Recent actions by the federal administration in the form of executive orders are creating confusion by implying that long-standing, legally compliant DEI practices might somehow be unlawful.
These executive orders don’t alter the underlying civil rights laws or legal protections for equal opportunity, but they send mixed signals that leave nonprofits questioning what is legal and what might trigger scrutiny. The lines between legal and political have been blurred, making it harder for organizations to confidently navigate their DEI work, even when that work remains entirely within legal bounds and as important as ever.
The purpose of this article is to clarify DEI terminology and current law, outline the current legal landscape, provide practical considerations for nonprofits, and provide some resources for additional reading on the topic of the legal status of DEI work. This article is not a comprehensive assessment of legal activity related to DEI work.
Background and terminology
What is Diversity, Equity, and Inclusion (DEI)?
For this writing, “DEI” encompasses efforts to promote the fair treatment and full participation of all people, particularly groups that have historically been marginalized. DEI in a workplace can include anti-bias training efforts, reviewing hiring practices to recruit a more diverse pool of job candidates, and promoting pay equity.
President Trump’s recent Executive Orders that claim DEI efforts are “illegal discrimination” do not define DEI nor do they specify what activities are supposedly unlawful.
What is in federal law?
Title VI of the federal Civil Rights Act, enacted in 1964, prohibits discrimination on the basis of race, color, and national origin in programs and activities receiving federal financial assistance, including through contracts and grants between federal agencies and nonprofits. Examples of illegal discrimination under Title VI include denying services, offering inferior services, or treating individuals differently based on the protected characteristics.
Title VII of the federal Civil Rights Act prohibits employers from discrimination on the basis of race, color, religion, sex, or national origin. Examples of illegal discrimination under Title VII: publishing a job advertisement that shows a preference for or discourages someone from applying for a job because of a protected identity; making decisions about job assignments and promotions based on a protected identity; and refusing reasonable accommodations for an employee’s religious belief or practices.
The Civil Rights Act also created the Equal Employment Opportunity Commission, a federal agency tasked with implementing and enforcing the Civil Rights Act. As a federal agency, the EEOC is ultimately led by the President.
What is the Trump Administration saying?
There are, to date, two Executive Orders (EOs) from President Trump related to DEI. It is important to note here that Executive Orders, while they have the force and effect of law, are not legislation or law. Rather, they are the President directing the federal government to act in a certain way. Only Congress can create or change federal law.
- “Ending Radical and Wasteful Government DEI Programs and Preferencing” (released Jan 20, 2025), directed all federal agencies to terminate all DEI offices, positions, and programs in federal agencies, including equity-related grants to entities outside the federal government like nonprofits. The EO failed to define “equity-related.”
- Ending Illegal Discrimination and Restoring Merit-Based Opportunity (released Jan 21, 2025), in part requires every federal grant or contract to certify that its work is compliant with “anti-discrimination” laws and does not operate any programs promoting DEI that violate “anti-discrimination” laws. It directed a federal office (OMB) to review all processes, directives, and guidance, and remove all references to DEI “under whatever name they appear” and terminate all related mandates, requirements, programs, and activities. This, along with several of the other executive order directives, led OMB to call for the pause of all federal funding (often called the funding freeze) to undergo a “comprehensive analysis” of the funding.
The Administration was sued over these EOs, and those cases are still working through the court system.
- In a case brought by the National Council of Nonprofits and others, a court issued a preliminary injunction, meaning that the related memo did not go into effect and federal agencies must continue those funding streams for recipients, including for nonprofits with federal grants and contracts. This case is ongoing.
- In a case brought by the National Association of Diversity Officers in Higher Education and others, an appellate court ruled on March 14 that the EOs pertaining to DEI can be in effect while litigation continues. This case is ongoing.
