By: Claire Zingraf Vaillancourt*

Introduction

Five female high school students made allegations of sexual and verbal sexual assault by male classmates which they claimed were not adequately addressed by the school, nor was any meaningful action taken in response to their complaints.[1] The school’s inadequate response to the complaints resulted in a “hyper-sexualized culture at the school.”[2] Elsewhere, a high school female was banned from participation in a football game for the sole reason she was female.[3] These are just a couple examples of discriminatory behavior based on sex occurring in schools today.

Title IX of the Education Amendments of 1972 states “[n]o person in the United States shall, on the basis of sex, be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any education program or activity receiving Federal financial assistance . . . .”[4] Title IX applies to schools and other educational institutions which receive federal financial assistance.[5] Recipients of federal financial assistance that must comply with Title IX include “approximately 17,600 local school districts, over 5,000 postsecondary institutions, and charter schools, for-profit schools, libraries, and museums. Also included are vocational rehabilitation agencies and education agencies of 50 states, the District of Columbia, and territories of the United States.”[6]

Recipients of federal financial assistance have not included independent schools who generally are not provided resources from state or federal governments to operate.[7] Independent schools are nonprofit and private schools, and are distinct in how they are managed and financed as they are governed by a board of trustees and are financially supported through tuition and charitable contributions.[8] Independent schools with § 501(c)(3) tax-exempt status are not considered recipients of federal financial assistance because their exempt status alone has not been considered federal financial assistance.[9] As such, this has allowed for independent schools to continue to engage in discriminatory behavior unbounded by the restraints of Title IX. That is, until July of 2022 when two district courts across the county from one another both concluded tax-exempt status in and of itself should be considered federal financial assistance requiring independent schools to comply with Title IX.[10]

While one of these cases settled prior to appeal and was dismissed and the other was reversed on appeal, this Note principally argues that the district court decisions should have been upheld on appeal, Buettner-Harsoe v. Balt Lutheran High Sch. Ass’n on appeal and E.H. v. Valley Christian Acad.  if it had been appealed. Part I provides an overview of Title IX, § 501(c)(3) tax-exempt status for independent schools, prior similar precedent, tax expenditure theory, and other relevant terms. Part II explores how both district court cases came to their holdings, relying on Supreme Court and circuit court cases as well as the plain meaning behind the Title IX statute. Finally, Part III argues why these cases should have been upheld on appeal based on equating tax-exempt status to a governmental grant, tax-expenditure theory, Title IX being modeled on Title IV, the public policy doctrine, and multiple courts making the same decision at the same time. Part III additionally provides counter arguments to an Amici Curiae brief[11] filed prior to the reversal of Buettner-Hartsoe, as it included arguments against Title IX applying to independent schools.[12]

I. Relevant Terms

Title IX and Federal Financial Assistance

Title IX’s purpose is to “protect people from sex-based discrimination in education programs or activities which receive federal financial assistance” and provide an avenue for individuals who are discriminated against to recover.[13] The Code of Federal Regulations section which outlines Tile IX defines federal financial assistance as “[a] grant or loan of Federal financial assistance,” “[a] grant of Federal real or personal property,” “[p]rovision of the services of Federal personnel,” or “[a]ny other contract, agreement, or arrangement which has as one of its purposes the provision of assistance to any education program or activity . . . .”[14] With this definition, federal financial assistance has been understood to constitute “funds received directly or indirectly from the federal government.”[15] Additionally, independent institutions which receive fees from individuals who are direct recipients of federal financial assistance, such as a student receiving a federal grant, are also subject to compliance as indirect recipients.[16] This was the holding in Grove City College v. Bell, a United States Supreme Court case interpreting what “receiving Federal Financial aid” meant in terms of Title IX.[17]

Grove City College enrolled students who received federal grants for educational purposes but did not accept direct assistance itself.[18] To reach its holding, the Supreme Court looks to the “statutory language of Title IX, Congress’s intent, and the Department’s administrative interpretation.”[19] When looking at the statutory language of Title IX, the Court “refused to read limitations on Title IX’s applicability that were not apparent on the face of the statute.”[20] The Court next looks to Congress’s intent and the Department’s administrative interpretation, finding that Congress would not have intended Title IX federal financial assistance to be treated differently than Title IV, and that student funds would result in Title IV coverage.[21] Finally, Congress has not overturned the Department’s determination that schools receive federal financial aid when it is given to a student to attend.[22]

Despite the provided definition in the CFR and the holding in Grove City College, there is still debate on whether the term federal financial assistance additionally includes tax benefits such as tax-exempt status under § 501(c)(3). Prior to Buettner-Hartsoe and E.H., this question had not been addressed by the courts in the context of Title IX. It has, however, been addressed in terms of other antidiscrimination statutes. The federal district courts which have addressed this issue came to opposite conclusions. In McGlotten v. Connally, a black man was denied membership in a nonprofit organization, and one issue discussed in the case is whether federal financial assistance includes tax-exemption in the Title VI dispute.[23] The court concludes that without contrary legislative history, the plain purpose of Title VI, to eliminate racial discrimination from programs and activities receiving federal financial aid, will be controlling.[24] The court stated, “[d]istinctions as to the method of distribution of federal funds or their equivalent seem beside the point,” and thus, the “assistance provided through the tax system is within the scope of Title VI of the 1964 Civil Rights Act . . . .”[25]

            The opposite conclusion was reached in Bachman v. American Society of Clinical Pathologists.[26] In Bachman, a plaintiff brought a § 504 Rehabilitation Act claim alleging discrimination based on disability.[27] The district court grants the organizations motion to dismiss, finding “that the tax exempt status of ASCP is not ‘federal financial assistance’ rendering the organization as a whole subject to the requirement of section 504.”[28] In reaching its decision, the court looks at the plain meaning of the statute, the administrative definition of federal financial assistance, and other statutes similar to § 504.[29]

It has been argued that the narrow definition of federal financial assistance in Bachman goes against the urges of the Court in Grove City College to not utilize such a narrow view.[30] Additionally, the “broader interpretations of [federal financial assistance] in Grove City College and McGlotten are the preferred method of interpretation in terms of maximizing protections to those persons whose federal rights are violated.”[31]

            Whether or not federal financial assistance includes tax-exempt status is an important question and dictates whether schools who receive no funding from state or federal government must comply with Title IX. Many of these schools may have policies that define how they will treat sexual harassment and sexual assault allegations, yet they may fail to come within the requirements of Title IX.[32] As such, if tax-exemption is itself federal financial assistance, independent schools may need to implement changes in their policies and practices to ensure they are in compliance with Title IX, or face repercussions.

