling of actual experts, like medical doctors. How could the Wikimedia Foundation justify removing a licensed doctor like James Heilman ("Doc James") from its Board, a decision even Jimmy Wales supported? I get that they put him back shortly after, but that's so arbitrary. Someone putting their professional credibility on the line to provide accurate public information without explaining the original removal publicly? Yes, he was reinstated shortly after, but the initial act and the lack of a clear public explanation for the original removal feel arbitrary and undermine trust. Here was someone putting their professional credibility on the line for accuracy, and they were treated in such a dismissive way. The exact type of caustic politics causes this split between public health advice and the medical profession. Frankly, I'd rather see funding go directly to the experts if this is how they treat people.
Imagine if Wikipedia were frozen as a "2017 Doc James Edition" snapshot. Would that be so bad if that could slash operating costs by 99%? I could live with a slightly outdated encyclopedia for a few years if it meant escaping the constant, resource-draining burden of moderation and the endless debates about needing more free contributions, now we're overloaded and needing more funding/moderators. Then the donations could go to archive.org, which I hope Wikipedia donates to, since I mostly use Wikipedia for links to archive.org snapshots, since I like to see the source, not what people "curate" for me.
The constant fundraising solicitations are grating when contrasted with how they treated Doc James, or when users are lectured about their "privilege" for accessing supposedly free information. It seems Wikipedia doesn't inherently need my contribution or money; they had a highly dedicated expert, pushed him out (temporarily, but damagingly), and kept asking for donations. Claiming that donating today supports the same original mission feels increasingly misleading. Doc James must have the patience of a saint. It infuriates me when that kind of undervaluation happens, and they get to deduct taxes "for the public good," I get yelled at by the moonlighting Wikipedia/Discord mods for even questioning it. It's no surprise he's focused on teaching now.
Anyways, thanks for not attacking me for a seemingly dumb question. I don't have the answer to my question either.
I'm not saying that's how it always works, but that's how it's designed to work. So if the system is being abused, then I think your issue might be with the system, not with Wikipedia in particular. They're just an example of the abuse of the system (which I don't think they are).