The Gates Foundation's sudden reversal to end racial exclusion for its college-aid initiative should spur the IRS to exercise its authority and advise nonprofits across the country that their tax-exempt status is in jeopardy if they continue with similar DEI programs, American Alliance for Equal Rights President Edward Blum wrote in a guest column for The Wall Street Journal.
At issue, Blum wrote, is that the Gates Scholarship was limited to high school seniors who had to be "from at least one of the following ethnicities: African-American, American Indian/Alaska Native, Asian & Pacific Islander American, and/or Hispanic American."
Blum's Alliance for Equal Rights filed a formal complaint with the IRS over the foundation's tax-exempt status given that "the scholarship's restriction constituted invidious racial discrimination in violation of federal law, IRS regulations and longstanding Supreme Court precedent."
Days later, the Gates Foundation "blinked," Blum wrote, adding their reversal has "seismic implications."
Gates "implicitly conceded a fundamental legal point: Race-based exclusions are incompatible with the privilege of federal tax exemption. That should serve as a clarion call not only to nonprofit organizations but to the IRS itself, which for years has tolerated these unfair and illegal programs," he wrote.
"The Gates Foundation's abrupt pivot confirms what critics of discriminatory 'equity' initiatives have argued all along. When placed under even modest legal scrutiny, programs that seek to achieve racial proportionality and divide people by race in the name of diversity or remediation — whether in colleges, workplaces or other institutions — can't stand," Blum added. "That is especially true when those programs are sponsored by organizations that enjoy the privilege of exemption from taxes."
Blum said the IRS "has the legal authority and the duty to act" with other nonprofits' DEI programs.
"It should immediately issue a nationwide advisory clarifying that any 501(c)(3) organization that engages in racial classifications and preferences risks losing its tax-exempt status," he wrote.
In the end, Blum said the Gates Foundation's about-face is "commendable but reactive."
"The IRS should issue clear guidance that makes explicit what the law and precedent already command: tax-exempt status is a privilege conditioned on colorblind nondiscrimination, not a shield for racial engineering, however well-intended it purports to be," he wrote.