Discriminatory Membership Policies in Federally Chartered Nonprofit Corporations

Since 1791 the United States has created federal corporations by specific acts of Congress. These corporations fall into three general types, including corporations organized in the District of Columbia, corporations that carry out a federal governmental or public function, and private nonprofit corporations that undertake educational, charitable, historical, cultural or similar purposes. About fifty groups comprise the third category, including the American National Red Cross, the Girl Scouts of America, the Boy Scouts of America, the United States Olympic Committee, the American Legion, the Veterans of Foreign Wars of the United States (VFW), and the Little League.

Recently, the discriminatory membership policies of some of these nonprofit organizations have aroused interest. The Boy Scouts, for example, maintain that “no boy can grow into the best kind of citizen without recognizing his obligation to God,” and therefore refused to initiate a ten-year-old boy as a member of a Cub Scout pack because he had stricken the word “God” from the Scout Promise on his application The Little League and the VFW have also invited attention; recent suits have been brought against both organizations challenging their practice of limiting membership to men. While it is not clear that any federally chartered groups presently practice racial discrimination, several organizations have done so in the past.

These controversial practices raise the question of whether judicial remedies exist for persons discriminatorily denied membership in federally chartered organizations. Traditional judicial response has been a reluctance to interfere with the policies of private associations, particularly where membership benefits are primarily social rather than economic. Therefore, if constraints on membership policies of federally chartered groups are to be found, they must flow from the charter itself. This Note will propose two theories by which such constraints may be derived, both of which rely heavily on the unique nature of a federal charter as an expression of official acclaim for an exemplary group. The first theory requires that the incorporating statute be read in light of federal public policy and construed not to require, and in fact to prohibit, discrimination inconsistent with federal policy. The second approach invokes the constitutional doctrine of governmental action. There is clearly sufficient governmental involvement to impose constitutional prohibitions if the statute chartering the group mandates the challenged membership policy. Even if the charter does not require the discrimination, the grant of a federal charter alone may be sufficient to characterize the group’s practices as governmental action and therefore subject to constitutional constraints.