New Philanthropy Roundtable legal analysis sheds light on the implications of the Supreme Court decision for three categories of organizations outside the higher-ed sphere.
The U.S. Supreme Court’s recent ruling against race-based admission policies at Harvard and University of North Carolina ends affirmative action in higher education as we know it. In the cases Students for Fair Admissions, Inc. (“SFFA”) v. University of North Carolina and SFFA v. President and Fellows of Harvard College, the Court ruled that such race-based affirmative action in higher education violates the 14th Amendment’s Equal Protection Clause and Title VI of the Civil Rights Act of 1964.
The implications of this decision are raising questions around diversity, equity and inclusion (DEI) practices of private businesses and philanthropy. The questions to consider are complex, and there is plenty of gray area. As charitable organizations begin to think through these questions, the Roundtable has published a new legal analysis regarding the decision’s potential implications beyond higher education. We have made this resource available for our community online here. As a general summary, there are differing levels of impact in three categories of organizations.
Clear Impact for Groups Receiving Federal Funds
At the center of the discussion are entities that receive federal financial assistance and are therefore subject to Title VI of the Civil Rights Act. The analysis suggests that if you are a nonprofit that receives direct aid from the government, it’s time to take a careful look at your DEI practices and evaluate where they may conflict with our nation’s civil rights laws and protections.
Farther out, with less clear implications, are private employers who are prohibited from race-based discrimination by Title VII of the Civil Rights Act. While the Supreme Court focused on Title VI and not on Title VII for this decision, courts have sometimes looked to Title VI cases in the Title VII context. This means that employers who may have been using similar practices to higher education, where policies resulted in decisions being made on the basis of an individual’s race, may be open to legal scrutiny and liability for violating anti-discrimination law.
Of course, the Court noted valid exemptions to these protections under Title VI, such as a prison’s decision to separate inmates by race to address race riots or an employer taking action to address prior specific discriminatory actions they took against a group. And the Court has previously recognized other narrow grounds for affirmative action unique to Title VII.
The U.S. Equal Employment Opportunity Commission’s chair has issued a statement that suggests it will not begin investigating DEI practices of private employers as unlawful. At the same time, another EEOC commissioner took a different approach. She warned employers that, “Poorly structured voluntary diversity programs pose both legal and practical risks for companies. Those risks existed before the Supreme Court’s decision today. Now they may be even higher.” It is worth remembering that the EEOC is comprised of presidential appointees and changes over time and with subsequent administrations.
Less Clear: What Does This Mean for Philanthropy?
At the edge of the potential implication universe are philanthropic entities—like private foundations and charities—that do not receive federal funds and do not use race as a factor in employment practices. The jury is still out on what this means for racial quotas for voluntary boards and what the impact will be on grantmaking to groups primarily focused on race-based work or for racial equity programs. However, there appears to be consensus that these types of practices, while not directly impacted by the decision, may be subject to future litigation in the wake of the SFFA ruling.
When it comes to grantmaking, there are outstanding questions of how DEI practices may be examined when making contracts. Given the prohibition on race-based actions (42 U.S.C. § 1981) in the making and enforcement of contracts, at least one lawsuit has already been filed to clarify this legal question.
Throughout the philanthropic landscape, the clear takeaway is that the Supreme Court has sent a strong signal: stop discriminating based on race. Nondiscrimination provisions in statute and the Constitution are likely to be enforced. While time will tell how this plays out in practice and future litigation, all race-based practices should be evaluated.
More importantly, the Court’s decision highlighted the need to treat individuals as unique people with unique perspectives, values and experiences.
For those interested in supporting True Diversity, Philanthropy Roundtable offers an equality-based framework for embracing diversity, which includes celebrating all the rich characteristics that make each of us special beyond solely race or gender. The Roundtable’s True Diversity initiative values every person as a unique individual and empowers charitable organizations with the freedom and flexibility to advance their missions and help those in need. This freedom to pursue the most effective ideas, strategies and solutions for addressing challenges and empowering communities ensures people from all backgrounds receive the support they deserve, regardless of the color of their skin.
Learn more at: TrueDiversity.org.