Independent Schools and § 501(c)(3) Status

Independent schools become tax-exempt by applying for § 501(c)(3) status with the Internal Revenue Service.[33] Section 501(c)(3) organizations are “[c]orporations, and any community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes . . . .”[34] For an independent school to obtain tax-exempt status as a § 501(c)(3) organization, it must pass both an organizational test and an operational test to determine that it will fulfill its exempt purpose.[35] To pass the organizational test, the school must show in its articles of incorporation it is organized for an exempt purpose and will not take part in any activities unrelated to that purpose.[36] To pass the operational test, the school must show it primarily acts within its exempt purpose, its net earnings do not inure to the benefit of private individuals, and the organization does not substantially engage in political or lobbying ventures.[37] Entities that obtain § 501(c)(3) tax-exempt status are exempt from paying federal income tax and are able to receive contributions from the public which are tax-deductible for donors.[38]

In addition to the organizational and operational test, in Bob Jones University v. United States, the Supreme Court added another requirement for an organization to obtain and hold tax-exempt status: the organization may not violate “established public policy.”[39]

Bob Jones University v. United States

In January 1970, a District Court for the District of Columbia issued a preliminary injunction on the IRS to stop a Mississippi private school from holding tax-exempt status after they discriminated based on race in their admissions.[40] Then in July 1970, the IRS declared via a news release that it “could ‘no longer legally justify allowing tax-exempt status [under § 501(c)(3)] to private schools which practice racial discrimination,’” nor could it “treat gifts to such schools as charitable deductions for income tax purposes [under § 170].”[41] This information was additionally provided to private schools by a letter dated November 30, 1970.[42] On January 1, 1971, this new policy was formalized into a Revenue Ruling, stating:

[R]acial discrimination in education is contrary to Federal public policy. Therefore, a school not having a racially nondiscriminatory policy as to students is not ‘charitable’ within the common law concepts reflected in sections 170 and 501(c)(3) of the Code and in other relevant Federal statutes and according does not qualify as an organization exempt from Federal income tax.[43]

In Bob Jones University v. United States, two religious educational institutions discriminated against students on the basis of race.[44] As such, the IRS revoked the university’s tax-exempt status in 1976, with the effective date of December 1, 1970, the day after the university had been notified of the IRS policy change in a letter.[45] The Court in Bob Jones sides with the IRS and states that discriminatory practices based on race violate a fundamental government interest in eradicating this type of discrimination.[46] Thus, the Court holds that nonprofit private schools which have race based discriminatory practices do not qualify as tax-exempt organizations.[47] Broadly, the holding was that “violation of fundamental public policy disqualifies an entity for tax-exempt status.”[48] As a result, the Department of the Treasury can either deny tax-exempt status or revoke status when it finds an organization is acting against “established public policy.”[49] To reach this holding, the Court in Bob Jones utilizes various sources, including looking to the Constitution, “the intent of Congress (as codified in Titles IV and VI of the Civil Rights Act of 1964 and subsequent legislation), and the judgment of the executive branch (as expressed by numerous executive orders . . . .)”[50]

Despite the broad holding of Bob Jones, the IRS has limited the holding to the specific facts in the case and racial discrimination in education.[51] This is mainly due to the Court not providing a clear understanding of what constitutes “established public policy.”[52] Thus, the doctrine has been “left open to the IRS’s unfettered discretion, potentially allowing discrimination to flourish in other areas . . .” such as with sex-based discrimination.[53]

Tax Expenditure Theory

Tax expenditures are defined as “revenue losses attributable to provisions of the Federal tax laws which allow a special exclusion, exemption, or deduction from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability.”[54] Tax expenditures are thus benefits that are provided to certain taxpayers.[55] Tax expenditures are defined by looking to the normal income tax structure.[56] The Joint Committee on Taxation does not include all charities’ tax-exempt status as a tax expenditure, stating “the nonbusiness actives of such organizations generally must predominate and their unrelated business income is subject to tax.”[57]  However, tax-exempt status is a benefit that charities and independent schools receive from the government. Independent school’s exempt status enables them to be exempt from paying federal taxes.[58] Donors who claim charitable contribution deductions on their taxes are considered to be tax expenditures by the Joint Committee.[59] According to 26 USC § 170(b)(1)(A)(ii), individuals can deduct any charitable contributions to “an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on . . . .”[60]

These tax benefit can be analyzed under tax expenditure theory, which essentially states that tax benefits should be treated as though the “government had provided the recipient of the tax benefit with an equivalent grant of money.”[61] When the tax paying institution is exempt from paying the federal income tax, tax expenditure theory would treat the amount not taxed by the government as a grant of money to the tax payer from the government.[62] Additionally, when individuals donate money to tax-exempt organizations, they are also able to obtain a tax-deduction for this contribution. Tax expenditure theory “would require the law to treat the dollar value of the deduction as equivalent to a grant of money by the government to the taxpayer-doner.”[63]

For an example of how tax expenditure theory views tax-exempt benefits, say an individual makes a $100 contribution to an independent school. [64] Typically, this income would be taxed and thus that $100 contribution would be lowered. The government would receive the money taxed, for example $20, and the independent school would retain the remaining amount, $80. By being tax-exempt, however, independent schools retain the $20 they would have been taxed, and thus they keep the full $100 that was contributed. Tax-expenditure theory essentially claims that the $20 not taxed is in essence a transfer from the government in the form of a subsidy. At the same time, the contributor would also be able to take a tax deduction for the full $100 contributed to the independent school. Instead of taking the taxable money, the government is choosing to allow independent schools to keep the full contribution. Additionally, they are allowing individuals who contribute to independent schools to also benefit by deducting the amount they contributed from their individual taxes.

PPP Loans: Paycheck Protection Program Loans

            In light of the Covid-19 pandemic, some independent and private schools accepted Paycheck Protection Program (PPP) loans, which provided small businesses with resources to continue to pay salaries, including benefits, as well as the ability to pay mortgage interest, rent, and utilities.[65] In June 2022, a North Carolina federal court held in Karanik et al. v. Cape Fear Academy, Inc. that a PPP loan was considered federal financial assistance.[66] “As a result, the court held that the school was subject to the obligations set forth in Title IX for the life of the loan.”[67] The Small Business Administration also confirmed that recipients of PPP loans should be considered recipients of federal financial assistance.[68] As such, “courts may find that private and independent schools that receive PPP loans will be required to comply with Title IX and other federal civil rights laws for the life of the loan.”[69] However, this language suggests that once the loans are forgiven, compliance is no longer required with statutes such as Title IX.[70]

Title IX Exceptions

            There are exceptions to Title IX compliance, two of which are relevant for the purposes of this Note. First, there is a “Religious Organization Exception,” which reads: “this section shall not apply to an educational institution which is controlled by a religious organization if the application of this subsection would not be consistent with the religious tenants of such organization.”[71] The exemption can be obtained by submitting a written statement to the Assistant Secretary for Civil Rights.[72] In the statement, the institution must identify the provisions of Title IX that go against the institution’s religious tenets.[73] The exemption can also be invoked after a Title IX complaint is brought.[74]

            Second, is the “Contract Sports Exemption.” [75] Generally Title IX prohibits exclusion from participation in athletics, unless it is a contact sport.[76] Contact sports include “boxing, wrestling, rugby, ice hockey, football, basketball and other sports the purpose or major activity of which involves bodily contact.”[77] Under the Code of Federal Regulations, schools may operate separate teams for each sex when the activity includes a contact sport.[78] If a school operates a team sport for one sex and not the other, individuals from the excluded side must be allowed to tryout unless the sport is a contact sport.[79] This is not a requirement, just an option for schools if they would like to invoke the exception.

