Nonprofits are charitable or religious organizations to which the Internal Revenue Service grants exemption from most taxes. Some laws that apply to public companies or government-funded organizations do not apply to nonprofit organizations. However, discrimination is generally illegal even in a nonprofit setting, although some organizations are exempt.

Discrimination Basics

Discrimination laws are primarily governed by Title VII of the Civil Rights Act, a federal law. Other federal laws, including the Americans With Disabilities Act, also affect employer-employee relationships, and some states have enacted additional anti-discrimination laws. It is generally illegal to discriminate on the basis of age, sex, religion, national origin, race or color, disability or genetic status. Common forms of harassment include disproportionately hiring members of one group, creating a hostile work environment or applying different standards to covered groups. For example, refusing to interview someone in a wheelchair would be an example of discrimination.

Who Is Covered

Not all employers are covered by anti-discrimination laws. Each category of discrimination has its own threshold for employer size and business practices. Employers that don't meet this threshold aren't required to abide by the laws. For example, age discrimination is prohibited if the employer has had more than 20 employees who worked more than 20 weeks in the last year, but the Equal Pay Act -- which provides equal pay to women for equal work -- covers employers with more than 15 employees and anyone who works in a professional or white collar job. According to the U.S. Equal Employment Opportunity Commission, very few employers are not covered by the Equal Pay Act.

Nonprofit Exemptions

Religious organizations such as churches or religious charities are permitted to discriminate on the basis of religion. For example, if a religion believes that women cannot be ordained, that organization is allowed to refuse to hire women as clergy members. However, religious corporations and other businesses run by nonprofits cannot discriminate. For example, if a church runs a store or hospital, it has to provide equal opportunities. Private clubs are also generally permitted to discriminate. Some states have enacted laws to narrow exceptions to discrimination laws. Pennsylvania, for example, has a law prohibiting discrimination by private clubs.


If your nonprofit receives any federal funding or federal contracts, it can lose these privileges if it discriminates. Discrimination is also a civil offense, and people who are discriminated against can sue for lost wages, actual damages and punitive damages, as well as attorney's fees. The Equal Employment Opportunity Commission is charged with investigating allegations of discrimination; sometimes it sues on behalf of employees. In other cases, it investigates and then authorizes a plaintiff to sue using her own lawyer.