Update: Nonprofit Status and Federal Financial Assistance

SAIS recently joined the National Association of Independent Schools, National Business Officers Association, the Association of Independent Schools of Greater Washington, the Virginia Association of Independent Schools, the North Carolina Association of Independent Schools, and the Palmetto Association of Independent Schools to coauthor an amicus brief in response to recent court rulings addressing federal financial assistance, nonprofit status, Title IX, and independent schools. Additional background information on this case can be found on the SAIS website.

Outcomes

The case of Buettner-Hartsoe v. Baltimore Lutheran School came before the District Court for the District of Maryland on September 1, 2022. Several representatives of the independent school associations that filed the brief attended the hearing. The court heard two motions: reconsideration, which asks the judge to revisit his opinion, and interlocutory appeal, which is an expedited form of appeal to the federal 4th Circuit Court of Appeals. The motion for reconsideration was denied. The motion for interlocutory appeal was granted. The judge upheld his interpretation of the law stating that 501(c)(3) status constitutes federal financial assistance for the purposes of Title IX. He also further clarified that, as a matter of policy, it is his opinion that Title IX should apply to all independent schools. The judge also noted that this is an important issue and warrants an expedited review by the 4th Circuit, and therefore granted the motion for an interlocutory appeal.

Next Steps

The school has received permission from the federal district court judge to petition the 4^th Circuit to review this particular question of law. Once the 4^th Circuit receives the petition, it will or will not grant permission for further filings and a hear. If the request is granted, the process could take a year or more to come to resolution in front of the 4^th Circuit. Until that time, this particular case is stayed, which means that, while it is on record, it is a less persuasive authority as a case that is stayed and under review.

What Does This Mean for Independent Schools?

• If the ruling is upheld, independent schools could be obligated to comply with certain federal statutes (such as Title IX) that were not previously applicable.
• Extending the reach of statutes like Title IX to tax-exempt independent schools just because of their nonprofit status without further traditional federal financial assistance would impose prescriptive compliance protocols that would financially and administratively overwhelm schools.
• Current compliance frameworks mandated by federal programs like Title IX were designed for colleges, universities, and large school districts, not for independent schools. 
• Many of these directives would be challenging for smaller independent schools. Seventeen percent of SAIS member schools have an enrollment of less than 200 students.

What We Know

• Independent schools value the freedom they have to create their own mission aligned policies.
• Independent schools have successfully protected their students and staff through different, but rigorous and effective, safeguards appropriate to their size and mission. 

We will continue to keep you updated on this evolving legal issue. Schools should work with their attorneys if they have particular questions about how specific laws may apply to their individual circumstances.

Additional Information

• 501(c)(3) Status May Trigger Title IX Obligations for Private Schools Shawe Rosenthal
• Courts Rule Private Schools’ Nonprofit Status Triggers Title IX Compliance NBOA
• DOE Publishes Final Title IX Guidelines. What Do You Need to Know? Venable
• Independent Schools – You may be subject to the requirements under Title IX, too! JDSupra