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 Association, d/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 worry 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. 

Update! When the Department of Education (“ED”) published new regulations for Title IX last week, ED specifically addressed concerns raised by commenters on the new rules, seeking clarification or revision of ED’s regulatory definition of “Federal financial assistance.” Commenters were concerned that recent court decisions holding that 501(c)(3) tax-exempt status of independent/private and religious schools triggered Title IX compliance and that these rulings were inconsistent with current and prior ED regulations and interpretations. ED “determined that it is not necessary to amend the definition of ‘Federal financial assistance’” because “[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.” Unofficial Final Title IX Rule, p. 187-188. As initial matter, ED noted that “most courts that have considered the issue have concluded that typical tax benefits are not Federal financial assistance because they are not contractual in nature.” In other words, private/independent school compliance with ED’s Title IX regulations is triggered only when the institution receives federal financial assistance, as defined in the regulations, from the Department of Education.  

It is important to keep in mind however, whether your private/independent educational institution receives funding from other federal agencies which may raise compliance obligations not addressed in ED’s regulations. Private/independent schools that receive any kind of federal financial assistance should consult with their school attorney to identify and review federal regulatory compliance obligations. 

For questions and further guidance, reach out to the Thompson & Horton Title IX team or any member of the Independent/Private School Practice Group.