Tax Planning and Compliance for Tax-Exempt Organizations, 2024 Cumulative Supplement, 6th Edition

CHAPTER 5Educational, Scientific, and Literary Purposes and Prevention of Cruelty to Children and Animals

• 5.1 Educational Purposes
• 5.5 Fostering Amateur Sports Educational Purposes

5.1 Educational Purposes

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A federal judge in Oregon dismissed a lawsuit¹ challenging income tax exemption for schools under Title IX.² The decision was a win for Christian colleges that had joined the U.S. Department of Education (DOE) in defending their federal income tax exemption in areas where their theological convictions on LGBT issues conflicted with the anti‐discrimination law that requires tax‐exempt organizations follow discriminatory policies. A group of 44 current and former students at religious schools filed a class‐action suit arguing that the religious exemptions were incompatible with LGBT rights and that LGBT individuals were exposed to “unsafe conditions” at religious schools. The lawsuit alleged that allowing exempt status to such schools violated the antidiscrimination rules required for their tax exemption.

Title IX provides that “[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[.]”³ The statute includes a religious exemption, which provides that Title IX “shall not apply to an educational institution which is controlled ...