II. In-depth Look at the Two District Court Cases

Buettner-Hartsoe v. Balt. Lutheran High Sch. Ass’n

In Buettner-Hartsoe v. Balt. Lutheran High Sch. Ass’n, five consolidated cases brought by female students allege “sexual assault and verbal sexual harassment by male students at the school dating back to 2016.”[80] These allegations further claim the school failed to adequately take action to address their complaints, “thereby cultivating a hyper-sexualized culture at the school.”[81] Both federal and state claims are brought against the school, including a claim under Title IX.[82] Defendant Baltimore Lutheran High School Association (now called Concordia Preparatory School or CPS) and Defendant Lutheran Church-Missouri Synod, Southeastern District filed partial Motions to Dismiss, or in the Alternative, for Summary Judgement related to the Title IX claim, stating they were not subject to Title IX as they were not the direct recipients of federal financial assistance during the time periods in which Plaintiffs’ claims the noncompliance with Title IX occurred.[83] The court notes that defendant school “is a religiously affiliated private school that is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code.”[84] The court, however, states their argument to dismiss or for summary judgement is without merit, “as the tax-exempt status of the Defendant under 26 U.S.C. §501(c)(3) constitutes federal financial assistance for the purposes of Title IX.”[85] As such, the motions to dismiss or alternatively for summary judgement are denied.[86] In holding that tax-exempt status constitutes federal financial assistance under Title IX, the court states “[t]he tax-exempt status of a private school subjects it to the same requirements of Title IX imposed on any educational institution. CPS cannot avail itself of federal tax exemption but not adhere to the mandates of Title IX.”[87]

Noting that the question of whether tax-exempt status under § 501(c)(3) constitutes federal financial assistance under Title IX has not been previously addressed by the Supreme Court nor the Court of Appeals for the Fourth Circuit,[88] the district court relies on analogous Supreme Court decisions and the principal objective of Title IX to reach its holding.[89] The court begins its analysis by looking at two Supreme Court decisions which explore when an entity should be considered a recipient of federal financial assistance, Grove City Coll. v. Bell, 465 U.S. 555 (1984) and Nat’l Collegiate Athletic Ass’n v. Smith, 525 U.S. 459 (1999).[90] The district court finds these decisions stand for the proposition that an “institution still qualifies as a recipient of federal assistance under Title IX even if it did not apply for the aid or the aid is indirectly provided.”[91]

The court then looks to a Supreme Court decision which examines the purpose and scope of tax-exemption, Regan v. Taxation with Representation, 461 U.S. 540 (1983).[92] From Regan, the court quotes: “[b]oth tax exemptions and tax-deductibility are a form of subsidy that is administered through the tax system” and concludes based on that, the Supreme Court recognizes § 501(c)(3) status as a form of subsidy.[93]

Next, the district court looks to Supreme Court and other district court cases that rule on race-based discrimination, noting Title IX was modeled after Title VI and thus the same principles which apply to race-based discrimination should be applicable to sex-based discrimination.[94] Quoting Bob Jones Univ. v. United States, 461 U.S. 574, 592 (1983), the court emphasizes tax-exempt schools “must demonstrably serve and be in harmony with the public interest.”[95] The court also notes in Green v. Connally, 330 F. Supp, 1150 (D.D.C. 1971), “the District Court for the District of Columbia held that schools that discriminate on the basis of race are not entitled to federal tax exemptions.”[96]

Finally, the court notes to the principal objectives of Title IX and states its purpose is to avoid providing federal resources to support discriminatory practices and to provide protections against discriminatory practices that may occur.[97] Taken all together, the court concludes that section “501(c)(3) tax exemption constitutes federal assistance for the purposes of Title IX.”[98]

The Fourth Circuit Court of Appeals reversed and remanded this decision on March 27, 2024, holding “tax exempt status pursuant to 26 U.S.C. § 501(c)(3) does not equate to ‘receiving Federal financial assistance’ for purposes of Title IX.”[99] Noting the phrase “receiving federal financial assistance” is undefined by Title IX, the court examined Title’ IX’s language, the ordinary meaning of the words, and Supreme Court precedent, determining “the phrase ‘receiving Federal financial assistance’ means taking or accepting federal financial aid, help, or support, even when that assistance is through an intermediary.”[100]

After next explaining tax exemption, the court turns to whether it equates to federal financial assistance.[101] Highlighting “since Title IX’s inception over fifty years ago, it has never been applied to organizations based solely on their tax exempt status,” the court notes that while “tax exemption is a tax benefit, that does not mean it is ‘Federal financial assistance’ for Title IX purposes.”[102] As exemption “is the withholding of a tax burden, rather than the affirmative grant of funds” it is not federal financial assistance.[103] The court also distinguishes tax exemption from indirect grants such as those in Grove City, stating because “no funds actually change hand . . . tax exemption is an indirect benefit” – not federal aid.[104]

Finally, the court responds to the argument that “because donors can receive a § 170 deduction when they donate to tax exempt organizations . . ., those organizations receive more money through donations than they otherwise would have if the donor received no deduction” and this increase functions as an indirect grant.[105] The court states this is not donors receiving federal funds, just the allowance of donating the full amount.[106] Thus, tax exempt status is not the receipt of federal financial assistance requiring compliance with Title IX, and the district court decision was reversed.[107]

E.H. v. Valley Christian Acad.

Plaintiff E.H. was a student at Cuyama Valley High School (“Cuyama Valley”) who tried out for and earned the position of wide receiver on the school’s football team during the 2020-2021 school year.[108] E.H. traveled with her team to play in a scrimmage under the California Interscholastic Federation (“CIF”), the organization who oversees high school sports in California and is operated under California’s Department of Education.[109] E.H. played the entire game without any issues or complaints, but after the game she removed her helmet and the other team realized she was a female.[110] A couple days later, E.H. was told that the rival school notified her superintendent that E.H. “was not welcome on Defendants Valley Christian’s and First Baptist’s shared premises to compete in a football game there again solely due to the fact that she was female.”[111] E.H. then filed an action against Defendants.[112]

Defendants have four arguments for why the E.H. fails to allege a claim under Title IX: “(1) E.H. fails to allege facts showing that Valley Christian receives federal financial assistance; (2) E.H.’s claim falls outside of the zone of interests of Title IX; (3) E.H.’s claim is precluded by the ‘contact sports exception;’ and (4) E.H.’s claim is precluded by the ‘religious organization exception.’”[113] In response, E.H. argues that defendants were subject to Title IX as they received a PPP loan and because of their tax-exempt status.[114]

The court begins its analysis on whether the PPP loan will be considered federal financial assistance. In its analysis, the court states that while the CFR provides a definition of “federal financial assistance, the Title IX statute itself does not define the term.”[115] Instead, the statute states:

Each Federal department and agency which is empowered to extend Federal financial assistance to any education program or activity, by way of grant, loan, or contract other than a contract of insurance or guaranty, is authorized and directed to effectuate the provisions of section 1681of this title with respect to such program or activity by issuing rules, regulations, or orders of general applicability which shall be consistent with achievement of the objectives of the statute authorizing the financial assistance in connection with which the action is taken.[116]

As such, the court recognizes there are only a few opinions on whether PPP loans constitute federal financial assistance. E.H. cites to Karanik, et al. v. Cape Fear Academy, et al., discussed supra, in which a district court in North Carolina held that “[a] PPP loan is ‘federal financial assistance’ subject to Title IX because it is ‘[a] grant or loan of Federal financial assistance.’”[117] Based on this and precedent in other anti-discrimination suits, the court finds E.H. sufficiently alleges PPP loans are a form of federal financial assistance under Title IX.[118]

Next, the court looks to E.H.’s allegation the school’s tax-exempt status was itself federal financial assistance that would require compliance with Title IX.[119] Similarly to Buettner-Hartsoe, the court explicitly notes that the Ninth Circuit has not yet addressed the issue.[120] Both parties, however, provide case law from other circuits to support their positions. In opposition to E.H., defendants utilize Johnny’s Icehouse, Inc. v. Amateur Hockey Ass’n which held “tax exempt status, without more, is . . . insufficient to subject it to the antidiscrimation requirements of Title IX.”[121] E.H. utilizes McGlotten v. Connally which found that under Title VI, tax-exemption constitutes federal financial assistance[122], and Fulani v. League of Women Voters Educ. Fund which concluded that “defendant received ‘Federal financial assistance’ within the meaning of both Title VI and Title IX because it received both direct grants and tax-exempt status.”[123] As neither side provides controlling precedent, the court uses the “plain purpose” of the statute to eliminate discrimination based on sex to come to its conclusion that tax-exempt status should be federal financial assistance under Title IX. [124] Again quoting McGlotten, the court states “[d]istinctions as to the method of distribution of federal funds or their equivalent seem beside the point . . . .”[125]

