As covered in a prior alert, American Alliance for Equal Rights (AAER) filed a lawsuit against the State of Illinois alleging the illegality of its new not-for-profit demographic disclosure law. AAER alleges that the law violates the 1st and 14th Amendments by, among other things, requiring certain[1] not-for-profit corporations to publicly disclose information they may not wish to disclose and by encouraging them to engage in discriminatory practices in hiring and board recruitment.
The Trump Administration joined the lawsuit in support of plaintiff AAER in March 2025. This move is another signal of the Administration’s efforts to combat DEI initiatives across the country and in the philanthropic community.
AAER subsequently filed an amended complaint that expanded upon its allegations of harm to its member organizations, including a new allegation objecting to the “gender identity” disclosure requirement.
Oral arguments in the case are scheduled for May 23, 2025.
Despite this activity in the lawsuit, not-for-profit corporations in Illinois that are subject to the disclosure requirement remain without much guidance regarding the law’s implementation or interpretation. It is unclear, for example, how those organizations should address a situation where some or all of their directors and officers decline to disclose demographic information (as they are permitted to do under the law). This is an unfortunate and challenging situation given many not-for-profit corporations will be required to make their initial disclosures this summer, within thirty days of filing their Form AG990-IL.
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C3 Legal is continuing to closely monitor developments regarding these issues and expects to share additional alerts and updates in the future.