A recent bombshell hit non-profit private schools, in the form of a federal court opinion holding that non-profit status subjects schools to Title IX prohibitions against sex discrimination. The federal district court for Maryland held that "§ 501(c)(3) status [is] a form of Congressional subsidy and the equivalent of a cash grant." Because Title IX applies to all educational institutions that receive federal funds, the court reasoned, the rules apply to all IRS-recognized non-profit schools.
The opinion only applies to schools in Maryland, and there is little doubt that the school will appeal. There also is little doubt, however, that the case is the forerunner of suits against private schools alleging violation of Title IX. Non-profit schools need to consult their attorneys about what steps to take in light of this ruling. Schools also need to pay attention to claims of sexual harassment and discrimination, and deal with them appropriately. Nonprofits may or may not be able to count on exemption from federal regulations in the near future.