The court goes on to find that E.H.’s claim was within the zone of interest for Title IX claims,[126] that the “Religious Organization Exception” to the Department of Education Title IX statute does not preclude the claim,[127] and that the “Contact Sports Exemption” also does not preclude the claim.[128] In discussing the “Religious Organization Exception,” the court notes  defendants “policy banning physical contact between members of the opposite sex does not provide an explicit link between the inappropriate conduct and [defendants’] religious teachings . . . [the] policy does not address how the banned contact is inconsistent with its religious teachings.”[129] If there had been a link between religious teachings and the banned conduct, for example in the student handbook, the exception may have applied.[130] Additionally, the contact sports exemption does not apply because it allows schools to have a choice to allow individuals to try out for contact sports teams.[131] Thus, the court denies defendant’s motion to dismiss E.H.’s cause of action under Title IX.[132]

While it was speculated this decision would be appealed, on August 10, 2023, this action was dismissed in its entirety as a settlement agreement was reached between EH and Defendants.[133]

III. The Decision Should Have Been Upheld on Appeal

            There are compelling legal and public policy reasons to uphold the decision that tax-exempt status is federal financial assistance requiring independent schools to comply with nondiscriminatory statutes such as Title IX.

Tax-Exempt Status Equates to a Government Grant and Tax-Expenditure Theory

Despite arguments otherwise, tax-exempt status, in essence, is a grant of money from the government to independent schools. In Regan v. Taxation with Representation, the United States Supreme Court states

[b]oth tax exemptions and tax-deductibility are a form of subsidy that is administered through the tax system. A tax exemption has much the same effect as a cash grant to the organization of the amount of tax it would have to pay on its income. Deductible contributions are similar to cash grants of the amount of a portion of the individual’s contributions. The system Congress has enacted provides this kind of subsidy . . . .[134]

A portion of the income independent schools receive would be collected through taxation, but instead the government has chosen to provide these entities with an exemption to such taxation. As such, when an independent school receives income of $100, they are enabled to utilize the full $100 spending power of that income, instead of having approximately $20 taken as income tax.[135] This exemption is equal to a transfer from the government because it is money the government is entitled to collect but has chosen not to by enabling entities to apply and obtain tax-exempt status.[136] As such, a § 501(c)(3) independent school is “keeping money that would otherwise belong to the government and in that fashion is a direct recipient of federal financial assistance.”[137]

This argument for treating federal income tax-exemption as federal financial assistance under Title IX is supported by tax expenditure theory.[138] As noted earlier, tax expenditure theory treats the amount not taxed by the government as a grant of money to the taxpayer from the government.[139] As such, under tax expenditure theory, tax-exempt status would be treated as a grant of money. Tax-exempt status provides independent schools with the large benefit of not having to pay income tax on their tuition and other education related earnings and enables them to receive tax-deductible contributions.[140] Independent schools obtain their financing from student tuition[141] and donations.[142] Both incomes, if they serve the independent schools educational or religious purpose, are exempt from federal income tax. Even though the Joint Committee does not consider this a tax expenditure, in essence it is.

On the other side, parents and individuals who make contributions to independent schools are also benefiting. First, they are making a charitable contribution that is deductible from their own federal taxes.[143] The Joint Committee does recognize this as a tax expenditure, stating “the ability of donors to . . . nonprofit organizations to claim a charitable contribution deduction is a tax expenditure . . . .”[144] These benefits are described in IRS guidelines to taxpayers outlining charitable contributions.[145] In the guide for use for the 2022 tax year, money or property contributed to nonprofit schools is deductible as a charitable contribution, while tuition is not.[146] In some states however, including Indiana, there is a statutory deduction for private school tuition.[147]

Second, if a parent makes a donation to the school, they are also getting the benefit of a better school for their children.[148] Donors may make their donations to improve a specific change in the school, and students, including the donors own children, benefit from these improvements.[149] IRS guidelines describe that a donor must reduce their deduction amount when they receive a benefit, stating a donor “can deduct only the amount of [the] contribution that is more than the value of the benefit . . . .”[150] However, school improvement and potentially better educational outcomes would be an indirect benefit and would thus not require this distinction.

Utilizing tax expenditure theory, these benefits should be treated as a grant from the government. Under the meaning of “Federal financial assistance” defined by the Code of Federal Regulations, the first category listed is as a “grant or loan.”[151] Thus, tax-exempt status should fall under the definition of federal financial assistance as a “grant,” and statutorily these independent schools should comply with Title IX:

Each Federal department and agency which is empowered to extend Federal financial assistance to any education program or activity, by way of grant, loan, or contract . . .  is authorized and directed to effectuate the provisions of [Title IX] with respect to such program or activity by issuing rules, regulations, or orders of general applicability which shall be consistent with achievement of the objectives of the statue authorizing financial assistance in connection with which the action is taken.[152]

If independent schools do not comply, the result could be “termination of or refusal to grant or to continue assistance . . . .”[153]

Utilizing tax expenditure theory, the tax benefits independent schools receive should be treated as a grant thus is federal financial assistance. As such, organizations should have to comply with nondiscriminatory statutes such as Title IX to continue receiving this benefit. This result is additionally supported by public policy.[154]

Bob Jones and the Public Policy Doctrine

As both the district court in Buettner-Hartsoe and E.H. pointed out, Title VI decisions have served as a model for Title IX decisions.[155] Both courts utilize Title VI decisions to support their holdings. As such, the argument for upholding that tax-exempt status is federal financial assistance requiring compliance with Title IX is additionally supported by applying the fundamental public-policy doctrine from Bob Jones to Title IX.

The holding in Bob Jones was not directly tied to race-based discrimination, but to date it has been so limited in its application. Another law review note analyzing Bob Jones concluded the Supreme Court found racial discrimination was a violation of fundamental public policy by utilizing civil rights-statues, case law, and executive branch actions.[156] The same argument can be made that ending sex-based discrimination violates fundamental public policy—determined by existing civil rights-statutes, case law, and executive branch actions.

            First, it is important to note that Congress has enacted various pieces of legislation to combat sex-based discrimination. First, Title IX is codified in 20 U.S.C. § 1681.[157] In addition to Title IX, Congress has also enacted Title VII of the Civil Rights Act of 1964.[158] Title VII prohibits sex-based and other forms of discrimination in the context of employment.[159] As there are anti-sex-based discrimination statutes in two spheres of the law, the statutory prong of fundamental public policy has been met.

Second, after the decision in Bostock v. Clayton County, which held that sex discrimination included discrimination based on sexual orientation and gender,[160] the Department of Education released a Notice of Interpretation that explained Title IX would also include discrimination based on sexual orientation and gender identity.[161] The notice describes the textual similarity between Title VII (under which the claim was brought in Bostock) and the language in Title IX.[162] Next, the notice recognizes that other case law applied Bostock to Title IX, and that discriminatory practices not covered would cause students harms.[163] At the time of the notice, numerous courts had already applied Bostock to Title IX.[164] Additionally, the notice states the purpose of Title IX to “ensure equal opportunity and to protect individuals from the harms of sex discrimination.”[165] To protect students from harm, Title IX needs to expand to fit within the holding of Bostock. Finally, the notice states that the U.S. Department of Justice’s Civil Rights Division has already applied the Bostock decision to Title IX.[166] As exemplified by this notice, the government expanded the coverage of Title IX in response to case law.