Considerations for nonprofits dedicated to DEI work
There are ways to maintain your organization’s commitments to diversity, equity, and inclusion that are both effective and well within the law. It is critical that the nonprofit sector continue this work, so that all individuals have equitable access to opportunities, communities remain strong and inclusive, and systemic barriers that have historically excluded marginalized groups are addressed. By focusing on creating fair processes, fostering inclusive environments, and ensuring equal opportunity for all, nonprofits can uphold their values while reducing risks of political retaliation.
The legal and political landscape around DEI is shifting—and that means the rules we’ve long operated under don’t apply in the same way. Continuing your DEI efforts could now carry legal or financial risks, and it’s important to consider that reality in your organization’s strategic conversations.
Recommended Actions
- Initiate conversations with your board and staff to assess what risks your organization is facing (if any).
- Understand your funding sources, particularly any federal grants or contracts.
- Evaluate the structure and objectives of your DEI initiatives, and in particular review these two resources below:
- The practical considerations for nonprofits and recommendations listed in “Tax-Exempt Implications of ‘Illegal DEI’”
- Whether your organization’s DEI goals can be achieved by “leveling” DEI practices, as outlined in “Steer Clear of “Illegal DEI”
- Consider your organization’s capacity to manage potential risks associated with DEI efforts.
- Discuss with your board and staff how your organizational efforts to further DEI align with your organization’s mission and vision.
- Ask board members and staff to contribute their viewpoints and opinions so that your organization’s leaders can best understand how decisions on DEI could impact the organization and its ability to move towards its mission and vision.
- Recognize the benefits of standing firm in your organizational values and commitments for your team and for the communities you support, as well as the benefits to nonprofits that are more vulnerable to politically-motivated attacks in the current environment.
- Engage in conversation with similarly-situated organizations, to learn how they’re thinking about their DEI work.
- Encourage each other to hold fast to DEI commitments, and recognize the power in standing strong together. If your organization can continue DEI work without risking its core mission or critical funding, we encourage you to lead as boldly as possible, because not every organization has that option. This is not a test of commitment—it’s a call for solidarity.
- Extend grace to organizations making decisions around DEI that you don’t agree with. Some nonprofits are in very vulnerable positions: their missions may be mischaracterized as “illegal DEI” under the federal administration’s policies, or federal funding is so vital that losing it would create irreparable harm to the communities the organization is committed to supporting. We can’t know the circumstances of those organizations, nor how DEI considerations may be shaping their work in quiet ways.
- Identify legal counsel with expertise in areas like civil rights, employment law, or federal contracts.
- Even if you don’t need immediate support, having a shortlist of trusted attorneys can save valuable time later. Consider reaching out to a few to find an attorney or firm who understands your mission and can help assess legal risks, compliance obligations, and strategic options. The right legal partner can be a critical resource in navigating this evolving landscape and helping your organization make informed, confident decisions.
We hope this information supports your nonprofit in making difficult decisions. Below are excerpts from related articles with additional important information and context.
Resources (in chronological order)
Tax-exempt implications of ‘illegal DEI’
Attorneys Greg Larson and Wade Hauser of Lathrop GPM provide practical considerations for nonprofits in their April 11, 2025 article “Tax-Exemption Implications of ‘Illegal DEI’”:
We recommend that nonprofit organizations conduct an individualized audit of their DEI-related practices – ideally with the assistance of legal counsel in privileged communications – to identify any that might be illegally discriminatory or otherwise high-risk, and to develop a mitigation plan.
Considerations and areas of focus may include, but are certainly not limited to:
- Sources of funding and, in particular, the sources and amounts of federal funding.
- Whether your organization conducts race-conscious programs or activities that provide benefits to individuals or organizations (such as scholarships, fellowships and grants).
- Whether your organization engages in race-conscious employment practices.
- Whether your organization supports or encourages protests and/or civil disobedience.
- Whether your organization engages in political activities that might be inconsistent with its tax-exempt status.
It is also important to triage the risks you identify by how likely they are to occur and what their potential operational or programmatic impact could be.
