I recently spoke with Tony Martignetti, host of Nonprofit Radio, about this summer’s Supreme Court decision on affirmative action in college admissions and the possible implications for nonprofits and their diversity, equity, and inclusion (DEI) efforts. You can join the 13,000 weekly listeners and catch the Nonprofit Radio podcast here.

The Supreme Court’s decision this summer struck down college admissions affirmative action programs. Yet it may have repercussions for nonprofits around employment, contracts, grants, and other areas. Gene Takagi gives us his analysis. He’s our legal contributor and managing attorney at NEO, the Nonprofit and Exempt Organizations law group.

The case: Students for Fair Admissions Inc. v. President & Fellows of Harvard College and Students for Fair Admissions, Inc. v. University of North Carolina (decided June 29, 2023).

Some Talking Points

• The Supreme Court’s decision specifically addressed higher education admissions policies and how race can and cannot play a factor (see, e.g., our post – Supreme Court Affirmative Action Decision).
• The decision, in and of itself, does not set precedent for how race may or may not play a factor for other nonprofits and in other areas (see, e.g., Two Cautions for Educators to Consider in the Aftermath of Affirmative Action Decisions).
• The elimination of prejudice and discrimination remains a valid charitable purpose under Section 501(c)(3) (see, e.g., our post – Charitable: Eliminating Prejudice and Discrimination).
• Existing anti-discrimination laws regarding employment and contracts still apply, and we’re likely to see more claims related to such laws, including by some plaintiffs who have been funded by certain individuals or organizations opposed to race-based preferences even in light of past and pervasive institutional racism (see the Key Resources listed below).
• Section 1981 of the Civil Rights Act of 1866 – which prohibits discrimination in the making or enforcement of contracts against, or in favor of, any race – may be of particular issue in grantmaking, if a grant agreement is a contract (see, e.g., our post – Anti-Discrimination Laws – Section 1981).
• Race-based scholarships and financial aid are now also under scrutiny, particularly by those organizations receiving governmental funding (see, e.g., After Supreme Court’s affirmative action ruling, race-based scholarships under scrutiny; Colleges scrutinize race-based financial aid after affirmative action ruling).

Some Key Resources

Ban on Affirmative Action: Implications, Risks, and Strategies for the Charitable Sector (Tim Cunningham, Marisa Meltebeke, Thomas C. Schroeder, Jean L. Tom, and LaVerne Woods, Davis Wright Tremaine)

Resources to prepare and respond to the Supreme Court’s affirmative action decisions (Hewlett Foundation)

What Nonprofit and Foundation Leaders Are Saying About the Supreme Court’s Affirmative-Action Ruling (Alex Daniels, Chronicle of Philanthropy)

U.S. Supreme Court Ends Affirmative Action in Higher Education: An Overview and Practical Next Steps for Employers (Sidley Austin)

Corporate DEI Policies Face Scrutiny Following SCOTUS Affirmative Action Decision (Lara A. Flath David E. Schwartz Amy Van Gelder, Skadden)

Ruling on Affirmative Action Could Affect Hiring (Isaiah Thompson, Nonprofit Quarterly)