By Leila Gary, Jackie Gharapour Wernz, & Leah Northener
It’s well established that Title IX applies only to entities that receive federal financial assistance, which traditionally has been interpreted to apply to a school’s actual receipt of federal money, such as special education funds. Two recent decisions from federal courts in Maryland and California have turned this traditional understanding on its head, holding that a school’s tax-exempt status under the federal tax code is the functional equivalent of receiving funds. What do these decisions mean for tax-exempt private and independent schools?
The Maryland case, Buettner-Hartsoe v. Baltimore Lutheran High School Association, involved a private, independent, religiously-affiliated school that was sued for damages under Title IX. The school argued that it was not subject to Title IX because the events at issue occurred before it accepted a federal PPP loan and had not otherwise accepted federal funds. The former students argued that the school was subject to Title IX because it received a federal tax exemption as a 501(c)(3) non-profit organization. The judge agreed, finding that an organization’s tax exemption under 501(c)(3) of the Internal Revenue Code is akin to a “Congressional subsidy and the equivalent of a cash grant” from the federal government.