In July 2022, two federal district courts on opposite sides of the country issued opinions that have the potential to have a major impact on non-profits and schools not accepting federal funding throughout the country.

Case Law Background

The first case was before the U.S. District Court for the District of Maryland (Buettner-Hartsoe v. Baltimore Lutheran High School Association d/b/a Concordia Preparatory School) and involved several former students who sued Concordia Preparatory School, a private school, under Title IX of the Education Amendments of 1972 (“Title IX”). The former students alleged that the school failed to adequately address complaints of sexual assault and sexual harassment. Concordia Preparatory School moved to dismiss the lawsuit on the basis that it was not subject to Title IX because it did not receive federal financial assistance. The Court held that the school was subject to Title IX because it is a 501(c)(3) organization, even though the school does not otherwise receive direct federal aid, nor any financial aid from the U.S. Department of Education, and denied the school’s motion to dismiss.

In California, a female student, who played wide receiver for a public high school during a football scrimmage against Valley Christian Academy, was told that she could not play in future football games because she is female. The female student sued the opposing school, Valley Christian, for violating state and federal laws, including Title IX. Valley Christian moved to dismiss the lawsuit on the basis that it is not subject to Title IX, and the U.S. District Court for the Central District of California denied the motion. The District Court in California opined that even though the school was private and religious, it received federal financial assistance in the form of PPP loans, which triggered Title IX compliance.

These cases illustrate that there may be significant changes coming for tax-exempt organizations and those that participate in federal loan programs – with respect to Title IX and beyond.

Why this is important

Title IX has long been understood to only apply to educational institutions that receive federal financial assistance, which has not traditionally included independent or private schools that are not supported by federal funds. With the Maryland court’s holding that a school’s status as a 501(c)(3) organization brings the school under Title IX’s purview, the court indicated that Title IX’s reach is not set in stone and can expand. Nonprofit organizations that were not subject to Title IX may face a situation where they have to engage in a complete overhaul of the organization’s policies to comply with the regulations.