Fourth Circuit Holds that 501(c)(3) Status is Not “Federal Financial Assistance” for the Purposes of Title IX

Back in January, I blogged about a lawsuit against Hillsdale College seeking to hold the college accountable under Title IX (the federal law that prohibits sex discrimination in higher education) for sexual violence against its students. Hillsdale argued that Title IX didn’t apply to it because it doesn’t receive any “federal financial assistance.” The plaintiffs argued that it does apply because the school is tax-exempt and receives tax-deductible contributions under sections 501(c)(3) and 170(c) of the Tax Code. In that post, I referenced a case decided in the District of Maryland that held that tax exemption does constitute “federal financial assistance” for the purposes of Title IX, supporting the plaintiffs;’ argument in the Hillsdale case.

Well, the Fourth Circuit Court of Appeals just decided the issue on interlocutory appeal from the District of Maryland case and reversed the District Court. It held that tax exemption is not “federal financial assistance” for the purposes of Title IX, and so schools are not subject to Title IX just because they are tax exempt and receive tax-deductible contributions. In doing so, the court acknowledged that tax exemption is a subsidy to its recipients, but that just because it is a kind of subsidy does not mean that it is “in all respects identical” to a cash subsidy. In the case of Title IX, it then determined that Congress did not intend to subject schools to the law based only on their tax status, and the government has been acting under that understanding for a long time.

–Benjamin Leff