Shockwaves reached the philanthropic community during President Trump’s first week back in office. A series of executive orders (with more likely to come) send a strong and clear signal that diversity, equity, and inclusion (“DEI”) at nonprofits and foundations are under a microscope and may face more challenges. Some of these executive orders take immediate effect, some signal future action, and some apply more directly to the federal government. Taken together, however, they make clear that underlying themes raised in the Supreme Court’s 2023 Students for Fair Admissions vs. Harvard decision have gained strength and scope. Selected highlights include[1]:
- Most notably and directly, an executive order on January 21, 2025, instructs the Attorney General of the United States to deliver a report to the President “containing recommendations for enforcing federal civil-rights laws and taking other appropriate measures to encourage the private sector to end illegal discrimination and preferences, including DEI”. It specifically requires the identification of “up to nine potential civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of 500 million dollars or more, State and local bar and medical associations, and institutions of higher education with endowments over 1 billion dollars.” (Emphasis added.)
- That same executive order also revokes a series of prior executive orders that were supportive of DEI and DEI-related efforts, and terminates affirmative action measures and DEI promotion in federal contracting.
- A January 20, 2025, executive order instructs the Director of the Office of Management and Budget (“OMB”) to “coordinate the termination of all discriminatory programs, including illegal DEI . . . mandates, policies, programs, preferences, and activities in the Federal Government, under whatever name they appear.” This instruction includes the termination of all federal DEI and environmental justice positions.
- Another January 20, 2025, executive order revokes more than 75-Biden administration orders, many of which promoted racial equity and DEI considerations.
While clearly alarming to organizations that are deeply committed to DEI and racial equity work, these executive orders leave much undefined. They signify a need for careful, measured analysis and monitoring rather than immediate reaction. For example, do these orders suggest that DEI itself constitutes illegal discrimination, or just that some DEI efforts may constitute illegal discrimination? What specifically does “diversity, equity, and inclusion” mean in this context? What regulatory or enforcement actions might flow from these orders? How should the increased legal risk suggested here be balanced against an organization’s stated mission and values? There are no obvious or clear responses to those important questions at this time. Accordingly, it is imperative that nonprofits and foundations continue to follow these developments closely and to regularly assess potential risk and risk tolerance.
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The C3 Legal team will continue to closely monitor developments in this area and expects to share additional alerts and updates in the future.
[1] A full analysis of these executive orders, or of other executive orders not specifically referenced here, exceeds the scope of this Alert.