Finally, when considering what risk-mitigation steps might be appropriate for your organization, keep mission front and center. Some organizations may decide that to pull back on DEI-related activities would be to negate the very reason for the organization’s existence. Other organizations may have more flexibility to adapt their activities or their messaging in a way that does not threaten the core of what they do or who they are. Again, this should be an individualized determination informed by an organization’s risk profile and risk tolerance.
The article also reviews the “public policy doctrine” developed in common law (a body of law based on court decisions rather than statutes), which provides that activities cannot be charitable if they are either illegal or contrary to federal public policy. The authors look at the public policy doctrine through the most famous case of the IRS revoking tax-exempt status of an organization based on racially discriminatory conduct, when the IRS revoked the exempt status of Bob Jones University. In applying the public policy doctrine to DEI activities, the authors write:
The January 2025 Executive Orders cited above and other recent administrative guidance make it plain that the current administration views all DEI activities with intense suspicion, and some unspecified subset of “DEI” activities as “illegal.” These pronouncements could be interpreted to apply even to activities merely intended to foster inclusion or belonging, or to recognize past injustices and ongoing disparities. The executive branch’s policy is, however, barely four months old, and we have very little evidence so far that the judicial branch and Congress are collectively in step with the new policy.
In short, even though federal enforcement priorities have dramatically shifted, we do not have a “fundamental public policy” against DEI in all its potential applications. Moreover, the IRS has long ruled that efforts to “lessen prejudice and discrimination against minority groups” or provide support to members of an “ethnic minority” can be charitable. (See, e.g., Rev. Rul. 74-587; Treas. Reg. § 53.4945-4(b)(5), ex. 2.) These precedents remain good law. Thus, many efforts to promote diversity, equity and inclusion remain legal and, even if they run counter to current trends, should not form the basis for revocation of tax-exempt status.
Statement of former EEOC officials
On April 3, 2025, former officials of the U.S. Equal Employment Opportunity Commission (EEOC) officials responded to a document posted on March 19, 2025 by the current Acting Chair of the EEOC “What You Should Know About DEI-Related Discrimination at Work.”
In their response (Statement of Former EEOC Officials on DEI Efforts), the former EEOC officials stated:
The Acting Chair’s document seems designed to convey the message that initiatives to advance diversity, equity, and inclusion (“DEI”), which the document does not define, are fraught with legal peril. This document ignores important aspects of applicable law, as well as the reality that proactive efforts are still needed in America’s workplaces to provide equal opportunity for all employees and applicants. To the extent the Acting Chair’s document chills such efforts, we believe it does a grave disservice to employers, their employees, and America’s economy.
The Statement goes on to provide guidance on how employers can continue training to promote inclusion, belonging, and equal opportunity; employee resource groups, and other efforts that can be a part of a comprehensive effort to promote equal opportunity.
An executive order explainer: Why the courts will have the final say on Trump’s anti-DEI actions
In this article for Brookings posted February 27, 2025, author Stacy Hawkins writes about what executive orders are, the effect of executive orders, what President Trump’s executive orders mean for DEI, and the role of the federal courts in interpreting civil rights law
She writes:
Moreover, while the DEI EOs express hostility toward DEI, the Supreme Court has consistently said that DEI efforts are not only permissible, but in its most recent case involving Harvard University, the Court called diversity a “commendable” goal. Nothing in these EOs alters these judicial decisions, which remain the law. The Trump administration’s inability to clarify what conduct is prohibited under these EOs—since that determination is reserved for courts—is precisely the reason at least one federal court has already enjoined several provisions of the DEI EOs, and the LGBTQIA EO is also being challenged in court.
Trump’s EOs aim to eradicate the practice of DEI and eliminate LGBTQIA protections. They will be most successful in doing so within the federal workforce, over which the president exercises a significant amount of control. The ability of these EOs to be effective in altering the practices of private employers or higher education institutions, however, is much more tenuous. The most important lever the president has over these entities is the power to control the federal purse strings through contracts. This may eventually exact the necessary certification compliance from these federal contractors, but ultimately, the determination of whether any DEI practice is “illegal” or “unlawful” or whether and how LGBTQIA individuals enjoy broad protections against discrimination under federal civil rights law remains in the hands of federal courts—not President Trump.