To argue eradicating sex-based discrimination is a fundamental public policy, executive branch actions must also be discussed. Bob Jones cites many executive orders over the decades discussing the public policy, which can be compared to the executive orders that President Biden issued on the new Title IX amendments in 2021.[167] In the order, President Biden states:

It is the policy of my Administration that all students should be guaranteed an educational environment free from discrimination on the basis of sex, including discrimination in the form of sexual harassment, which encompasses sexual violence, and including discrimination on the basis of sexual orientation or gender identity. For students attending schools and other education institutions that receive Federal financial assistance, this guarantee is codified, in part, in Title IX of the Education Amendments of 1972, 20 U.S.C. 1681 et seq., which prohibits discrimination on the basis of sex in education programs or activities receiving Federal financial assistance.[168]

The key word in the executive order is the word “all.” While the guarantee is codified in Title IX for students receiving an education from institutions receiving federal financial assistance, the administrative policy does not start and end with these students. To reach all students, federal financial assistance should include tax-exemption. Otherwise, students at these schools are being denied the protections they are guaranteed.

It is additionally worth highlighting that the courts which held Title IX should apply to tax-exempt schools are in two separate district courts across the county from one another. These decisions were made, in part, so the individuals in schools are protected from discrimination and those who experience discrimination will have a means to recover.[169] The holdings themselves are indicative that sex-based discrimination should not be occurring in any schools. Under the public policy doctrine, an institution’s purpose and practices cannot be “so at odds with the common community conscience as to undermine any public benefit that might otherwise be conferred.”[170] Thus, the notion that tax-exempt status is itself federal financial assistance requiring independent schools to comply with civil rights laws such as Title IX falls within the public-policy doctrine described in Bob Jones.

Congress, the IRS, or the Courts?

Instead of relying on tax-expenditure theory or the public-policy doctrine, it has been argued that Congress should enact a “well-defined nondiscrimination requirement” in § 501(c)(3).[171] However, Congress has not acted and enacted statutes clarifying that charitable organizations should not be engaging in discriminatory behaviors, and sex-based discrimination is still occurring in schools today. Given that the Court in Grove City said federal financial assistance includes indirect or direct benefits, and antidiscrimination statutes are only limited to the extent Congress limits them, it is also important to note that Congress has not enacted a statute clarifying that federal financial assistance is not inclusive of tax-exempt status.[172]

 It has also been the subject of a law review note whether the IRS may choose to utilize its power to expand the scope of Bob Jones and revoke tax-exempt status based on gender or sexual discrimination.[173] This has also not been done. It is unlikely regulatory agencies by themselves will adopt the outlook that tax-exempt status is federal financial assistance requiring independent schools to comply with antidiscrimination statutes.[174]

As Congress has not enacted statues against sex-based discrimination or clarifying that federal financial assistance does not include tax-exempt status, nor has the IRS revoked tax-exempt status of independent schools on a similar basis, “court interpretation is the only mechanism by which tax benefits might be equated with [federal financial assistance].”[175] The decision was in the hands of the courts, and the courts should have upheld  the decision. Upholding the decision tax-exempt status requires compliance with Title IX could bring about the end of sex-based discrimination in schools previously uncontrolled by Title IX by mandating a floor for schools to build upon for a sex-based discrimination policy. And if not bringing the end to sex-based discrimination, at least opening up the door to students by providing another mean of obtaining justice.

Response to Amici Brief

In the Amici Curiae brief filed by various independent school associations in the Buettner-Hartsoe appeal, Amici stated one of their main concerns was that some independent schools were too small to have to comply with the requirements of Title IX.[176] This concern is addressed in the Department of Education’s proposed amendments to Title IX. The proposed rule states “[t]he Department recognizes that schools vary in size, student populations, and administrative structure. The proposed regulations would enable all schools to meet their obligations and comply fully with Title IX while providing them appropriate discretion and flexibility to account for these variations.”[177] Specifically, during the Hearing on the Motions, the counsel from Amici noted the difficulty for smaller schools to comply with Title XI, as the regulations currently require three people to resolve allegations, a coordinator, an investigator, and someone to adjudicate the claim.[178] The proposed regulation changes, however, would allow schools instead to use a single-investigator model if it determined that this model would result in a “fair and reliable process.”[179] Additionally, Judge Richard D. Bennett points out in the Motions on the Hearing that public schools, like private schools, also vary in size and may include a very small rural school which much comply with Title IX.[180] As such, compliance with Title IX regulations, even for smaller schools, is achievable.

            On a final note, the Amici Curiae brief additionally states “independent schools care deeply about protecting their students and other community members. When advised of behavior that may have caused harm, independent schools respond effectively and promptly, pursuant to their own considered policies and procedures and in compliance with state and local laws.”[181] Yet, in the underlying case upon which the Amici Brief was filed, five different women brought claims against their independent school for not taking “meaningful action in response” to sexual assault and verbal sexual harassment they were facing at school since 2016.[182] Clearly, the school did not have effective and prompt policies and procedures in place to address their “numerous complaints.”[183] In fact, the 2017-2018 Upper School Student-Parent Handbook has one paragraph covering their Sexual Harassment Policy:

Concordia Prep is committed to maintaining a learning environment that is free from all forms of sexual harassment and in which all employees and students can work and study together comfortably and productively. Concordia Prep prohibits and will not condone, permit or tolerate any form of sexual harassment. It shall be a violation of this policy for any student or employee of Concordia Prep to harass a student or an employee through conduct or communication of a sexual nature as defined by this policy. The Administration of Concordia Prep will act to investigate all complaints, either formal or informal, verbal or written, of sexual harassment and will discipline any student or employee who harasses any student or employee of Concordia Preparatory school.[184]

With this policy in place, these five women were harassed to the extent they felt the need to bring suit. Had this school instead needed to comply with Title IX, the policies and procedures would have been more extensive and clearer, and the harassment these students faced may have been dealt with before they felt the need to take the issue to court.

Conclusion

            The district courts in Buettner-Hartsoe and E.H. both held tax-exemption under § 501(c)(3) equates to federal financial assistance requiring independent or tax-exempt schools to comply with Title IX regulations. This Note examined the two decisions and how the courts reach their holdings and argues that these decisions should have been upheld. This conclusion was substantiated by equating tax-exempt status as a grant from the government, tax-expenditure theory, how Title IX decisions have historically followed the decisions on Title VI, and the public-policy doctrine from Bob Jones. Fifty years after the passage of Title IX, individuals are still experiencing sex-based discrimination in schools. The decision to eradicate sex-based discrimination in independent schools was in the hands of the courts, and they should have upheld the decision to give full force and effect to Title IX’s mission to ensure no person is excluded or denied the benefits of education.

---

* J.D. Candidate, 2024, Indiana University Robert H. McKinney School of Law; B.A. 2014, DePauw University – Greencastle, Indiana. At the original time of this Notes completion, both cases discussed therein had been decided in their respective district courts and were likely to be appealed. This Note’s central argument was that in the case of appeal, the decisions should be upheld. Since then, one has resulted in a settlement between the parties and the other was reversed on appeal. The argument has thus been updated for blog publication to state the district court decisions should have been upheld.

