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.

Does Title IX Apply to Tax-Exempt Private Schools? Two Courts Say Yes

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.