California DEI Mandates Ruled Unconstitutional

Headlines are full of updates for those following the latest diversity, equity and inclusion (DEI) quota news. In the last few weeks alone, Florida has banned public universities from spending money on DEI initiatives or teaching “critical race theory,” the Texas legislature is considering similar legislation and the U.S. Supreme Court is expected to rule on a challenge to affirmative action in higher ed in the coming weeks.  

Smart and well-intentioned individuals have different opinions on whether government should be stepping in to set rules banning DEI practices or whether it should be the decision of the institutions. Throughout the debate, the Roundtable remains committed to our True Diversity initiative that values every person as a unique individual, promotes equality over equity and empowers charitable organizations with the freedom and flexibility to advance their missions and help those in need. 

Latest Court Ruling Against Mandates 

In the latest news, a federal court ruled California’s diversity mandates for corporate boards run counter to the Constitution’s Equal Protection Clause, which effectively prohibits treating individuals differently under the law based on race, gender or other characteristics. The case, Alliance for Fair Board Recruitment v. Weber, challenged a 2020 law, enacted as Assembly Bill 979. The law required corporations based in the state to have a certain number of board members of specific racial or LGBTQ communities.  

Philanthropy Roundtable has closely followed the case and filed amicus briefs in a parallel case that challenged the state’s discriminatory gender quota law for corporate boards, Creighton Meland Jr. v. Shirley N. Weber, Secretary of State of California. This case has also been struck down in the courts and is currently on appeal. 

Why Does Any of this Matter for Philanthropy? 

While the California law targeted corporate boards specifically, it sets a precedent that could easily carry over to mandates on nonprofit and foundation boards. But, more broadly, such mandates violate the Civil Rights Act and embed discrimination into statute by requiring entities to treat individuals differently based on their race, gender or other statutory categories. Even disclosure regimes, such as NASDAQ’s proposed regime for listed companies, threaten to chill efforts to foster real diversity by narrowly categorizing individuals and valuing only set, immutable characteristics.  

U.S. charities and their donors support a diversity of communities and causes that Americans care about deeply. Imposing misguided rules like DEI mandates will only serve to limit true diversity in our sector and throughout our society. To learn more about the unintended consequences of mandates, see Philanthropy Roundtable Adjunct Senior Fellow Patrice Onwuka’s recent study, “Improving Board Diversity: Lessons from Sweden and Norway.”