[1] Buettner-Hartsoe v. Balt. Lutheran High Sch. Ass’n, CV RDB-20-3132, 2022 WL 2869041, at *1 (D. Md. July 21, 2022), reconsideration denied, motion to certify appeal granted, CV RDB-20-3132, 2022 WL 4080294 (D. MD. Sept. 6, 2022), and rev’d and remanded, 23-1453, 2024 WL 1289592 (4th Cir. Mar. 27, 2024).

[2] Id.

[3] E.H. by & through Herrera v. Valley Christian Acad., 616 F. Supp. 3d 1040, 1044 (C.D. Cal. 2022).

[4] 20 U.S.C. § 1681(a); The “father” of Title IX is former Indiana Senator Birch Bayh, who drafted the legislation and worked to have it pass through the Senate. Title IX – The Nine, ACLU, https://www.aclu.org/other/title-ix-nine [https://perma.cc/XWW9-5E8N].

[5] Title IX and Sex Discrimination, U.S. Dep’t of Educ., (revised Aug. 2021) https://www2.ed.gov/about/offices/list/ocr/docs/tix_dis.html [https://perma.cc/Q5PA-MTWF].

[6] Id.

[7] Institutional Compliance Solutions, Independent Schools – You may be subject to the requirements under Title IX, too!, JD Supra (Aug. 25, 2022), https://www.jdsupra.com/legalnews/independent-schools-you-may-be-subject-7273982/ [https://perma.cc/9BVZ-RZR5].

[8] About NAIS, Nat’l Ass’n of Indep. Sch., https://www.nais.org/about/about-nais [https://perma.cc/EK4S-C2SL] (last visited Feb. 2, 2023).

[9] Independent Schools – You may be subject to the requirements under Title IX, too!, supra note 7.

[10] See Buettner-Hartsoe v. Balt. Lutheran High Sch. Ass’n, CV RDB-20-3132, 2022 WL 2869041 (D. Md. July 21, 2022), reconsideration denied, motion to certify appeal granted, CV RDB-20-3132, 2022 WL 4080294 (D. MD. Sept. 6, 2022), and rev’d and remanded, 23-1453, 2024 WL 1289592 (4th Cir. Mar. 27, 2024); see also E.H. by & through Herrera v. Valley Christian Acad., 616 F. Supp. 3d 1040 (C.D. Cal. 2022).

[11] Brief for National Association of Independent School, et al. as Amici Curiae Supporting Petitioners, Balt. Lutheran High Sch. Ass’n v. Buettner-Hartsoe, (No. 22-272), 2022 WL 4570690.

[12] As an aside, while Title IX also applies at the postsecondary level, this Note is limited in scope to independent schools below the postsecondary level.

[13] Title IX and Sex Discrimination, supra note 5.

[14] 34 C.F.R. § 106.2(g)(1)–(5).

[15] David A. Brennen, Tax Expenditures, Social Justice, and Civil Rights: Expanding the Scope of Civil Rights Laws to Appy to Tax-Exempt Charities, 2001 BYU L. Rev. 167, 171.

[16] Id. at 172.

[17] 465 U.S. 555, 555-56 (1984).

[18] Grove City Coll. v. Bell, 465 U.S. 555, 559 (1984).

[19] Brennen, supra note 15, at 198.

[20] Id. (citing Grove City Coll. v. Bell, 465 U.S. 555 (1984).

[21] Id. at 198-99.

[22] Id. at 199.

[23] 338 F. Supp. 448, 450 (D.D.C. 1972).

[24] McGlotten v. Connally, 338 F. Supp. 448, 461 (D.D.C. 1972).

[25] Id.

[26] 577 F.Supp. 1257 (D.N.J. 1983).

[27] Id. at 1258.

[28] Id. at 1265.

[29] Brennen, supra note 15, at 205.

[30] Id. at 206.

[31] Id. at 207.

[32] Carlton Fields et al., New Cases Apply Title IX to Independent Schools: Tips for Schools and Next Steps, JD Supra (Aug. 5, 2022), https://www.jdsupra.com/legalnews/new-cases-apply-title-ix-to-independent-6847300/ [https://perma.cc/Z9JK-ATJA].

[33] Nicholas A. Mirkay, Is it “Charitable” to Discriminate?: The Necessary Transformation of Section 501(c)(3) Into the Gold Standard for Charities, 2007 Wis. L. Rev. 45, 54.

[34]  26 U.S.C. § 501(c)(3).

[35] Alex Zhang, Antidiscrimination and Tax Exemption, 107 Cornell L. Rev. 1381, 1391 (2022).

[36] Id.

[37] Id.

[38] Brennen, supra note 15, at 176–77.

[39] Id. at 178 (citing Bob Jones University v. United States, 461 U.S. 574, 575 (1983)).

[40] Bob Jones Univ. v. United States, 461 U.S. 574, 578 (1983) (citing Green v. Kennedy, 309 F.Supp. 1127, appeal dism’d sub nom. Cannon v. Green, 398 U.S. 956 (1970)).

[41] Id. at 579 (citing IRS News Release, July 7, 1970).

[42] Id.

[43] Rev. Rul. 71-447, 1971-2 C.B. 230.

[44] Bob Jones Univ., 461 U.S. at 574.

[45] Id. at 581.

[46] Id. at 604.

[47] Id. at 575.

[48] Zhang, supra note 35, at 1383-84 (citing Bob Jones Univ. v. United States, 461 U.S. 574 (1983)).

[49] Brennen, supra note 15, at 183.

[50] Zhang, supra note 35, at 1394.

[51] Id. at 1396.

[52] Mirkay, supra note 33, at 56.

[53] Id.

[54] Joint Committee on Taxation, Estimates of Federal Tax Expenditures for Fiscal Years 2022-2026 (JCX-22-22), December 22, 2022, at *3 (citing the Congressional Budget and Impoundment Control Act of 1974).

[55] Estimates of Federal Tax Expenditures for Fiscal Years 2022-2026 (JCX-22-22), supra note 54, at 3.

[56] Id.

[57] Id. at 10.

[58] Brennen, supra note 15, at 176–77.

[59] Estimates of Federal Tax Expenditures for Fiscal Years 2022-2026 (JCX-22-22), supra note 54, at 10.

[60] 26 U.S.C. §170(b)(1)(A)(ii).

[61] Brennen, supra note 15, at 208-09.

[62] Id. at 209.

[63] Id.

[64] Thank you to Professor Stephanie Hoffer for this explanation of how tax expenditure theory works.

[65] Paycheck Protection Program, U.S. Dep’t of the Treasury, https://home.treasury.gov/policy-issues/coronavirus/assistance-for-small-businesses/paycheck-protection-program [https://perma.cc/4R78-VVN9]. PPP loans are a direct transfer of money from the government to independent schools and are thus distinct from the issue of whether tax-exempt status by itself is federal financial assistance. However, the question of whether PPP are federal financial assistance is demonstrative of how unclear the meaning of “federal financial assistance” is for the purposes of Title IX.

[66] 608 F. Supp. 3d 268 (E.D.N.C. 2022), motion to certify appeal granted, No. 7:21-CV-169-D, 2022 WL 16556774 (E.D.N.C. Oct. 31, 2022), and appeal dismissed, No. 22-2221, 2023 WL 8354464 (4th Cir. June 12, 2023).

