Submit a Public Comment: Proposed Rule Change - Racial Nondiscrimination in Private Schools
On September 4, 2026, the Treasury and the IRS published proposed regulations in the Federal Register addressing racial nondiscrimination requirements for tax-exempt private schools. These proposed changes would impose that a private school is not eligible for tax-exempt status under section 501(c)(3) if it adopts, maintains, or enforces a policy or practice that discriminates on the basis of race, color, or national or ethnic origin in the administration of educational policies, admissions policies, scholarship or loan programs, athletic programs, or other school-administered or school-supported programs. As proposed, this regulation would undermine race-conscious programs intended to support under-resourced communities and promote racial equity. It could serve as a fundamental framework for future efforts challenging race-conscious funding, grants, charitable efforts, and programs that currently exist in other 501(c)3 organizations. Philanthropy California invites funders to submit a public comment by November 3rd.
Why It Matters
Philanthropy serves as a partner and investor in the nonprofit and public sector, ensuring that grantees have the support to provide essential services and advance equitable outcomes in communities across the nation. This can include distributing support through funds and scholarships administered to private education institutions. We are writing to express our concerns regarding the proposed rule. As written, these changes to the Income Tax Regulations would eliminate allowances for schools to favor racial minority groups in admissions, even when deemed a remedial public policy benefit. This undermines race-conscious programs intended to support under resourced communities and promote racial equity.
In addition, implementation of this proposal could serve as a fundamental framework for future efforts challenging race-conscious funding, grants, charitable efforts, and programs that currently exist in other 501(c)3 organizations, although this would require additional regulatory action. If regulations are finalized as proposed, the IRS would remove language that states a school may favor racial minority groups in admissions, facilities, or programs when the purpose and effect are to establish or maintain a racially nondiscriminatory policy. This nondiscrimination requirement would apply to any educational policy, admissions policy, scholarship or loan program, athletic program, or other school-administered or school-supported program starting on May 31st, 2027.
Calls to Action
We invite your organization to submit a public comment by November 3rd, 2026. For proposed rule regulations, the quantity and individuality of public comments is imperative. We understand that the federal government is increasing its use of generative artificial intelligence tools in the agency rulemaking process, including the analysis of submitted comments from the public. To be counted as a unique, individual comment, we recommend writing the public comment in your own words, using examples specific to your organization as often as possible. You may also request that OMB disclose its usage of AI tools in the development of the rule on federal assistance.
Submitting a public comment is within a foundation's advocacy rights and is NOT considered lobbying. Learn more at Alliance for Justice's Bolder Advocacy Resources or the United Philanthropy Forum's resource on Regulatory Engagement for Philanthropy. See the link below for an example of the language foundations can use to submit their own comments.