A new White House directive has diversity, equity and inclusion (DEI) practices in its crosshairs. Private foundations and philanthropy groups engaging in discriminatory DEI practices are justifiably concerned they are now under a microscope for the legality of their hiring, grantmaking or programmatic activities.
At the Roundtable, we have long championed a more holistic and equality-based approach to embracing diversity centered on the value and uniqueness of each individual, rather than on quotas or discriminatory approaches. We advocated for this approach through our True Diversity initiative as we believe it’s a better path toward empowering charitable organizations with the freedom and flexibility to advance their missions and help those in need. Over the last few years, our network has supported dozens of groups around the country who support this view and put it into practice in their work.
What’s In the Executive Order
On January 21, the Trump administration issued an executive order (EO) titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” directing federal agencies to identify up to nine potential civil compliance investigations targeting diversity, equity and inclusion programs deemed discriminatory. Large nonprofit organizations and foundations with assets of $500 million or more are among those that could be identified. Predictably, opponents of the EO are outraged, using “philanthropic freedom” as their battle cry.
The order calls on the attorney general to submit a report within 120 days with recommendations for enforcing civil rights laws in the private sector. This report must include key sectors of concern within each agency’s jurisdiction, the most egregious DEI practitioners in each area. It also calls for each agency to “identify up to nine potential civil compliance investigations of publicly traded corporations, large nonprofit 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.”
What the Order Means for Philanthropy
For foundations that engage in any practices based on race, color, religion, sex or national origin, this order is – at minimum – a signal to carefully examine their programs and policies to ensure they comply with both the text and the spirit of the Civil Rights Act of 1964. Some large foundations may be targeted for investigations, although agency attention will also be on large corporations, universities and other institutions. Longer term, foundations should expect this order is the first step toward future explicit regulations banning DEI practices. Of note, the order is clear that changing the name of these practices is not sufficient to avoid scrutiny.
The EO says institutions throughout society have adopted DEI practices that violate Civil Rights Act protections against discrimination based on race, color, religion, sex or national origin. It is a clear signal to judge people as individuals based on character, merit and potential, not skin color. It also aims to protect free speech. For example, it explicitly states it does not limit the ability of university professors at federally funded institutions to advocate for the practices prohibited by the order.
Nonprofit recipients of federal funds should note the EO directs federal agencies to ensure compliance with civil rights laws for any grants or contracts. Nonprofit organizations receiving federal funds, including universities, must prepare for increased restrictions on DEI practices to continue such financial support.
Philanthropy groups that promote discriminatory hiring, grantmaking and programming are justifiably concerned about this order. As Philanthropy Roundtable cautioned following the Supreme Court’s overturning of affirmative action, we are seeing a growing number and success rate of challenges to DEI activities across the private and public sectors. The recent executive order is simply the next step in the movement away from discriminatory practices.
We are not surprised the nonprofit sector is calling this a violation of philanthropic freedom. Philanthropic freedom is paramount, but is not a free pass to violate federal law. We would encourage funders to engage thoughtfully in ways to uplift all communities without solely using race or other immutable characteristics to guide activities.