Steer clear of ‘illegal DEI’
For organizations that are in privileged positions and able to consider using alternative language for DEI work, Kenji Yoshino and David Glasgow suggest reframing DEI as “equal opportunity” initiatives to avoid risking federal interference.
In their article Steer Clear of ‘Illegal DEI’ with Leveling – Not Lifting – Programs, Yoshino and Glasgow describes two “types” of DEI: leveling and lifting.
[T]he difference between illegal DEI and legal DEI could be styled as the difference between what we call “lifting” DEI and “leveling” DEI. The contrast can be seen through example. In 1970, less than 5% of musicians in the top symphony orchestras were women. We could solve such a problem in one of two ways. Lifting DEI would give a “bump,” or preference, to women in the audition process. Leveling DEI would de-bias the audition process by removing gender from the equation altogether. In fact, the orchestra directors chose the leveling strategy and had everyone audition behind a screen, arguably leading to a dramatic increase in the number of women musicians.
However unfairly, anti-DEI advocates have primarily trained their sights on lifting DEI. The vast majority of anti-DEI lawsuits are challenging programs that limit eligibility to members of underrepresented groups, government initiatives that explicitly consider race, and other alleged “preferences” or “quotas” in the workplace. Hiring set-asides, tiebreaker practices, and tying manager compensation to meeting diversity goals are all examples of lifting DEI. Organizations that adopt or continue such practices risk being targeted by the new administration.
In our experience, leveling DEI garners much wider support. It includes structured recruitment and promotion processes to minimize bias, opening gender- and race-based affinity groups to all-comers, expanding mentorship programs, establishing procedures for fair work allocation, and building DEI initiatives around concepts like “allyship” and “inclusive leadership” to benefit people of all identities and backgrounds. It also includes rhetorical shifts: The statement “Talent is everywhere but opportunity is not; DEI closes the gap” (leveling) differs from “We use diversity hiring to recruit people from historically disadvantaged groups” (lifting).
Multi-state Attorneys General guidance
The Attorneys General from 16 states, including Minnesota Attorney General Keith Ellison, issued formal guidance in February 2025 to support businesses, nonprofits, and other organizations in maintaining their DEI efforts while complying with legal requirements.
The Attorneys General emphasize there is a whole spectrum of very important and legal DEI policies and practices that strengthen and protect employers and result in better business. Referencing the Executive Orders’ requirement that organizations receiving federal funding must certify that it is not operating “illegal DEI programs,” the guidance states:
[C]ertification that an entity is not operating “illegal DEI programs” need not result in the abandonment of lawful DEI policies and practices. In fact, it is precisely this potentially chilling effect on these contractors’ free speech rights—as well as the uncertainty regarding what might be deemed “illegal” under the EO—that prompted a federal court to temporarily enjoin this certification requirement, as well as a portion of the EO targeting federal sector “equity contracts,” pending litigation.
This Guidance also emphasizes that the Executive Orders are not law, though they do show the President’s control over federal spending through grants and contracts:
In spite of what appear to be serious threats and corresponding obligations in these EOs, it is important to remember that EOs do not have the force of law. They merely direct federal agencies on how to exercise their enforcement authority under the law. While this threat of expanded enforcement action is not trivial, nothing about the Civil Rights Act or the conduct that law proscribes or permits has changed with the issuance of these EOs. Unlike the EO directed to the federal workforce, which dismantles DEI efforts wholesale, the EO aimed at non-federal public and private sector entities, including federal contractors, targets only those DEI practices deemed “illegal” or “unlawful” under civil rights laws. However, that EO does not define what constitutes an “illegal” or “unlawful” DEI practice—nor could it.