Nonprofit Resources


Racial Nondiscrimination Certification for Tax-Exempt Schools

Every tax-exempt school must annually certify to the IRS that it does not discriminate on the basis of race. The Supreme Court ruled in 1983 that a racially discriminatory school could not be tax exempt and that religion was not a defense.

Schools certify nondiscrimination on Schedule E if they file Form 990 or on Form 5578 if they do not file Form 990 (because they are associated with a church). We’ve summarized critical requirements of this certification below. Details are available in the instructions to both forms, available at

The main requirements are:

  1. Board approval of a racial nondiscrimination policy must be documented.
  2. All brochures and websites used for recruiting students must include a nondiscrimination statement. The IRS-approved wording is:

    The M school admits students of any race, color, national and ethnic origin to all the rights, privileges, programs, and activities generally accorded or made available to students at the school. It does not discriminate on the basis of race, color, national and ethnic origin in administration of its educational policies, admissions policies, scholarship and loan programs, and athletic and other school-administered programs.

  3. The school must annually publicize its nondiscrimination policy in a newspaper, broadcast media, or on its primary publicly accessible website home page. The method used must be reasonably expected to reach all segments of the community served. Approved alternatives are available for church-related schools where 75% or more of students are from the church, schools that draw a substantial percentage of students nationally or worldwide, and schools that the IRS determines have a substantial minority enrollment. Study the publicity requirements in the form instructions carefully to assure compliance. 
  4. The following records must be kept:
  • Documentation of the racial composition of the student body, faculty, and administrative staff (estimates are allowed)
  • Documentation that scholarships and other financial assistance are awarded on a nondiscriminatory basis
  • Copies of all written communications regarding students and solicitation of contributions

IRS Rev. Proc. 75-50 has these statements about noncompliance and record keeping:

Failure to comply. Failure to comply with the guidelines will ordinarily result in the proposed revocation of the exempt status of a school in accordance with the procedures set forth in Rev. Proc. 72-4, 1972-1 C.B. 706.

Failure to maintain records. Failure to maintain or to produce upon the proper request the required records and information will create a presumption that the organization has failed to comply with these guidelines.

There is no formal correction process or penalty for schools that discover they are not in compliance or lack necessary records. The school should immediately begin complying and keeping records. A history of compliance after discovery of the requirements will carry substantial weight if any issues are raised in an IRS audit about racial nondiscrimination.

If you have any questions about this topic, please contact us online or at [email protected].


  • R Scott Dobbs says:

    If the church operates a pre-k program ONLY for 1 year old infants through pre-kindergarten ages as more of a “mothers day out” program as opposed to an official “school” . . . would this apply to us ?

    • Ted R. Batson, Jr. Ted Batson says:

      The rule you are asking about only applies to “schools.” The Tax Code’s definition of a school is “an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on.” From this we can list five key criteria that describe a school:

      1. It is about education;
      2. It has a faculty, generally of trained instructors;
      3. It implements a defined instructional curriculum;
      4. It “normally” has a regularly enrolled body of pupils or students (in other words, this requirement may be of lesser importance); and
      5. It has a location where its educational activities are regularly carried on (although this may be a virtual location).

      A pre-school may be a school and therefore subject to the racial nondiscrimination rules. However, a program that operates as a “mother’s day out” program and doesn’t meet the five criteria listed above would not be subject to the racially nondiscriminatory policy and practices discussed in the article. This would mean that if the program really operates as childcare for moms who drop their children off while they run errands and there is no instruction going on (e.g., there is no curriculum employed and no teachers trained to teach), then the program would be exempt.

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