Fourth Circuit: Tax Exempt Status Is Not Federal Financial Assistance

In a pair of cases decided within weeks of each other in 2022, federal judges ruled that private schools' tax- exempt status under section 501 (c) (3) of the tax code constituted "federal financial assistance" and thus subjected the schools to federal regulation under Title IX. For a while, it began to look as if the independence of schools that do not take federal money--among them Michigan's Hillsdale College, as well as thousands of private and religious K-12 institutions--was at risk. Now, in welcome news, a unanimous panel of the Fourth Circuit has reversed one of the rulings. Donna Buettner- Hartsoe and her daughter sued the Baltimore Lutheran High School Association after the daughter was allegedly subjected to bullying and sexual harassment at Concordia Prep, a Lutheran high school in Towson. They sought to invoke the federal Title IX law on the grounds that the school was organized under the familiar tax exemption provisions of 501(c)(3) of the tax code, which apply to much of the nonprofit sector (including the Cato Institute).