Mellon Foundation Opposes Proposal to Target Private College and Universities’ Tax-Exempt Status

In a regulatory comment submitted to the IRS on November 3, 2026, the Foundation argued that the proposed rule distorts existing law and risks chilling college and universities’ lawful efforts to support voices and experiences that have historically been excluded from higher education. If implemented, we believe this rule would undermine higher education’s crucial role in supporting pluralism in our diverse and democratic society and would stifle the free exchange of ideas on campus. At Mellon, these freedoms are not abstractions; they describe the work we support every day.

The IRS’s proposed rule regarding “Racial Nondiscrimination in Private Schools” would deny tax-exempt status to any private school, including private colleges and universities, that considers race, color, or national or ethnic origin “for any purpose” in “any educational policy” or “school-supported program,” and would do so “regardless of the intent behind or the legality of” the conduct at issue. In this way, the proposed rule goes far beyond settled law and threatens to erase the decades long struggle for dignity and equality that opened up higher education to those long excluded.

In our grantmaking, the Mellon Foundation is committed to strengthening and expanding access to the arts and humanities—uplifting under-told and often overlooked histories across the country. This work is essential to a healthy democracy because it is through these fields that people come to know one another and tell a more complete story of who we were, who we are, and who we can become.

As the nation’s largest private funder of the arts and humanities, we know firsthand that private colleges, universities—and the students, scholars, archivists, and artists they support—are better off when diverse ideas, experiences, and perspectives can flourish. We also know these ideas must be continually tested and challenged. American universities and colleges have always been central to this project, functioning not only as an essential space for the human pursuit of knowledge but also as one of the pillars of our democratic system, where new ideas are formed and existing ideas are challenged and held accountable.

The uncertainty created by this proposed rule will almost certainly chill otherwise lawful conduct and speech, turning almost every academic center, course of study, scholarship, student group and academic program that even tangentially relates to race into a potential gamble risking the school’s tax-exempt status. And if the proposed rule is finalized, this chilling effect could extend beyond the higher education sector, potentially threatening almost any charitable group championing diversity, racial justice, and equity.

The risk this proposed rule poses to the higher education sector is great. The risk it poses to our collective efforts to understand each other in a democratic and pluralistic society is potentially even greater.

Since our founding in 1969, we have seen that each time American higher education opens its doors to more voices—such as women scholars, scholars of color, LGBTQ+ scholars, and disabled scholars—more of the American tapestry is uncovered. This proposed rule threatens to close the doors on these efforts and so, together with other Foundations and supporters of a democratic ideal of higher education, we urge its withdrawal.

Read our full public comment.