Fourth Circuit Finds 501(c)(3) Status Does Not Subject Private Schools to Title IX

Title IX, like Title VI and Section 504, is applicable to schools that accept federal financial assistance. Public schools receive federal funds and are thus subject to these laws. But private, tax-exempt schools have long operated with the understanding that they are not subject to these laws. In 2022, however, a district court in Maryland and one in California rocked the private school community by determining that a private school’s tax-exempt status constituted the receipt of federal financial assistance requiring compliance with Title IX. The Fourth Circuit has now reversed the Maryland decision, Buettner-Hartsoe v. Baltimore Lutheran High School Associationd/b/a Concordia Preparatory School, finding that a tax exemption is not the same as the monetary grant contemplated by Title IX.

The Fourth Circuit explained that the plain text of Title IX contemplates the transfer of funds from the federal government to an entity. While federal funds might come to the school indirectly (such as through federal financial aid to students), it is not sufficient for the school to merely benefit from federal assistance. Tax exemption provides a benefit by alleviating a tax burden, but the school does not receive any funds. The Court also rejected the argument that the favorable tax treatment of charitable contributions to nonprofit entities should be construed as receipt of federal financial assistance, finding the connection too attenuated.

What does this ruling mean for private schools? Well, at least for private schools within the Fourth Circuit, a private school’s tax-exempt status does not bring with it an obligation to comply with Title IX. For private schools in other parts of the country, the decision is not binding, but does reinforce the longstanding view that tax-exempt status is not the functional equivalent of receiving federal funds. Accordingly, private schools that do not accept federal funding likely do not need to stress about complying with Title IX and its complex, ever-changing regulations. At the same time, establishing robust anti-discrimination policies and grievance processes can help protect students, resolve disputes, and guard against liability in the event of further challenges seeking to expand the applicability of Title IX to private schools.

For questions and further guidance, reach out to the Thompson & Horton Title IX team.