William Melhado
September 4, 2026
Top Takeaways
- The IRS is seeking to strip private schools of their tax-exempt status if the Trump administration determines they engaged in racially discriminatory practices.
- The threat to target schools with diversity programs could lead to donors pulling back on contributions and loss of programming, experts say.
- The proposed regulation, which leans on the Supreme Court’s 2023 decision to end race-based affirmative action, will likely face legal challenges.
A proposal by the Trump administration to revoke the tax-exempt status of private schools with diversity, equity and inclusion programs could make it harder for independent schools to raise money and maintain programs intended to broaden access for minority students.
Nonprofit and tax law experts say the proposal, announced by the Internal Revenue Service Thursday morning, could have a chilling effect on private schools and universities, even if the policy never goes into effect.
“The intent, clearly, is to starve these organizations of funding, or at least use that as the threat to keep them from doing things that the administration is opposed to,” said Geoff Green, the CEO of the advocacy group CalNonprofits.