A major challenge faced by democracies worldwide is to decide if they should penalize the members of social media groups, which subtly promote racial discrimination.

A. to decide if they should penalize the members of social media groups, which
B. deciding whether to penalize the members of social media groups that
C. deciding whether to penalize social media groups, which
D. to decide whether they should penalize the members of social media groups, which
E. deciding whether they should penalize social media groups to have members thatA major challenge faced by democracies worldwide is 
to decide if they should penalize the members of social media groups, which subtly promote racial discrimination.

A. to decide if they should penalize the members of social media groups, which "if" is a conditional, "whether" should be used when presented with a choice. Also, "to decide" conveys intent to decide, which is not the meaning intended by the sentence. Eliminate.

B. deciding whether to penalize the members of social media groups that Correct answer.

C. deciding whether to penalize social media groups, which Comma followed by "which" modifies the entire preceding noun ie; social media groups. This states that (all?) social media groups "subtly promote racial discrimination", which is not the intended meaning. Usage of "that" is better since "that" works as restricting the original set (members of social media groups) into a subset (members who promote racial discrimination). Also, the original sentence talks about punishing "members", not the groups themselves. Eliminate.

D. to decide whether they should penalize the members of social media groups, which Same errors of using "to decide" as in (A) and "which" as in (C). Eliminate.

E. deciding whether they should penalize social media groups to have members that The original sentence talks about punishing members of social media groups and not the groups themselves. Eliminate.