[67] Kathleen E. Dion & Seth B. Orkand, Federal Court Suggests Title IX Applies to Private Schools Receiving PPP Loans, Nat’l L. Rev. (July 18, 2022), https://www.natlawreview.com/article/federal-court-suggests-title-ix-applies-to-private-schools-receiving-ppp-loans [https://perma.cc/63PJ-V8VX].

[68] Id.

[69] Id.

[70] Id.

[71] 20 U.S.C. 1681(a)(3).

[72] Exemptions from Title IX, U.S. Dep’t of Educ., https://www2.ed.gov/about/offices/list/ocr/docs/t9-rel-exempt/index.html [https://perma.cc/8RVL-93WB].

[73] Id.

[74] Id.

[75] 34 C.F.R. § 106.41.

[76] Id. § 106.41(b).

[77] Id.

[78] Id.

[79] Id.

[80] Buettner-Hartsoe v. Balt. Lutheran High Sch. Ass’n, CV RDB-20-3132, 2022 WL 2869041, at *1 (D. Md. July 21, 2022), reconsideration denied, motion to certify appeal granted, CV RDB-20-3132, 2022 WL 4080294 (D. MD. Sept. 6, 2022), and rev’d and remanded, 23-1453, 2024 WL 1289592 (4th Cir. Mar. 27, 2024).

[81] Id.

[82] Id.

[83] Id.

[84] Id. at 2.

[85] Id. at 1.

[86] Id.

[87] Id. at 3.

[88] Id.

[89] Id. at 5.

[90] Id. at 4.

[91] Id.

[92] Id.

[93] Id. (quoting Regan v. Taxation with Representation, 461 U.S. 540, 544 (1983)).

[94] Id.

[95] Id. (quoting Bob Jones Univ. v. United States, 461 U.S. 574, 592 (1983)).

[96] Id. (citing Green v. Connally, 330 F. Supp. 1150 D.D.C. 1971)).

[97] Id. at 5. (citing Cannon v. Univ. of Chicago, 441 U.S. 667, 704 (1979)).

[98] Id. (citing Cannon v. Univ. of Chicago, 441 U.S. 667, 704 (1979)).

[99] Buettner-Hartsoe v. Baltimore Lutheran High Sch. Ass’n, 23-1453, 2024 WL 1289592, at *5 (4th Cir. Mar. 27, 2024).

[100] Id. at 2–4.

[101] Id. at 4.

[102] Id.

[103] Id.

[104] Id. at 5.

[105] Id.

[106] Id.

[107] Id.

[108] E.H. by & through Herrera v. Valley Christian Acad., 616 F. Supp. 3d 1040, 1043 (C.D. Cal. 2022).

[109] Id. at 1044.

[110] Id.

[111] Id.

[112] Id.

[113] Id. at 1048.

[114] Id.

[115] Id.

[116] Id. at 1048–49 (citing 20 U.S.C.A. § 1682).

[117] Id. at 1049 (citing Karanik et al. v. Cape Fear Academy, et al., 608 F. Supp. 3d 268 (E.D.N.C. 2022), motion to certify appeal granted, No. 7:21-CV-169-D, 2022 WL 16556774 (E.D.N.C. Oct. 31, 2022), and appeal dismissed, No. 22-2221, 2023 WL 8354464 (4th Cir. June 12, 2023)).

[118] Id.

[119] Id.

[120] Id. at 1050.

[121] Id. (quoting Johnny’s Icehouse, Inc. v. Amateur Hockey Ass’n, 134 F. Supp. 2d 965, 972 (N.D. Ill. 2001)).

[122] Id. (citing McGlotten v. Connally, 338 F. Supp. 448, 461 (D.D.C. 1972)).

[123] Id. (citing Fulani v. League of Women Voters Educ. Fund, 684 F. Supp. 1185, 1192 (S.D.N.Y. 1988)).

[124] Id. (quoting McGlotten v. Connally, 338 F. Supp, 448, 461 (D.D.C. 1972)).

[125] Id. (quoting McGlotten v. Connally, 338 F. Supp, 448, 461 (D.D.C. 1972)).

[126] Id.

[127] Id. at 1054.

[128] Id. at 1055.

[129] Id. at 1054.

[130] Id.

[131] Id. at 1055.

[132] Id. at 1057.

[133] Order Dismissing Action with Prejudice, E.H. v. Valley Christian Acad., 221CV07574MEMFGJS, (C.D. Cal. Aug. 10, 2023).

[134] 461 U.S. 540, 544 (1983).

[135] See tax-exemption example in supra Section I.D.

[136] Transcript of Motions Hearing at 47, Buettner-Hartsoe v. Balt. Lutheran High Sch Ass’n, 1:20-cv-03132-RDB (D. MD. Sept. 1, 2022), https://storage.courtlistener.com/recap/gov.uscourts.mdd.486720/gov.uscourts.mdd.486720.150.0.pdf [https://perma.cc/ZXK9-S7W9].

[137] Id. at 43.

[138] See Brennen, supra note 15, at 208–12.

[139] Id. at 209.

[140] Id. at 176–77.

[141] In the United States, the average annual tuition of private K-12 schools is $12,350, and the average tuition for a private high school is $16,040. The average cost in Indiana for K-12 tuition is $5,100 and the average cost of tuition at secondary schools is $11,260. See Melanie Hanson, Average Cost of Private School, Education Data Initiative, (Dec. 27, 2021), https://educationdata.org/average-cost-of-private-school [https://perma.cc/KW58-KXLN]; the tuition fee to attend Valley Christian Academy, the defendant in E.H., begin at $653 a month for the first child in a family to attend ($694 if the child is in “Talent Development,” a program to assist students who are below grade level). There are additional fees such as registration ($300 or $400), books ($500), and athletic fees ($150 for sport one, $125 for sport two, and $100 for sport three). See Valley Christian Academy Financial Information 2023-2024 School Year, https://thechurchco-production.s3.amazonaws.com/uploads/sites/4051/2023/02/2023-2024FinanceSheet.pdf (last visited Feb. 3, 2023) [https://perma.cc/8AAX-NRSZ]; the tuition fee to attend Concordia Preparatory School, the defendant school in Buettner-Hartsoe, begins at $15,200 annually for the first child in a family to attend. See Tuition Information and Payment, Concordia Preparatory School, https://concordiaprepschool.org/admissions/tuition-information, (last visited Feb. 3, 2023) [https://perma.cc/VS23-WAJE].

[142] About 14% of charitable giving in 2021 was given to education. Charitable Giving Statistics, Nat’l Philanthropic Trust, https://www.nptrust.org/philanthropic-resources/charitable-giving-statistics/ (last visited Mar. 12, 2023) [https://perma.cc/XR92-QQL5].

[143] See 28 U.S.C. 170(a) & (b)(1)(ii); see also Ways to Give, Concordia Preparatory School, https://concordiaprepschool.org/development/ways-to-give (last visited Feb. 3, 2023) [https://perma.cc/8D36-2DYD] (stating on their Ways to Give webpage that gifts to the school are tax deductible).

[144] Estimates of Federal Tax Expenditures for Fiscal Years 2022-2026 (JCX-22-22), supra note 54, at 10.

[145] Charitable Contributions for Use in Preparing 2022 Returns, Dep’t of the Treasury, https://www.irs.gov/pub/irs-pdf/p526.pdf [https://perma.cc/DN3D-VCJH].

[146] Id. at 3.

