A private school with 501(c)(3) status is required not only to have a racially nondiscriminatory policy to qualify for exemption but also to make its racially nondiscriminatory policy known to all segments of the general community served by the school. Historically, there have been only two ways to satisfy this requirement. The first option is to publish, at least annually, a notice of the policy in a newspaper of general circulation that serves all racial segments of the community. The second option is to use broadcast media as long as the way it’s communicated is reasonably expected to be effective. Private schools can easily fall short in complying with these two methods. For example, the notice in the paper must have the heading in 12-point font and text in 8-point font and must occupy at least three column inches. If the school serves more than one community, the notice should be in a newspaper that’s reasonably likely to be read by all racial segments of all communities it serves.
Now, the IRS is catching up with technology and allowing a third option to publicize the racially nondiscriminatory policy. A private school can now use its website to satisfy the requirement. The policy must be on the school’s primary, publicly accessible internet home page at all times during its taxable year in a manner reasonably expected to be noticed by site visitors. If a school doesn’t have its own website but rather its own webpage contained in a website, it can still use this option by posting the notice on its primary landing page for the school. A temporary outage due to website maintenance or technical problems is allowed. This home page can’t require a visitor to input their information (email address, username or password) to access it.
The IRS will consider the following factors to determine if the policy notice is reasonably expected to be noticed by visitors:
- Size of the notice
- Color of the notice
- Graphic treatment of the notice in relation to other parts of the home page
- Whether it’s unavoidable to visitors
- Whether other parts of the home page distract from the notice
- Whether the notice is visible without a visitor having to do anything other than simple scrolling on the home page; a link to another page, selecting from a drop-down menu or having to hover the mouse over the notice isn’t acceptable
Below is the sample the IRS gives for the notice:
NOTICE OF NONDISCRIMINATORY POLICY AS TO STUDENTS
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.
The new option makes it easier for private schools to be in compliance. They won’t have the burden of annually submitting the notice to one or multiple newspapers or doing a broadcast, which typically costs money. They’ll only have to post it to the website once (ensuring it meets the requirements above) to always be in compliance. Private schools using the website option should check that the notice is still on the home page after any website maintenance is done. They’ll also need to update the supplemental information they disclose on Schedule E of the Form 990.
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