Eleventh Circuit Rules 2-1 that DEI Precludes Tax Exemption

I have only once previously commented on Clarence and the Supremes’ recent logic that DEI is no better and just as bad as the deeply systemic discriminations visited on Black people since Plymouth Rock landed on us.  Discrimination is such an antiseptic word, though.  In American history and even today it means invasion, murder, rape, kidnap, torture and forced labor, followed later by lesser more implicit manifestations like miseducation, redlining, extra-judicial killing, over-policing, police brutality and vigilantism.  Oh, and wholesale prison warehousing.  Its all big business.  Yeah, and the Supremes think DEI is just like all of that.  They claim to want to eliminate discrimination root and branch, I guess. And that when effectuated by government or with government subsidy, DEI is unconstitutional just like all those other discriminations.  So DEI is now as unconstitutional as slavery and Jim Crowe ever were. 

In my first post, I noted that one of the emergent groups of sudden protectionists sued Fearless Fund, Inc. because that partially government funded 501(c)(3) explicitly limits its charitable grants to Black women entrepreneurs.  The lower court rejected plaintiff’s complaint and refused to grant injunctive relief against Fearless Fund’s grant program pending appeal.  An injunction pending appeal is available only if there is a substantial likelihood of success.   A three-judge 11th Circuit thought the likelihood very high and in doing so strongly signaled the fate of exempt organizations working for diversity, equity, and inclusion.  Oh, I know some say that DEI is not really dead, that colleges and universities can get there without ever mentioning race.  I don’t believe it and I don’t think those telling us to relax believe it either.  Here is what the panel said about it:

The district court reasoned that Section 1981 was likely unconstitutional under the First Amendment as applied to the defendants.  We disagree.  The defendants do not provide “expressive services” or otherwise engage in pure speech.  303 Creative LLC . Elenis, 143 S. Ct. 2298, 2318 (2023).  Although the First Amendment protects the defendant’s right to promote beliefs about race, it does not give the defendants the right to exclude persons from a contractual regime based on their race. . . In light of the plaintiff’s likelihood of success on the merits, the plaintiffs have established an irreparable injury and that the balance of equities and public interest favor an injunction. 

So there you have it. The Court didn’t actually address 501(c)(3), but the logic is not hard to follow. Exempt organizations that practice DEI violate the equal protection clause and therefore should not be tax exempt.  Dress it up all you want.  My co-author and occasional golfing buddy, David Brennen, is not nearly as pessimistic as I am.  Here is what he concludes in a recently posted, forthcoming essay on the matter:

CONCLUSION

The Court’s decision in SFFA v. Harvard/UNC sends a reasonably clear message as to the constitutionality of the use of race in college admissions. Prior to SFFA v. Harvard/UNC, the use of race was constitutionally allowed if race was one of many factors in the admissions decision and not a deciding factor. After SFFA v. Harvard/UNC, it appears that race cannot be a factor in admissions decisions of public colleges or private ones that receive federal financial assistance. Since the Court in Bob Jones relied principally on constitutional law doctrine in concluding that a private 501(c)(3) tax exempt entity that engages in invidious racial discrimination against African Americans in making admissions decisions is not entitled to tax exemption, the question arises as to what the implications are of the Court’s decision in SFFA v. Harvard/UNC for the public policy doctrine. Since the public policy doctrine is defined not only by constitutional norms, but also by executive and legislative enactments, this essay concludes that the SFFA v. Harvard/UNC decision is not a death nail to race-based affirmative action by private 501(c)(3) entities that are not state actors and not recipients of federal financial assistance. Further, given the goal of 501(c)(3) entities to contribute to a “vigorous, pluralistic society,” it makes sense that such entities are not necessarily constrained to the same extent that government is so constrained.

If I can get him to sit still long enough, maybe we can take this debate on the road some time.

darryll k. jones