Does Tax-Exempt Status Without More Create Title IX Obligations?

04.30.2024

With the recent release of the 2024 Final Title IX regulations that must be implemented by August 1st of this year, one of the first questions that must be asked is whether a school, college, or university must comply with the obligations set forth under Title IX.  For public educational entities, the answer more often than not is a resounding yes because they are recipients of federal funding.  For private schools, the determination turns on whether the school accepts federal funding.  When the federal government provides money directly to a school, the answer is easily ascertainable.  The more nuanced question is whether a school becomes obligated to adhere to Title IX merely because of its tax-exempt status.    

Does tax-exempt status alone require a private, nonprofit school, college, or university to adhere to and comply with Title IX obligations?  There are differences of opinion in our federal courts.

In July 2022, a federal district court in the Central District of California held that a religious-based school’s tax exemption constituted “federal financial assistance” within the meaning of Title IX As a result, a female public high school football player could bring a Title IX claim against a private religious school that barred her from playing in games on its premises against its football team.  E.H. v. Valley Christian Academy, 616 F. Supp. 3d 1040, 1050 (C.D. Cal. 2022).

On March 27, 2024, the Fourth Circuit Court of Appeals, the first federal appellate court in the nation to address this issue, reached a different conclusion and reversed a Maryland district court decision that echoed the rationale in the Valley Christian Academy case.  In Buettner-Hartsoe v. Baltimore Lutheran High School Association, 96 F.4th 707, 710 (4th Cir. 2024), the Fourth Circuit Court of Appeals held that organizations with tax-exempt status do not receive federal financial assistance for Title IX purposes.  Less than a month after this case was decided, the Department of Education (the “Department”) issued its 2024 Final Title IX Regulations on April 19, 2024.  The Department did not change its definition of “federal financial assistance” in the new regulation but the Department did address  the split in federal decisions concerning the definition.  Specifically, in its comments, the Department provided, “[g]enerally, tax benefits, tax exemptions, tax deductions, and most tax credits are not included in the statutory or regulatory definitions of Federal financial assistance.”  The Department further explained that “even if tax-exempt status is considered a form of Federal financial assistance by some courts, not all educational institutions that have tax-exempt status are subject to the Department’s Title IX regulations because the Department’s Title IX regulations only cover educational institutions that receive funds from the Department.” (Emphasis added.)

While the Department’s comments about its regulations are not binding law, its interpretation of its regulations is given deference.  Here, the Department’s analysis, particularly when read in conjunction with the Fourth Circuit decision referenced above, can lead one to reasonably conclude that we will see a growing trend where Title IX is found not to apply to private, nonprofit schools, colleges, or universities merely because of their tax-exempt status.

This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process.

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