[147] See Ind. Code §6-3-2-22 (2021).  Subsections (c)–(d) state “[a] taxpayer who makes an unreimbursed education expenditure during the taxpayer’s taxable year is entitled to a deduction against the taxpayer’s adjusted gross income in the taxable year” in the amount of “(1) one thousand dollars . . . multiplied by (2) the number of the taxpayer’s dependent children for whom the taxpayer made education expenditures in the taxable year.”

[148] Joseph Corbett, NAIS Jobs-to-Be-Done Research: Why Donors Give to Independent Schools, Nat’l Ass’n of Indep. Sch., (Spring 2021), https://www.nais.org/magazine/independent-school/spring-2021/nais-jobs-to-be-done-research-why-donors-give-to-independent-schools/#:~:text=They%20donate%20to%20preserve%20or,benefit%20from%20the%20school%20experience [https://perma.cc/XD5Y-NZG3].

[149] Id.

[150] Charitable Contributions for Use in Preparing 2022 Returns, supra note 145 at 3.

[151] 34 C.F.R. § 106.2(g)(1).

[152] 20 U.S.C. § 1682.

[153] Id.

[154] In Buettner-Hartsoe, while hearing defendants’ argument during the Motions Hearing for the Motion for Reconsideration and the Motion for Interlocutory Appeal, Judge Richard D. Bennett responded, “I notice there are two words you haven’t mentioned here, and that’s public policy.” Transcript of Motions Hearing at 24, Buettner-Hartsoe v. Balt. Lutheran High Sch Ass’n, 1:20-cv-03132-RDB (D. MD. Sept. 1, 2022), https://storage.courtlistener.com/recap/gov.uscourts.mdd.486720/gov.uscourts.mdd.486720.150.0.pdf [https://perma.cc/ZXK9-S7W9].

[155] Buettner-Hartsoe v. Balt. Lutheran High Sch. Ass’n, CV RDB-20-3132, 2022 WL 2869041, at *4 (D. Md. July 21, 2022), reconsideration denied, motion to certify appeal granted, CV RDB-20-3132, 2022 WL 4080294 (D. MD. Sept. 6, 2022) , and rev’d and remanded, 23-1453, 2024 WL 1289592 (4th Cir. Mar. 27, 2024) (citing Cannon v. Univ. of Chicago, 441 U.S. 667, 704 (1979); E.H. v. Valley Christian Acad., 616 F. Supp. 3d 1040 (C.D. Cal. 2022).

[156] Zhang, supra note 35, at 1394.

[157] 20 U.S.C. § 1681.

[158] See 42 U.S.C. §§ 2000e–2000e-17.

[159] Id. § 2000e-2.

[160] Bostock v. Clayton Cnty., Georgia, 140 S.Ct. 1731, 1753 (U.S. 2020).

[161] Enforcement of Title IX of the Education Amendments of 1972 with Respect to Discrimination Based on Sexual Orientation and Gender Identity in Light of Bostock v. Clayton County, 86 Fed. Reg. 32,637 (June 22, 2021),  https://www2.ed.gov/about/offices/list/ocr/docs/202106-titleix-noi.pdf [https://perma.cc/N9UT-ZM3N].

[162] Id.

[163] Id.

[164] Id. (citing the following cases for already applying Bostock to Title IX: “Grimm v. Gloucester Cnty. Sch. Bd., 972 F.3d 586, 616 (4th Cir. 2020), as amended (Aug. 28, 2020), reh’g en banc denied, 976 F.3d 399 (4th Cir. 2020), petition for cert filed, No. 20– 1163 (Feb. 24, 2021); Adams v. Sch. Bd. of St. Johns Cnty., 968 F.3d 1286, 1305 (11th Cir. 2020), petition for reh’g en banc pending, No. 18–13592 (Aug. 28, 2020); Koenke v. Saint Joseph’s Univ., No. CV 19–4731, 2021 WL 75778, at *2 (E.D. Pa. Jan. 8, 2021); Doe v. Univ. of Scranton, No. 3:19–CV–01486, 2020 WL 5993766, at *11 n.61 (M.D. Pa. Oct. 9, 2020)”).

[165] Id.

[166] Id.

[167] Exec. Order No. 14021 (2021).

[168] Id. (emphasis added).

[169] During the Motions Hearing for the Motion for Reconsideration and the Motion for Interlocutory Appeal, Judge Richard D. Bennett, states “[i]t’s Title XI and young women and the protections and benefits they receive.” Transcript of Motions Hearing at 52, Buettner-Hartsoe v. Balt. Lutheran High Sch Ass’n, 1:20-cv-03132-RDB (D. MD. Sept. 1, 2022).

[170] Bob Jones Univ. v. United States, 461 U.S. 574, 592 (1983).

[171] Mirkay, supra note 33, at 68.

[172] Brennen, supra note 15, at 226.

[173] Amy Moore, Rife with Latent Power: Exploring the Reach of the IRS to Determine Tax-Exempt Status According to Public Policy Rationale in an Era of Judicial Deference, 56 S. Tex. L. Rev. 117, 156 (2014) (discussing how the IRS may choose to revoke tax-exempt status for universities which are discriminating based on gender or sexual orientation).

[174] Brennen, supra note 15, at 226.

[175] Id.

[176] Brief for National Association of Independent School, et al. as Amici Curiae Supporting Petitioners, Balt. Lutheran High Sch. Ass’n v. Buettner-Hartsoe, (No. 22-272), 2022 WL 4570690, at *7-8.

[177] Nondiscrimination on the Basis of Sex in Education Programs or Activities Receiving Federal Financial Assistance, 87 Fed. Reg. 41390, 41390 (proposed July 12, 2022) (to be codified at 34 C.F.R. pt. 106).

[178] Transcript of Motions Hearing at 53-54, Buettner-Hartsoe v. Balt. Lutheran High Sch Ass’n, 1:20-cv-03132-RDB (D. MD. Sept. 1, 2022), https://storage.courtlistener.com/recap/gov.uscourts.mdd.486720/gov.uscourts.mdd.486720.150.0.pdf [https://perma.cc/ZXK9-S7W9].

[179] FACT SHEET: U.S. Department of Education’s 2022 Proposed Amendments to its Title IX Regulations, at *3, https://www2.ed.gov/about/offices/list/ocr/docs/t9nprm-factsheet.pdf [https://perma.cc/3RTS-X6HK].

[180] Transcript of Motions Hearing at 61, Buettner-Hartsoe v. Balt. Lutheran High Sch Ass’n, 1:20-cv-03132-RDB (D. MD. Sept. 1, 2022), https://storage.courtlistener.com/recap/gov.uscourts.mdd.486720/gov.uscourts.mdd.486720.150.0.pdf [https://perma.cc/ZXK9-S7W9].

[181] Brief for National Association of Independent School, et al. as Amici Curiae Supporting Petitioners, Balt. Lutheran High Sch. Ass’n v. Buettner-Hartsoe, (No. 22-272), 2022 WL 4570690, at *8.

[182] Buettner-Hartsoe v. Balt. Lutheran High Sch. Ass’n, CV RDB-20-3132, 2022 WL 2869041, at *1 (D. Md. July 21, 2022), reconsideration denied, motion to certify appeal granted, CV RDB-20-3132, 2022 WL 4080294 (D. MD. Sept. 6, 2022), and rev’d and remanded, 23-1453, 2024 WL 1289592 (4th Cir. Mar. 27, 2024)..

[183] Id.

[184] Upper School Student-Parent Handbook 2017-2018, Concordia Prep, https://concordiaprepschool.org/wp-content/uploads/2014/07/17-18-US-Handbook-FINAL-1.pdf, at *7 [https://perma.cc/CZH4-VNAB].