4th Circuit Court Holds That 501(c)(3) Status Is Not Federal Financial Assistance

Updated April 3, 2024.

(From Venable LLP) In a significant decision, the U.S. Court of Appeals for the Fourth Circuit reversed a 2022 ruling that an independent school's 501(c)(3) tax-exempt status constitutes federal financial assistance. The appellate court's decision in Buettner-Hartsoe v. Baltimore Lutheran High School Association clarifies that tax-exempt status does not make a school a recipient of federal financial assistance under Title IX or other federal laws. This ruling is a relief for independent schools that do not otherwise receive federal funds. Schools should, however, continue to assess their obligations under state or federal programs in which they participate.

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(From NAIS) NAIS has been working with NBOA and several other partner associations to protect members’ independence as a significant, potentially precedent-altering court case threatened the nonprofit status of independent schools. This advocacy coalition submitted several amici (“friends of the court”) briefs over the past two years while this case was being adjudicated. Earlier this year we participated in the oral arguments in front of the 4th Circuit Court of Appeals.

On March 27, a unanimous panel of judges from the 4th Circuit Court of Appeals agreed with NAIS and partner organizations, holding that the phrase “federal financial assistance” means that funding has moved from the government to a school or other entity, and no transfer occurs when there is a tax exemption. Find the Court’s opinion here.

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NBOA members can contact Jennifer Osland Hillen, chief learning officer, with questions or comments at  jennifer.hillen@nboa.org.