Demographic Data Amendment for Non-Profits Challenged in Illinois

The ink was barely dry on an amendment to the General Not-For-Profit Corporation Act in the state of Illinois when it was challenged in a lawsuit brought in the Northern District of Illinois Eastern Division, American Alliance for Equal Rights v Raoul. According to an article on the Venable website, the amendment, which went into effect on January 1 of this year, requires Illinois-formed not-for-profit corporations that grant $1 million or more to other nonprofits annually to post aggregated demographic data about their directors and officers on their public website.

“Although this measure, and the lawsuit against it, affects only Illinois-formed not-for-profit corporations directly,” says Venable, “the case signals continued activist efforts against diversity, equity, and inclusion measures.”

According to the complaint, the American Alliance for Equal Rights is dedicated to “ending racial and other unlawful preference nationwide.”

Required demographic data includes information about race, ethnicity, gender, disability status, veteran status, sexual orientation, and gender identity. Notably, the Venable attorneys add that the not-for-profits are subject to the new requirement and “must allow individuals to decline to disclose any of their personal demographic information to the corporation.”

The lawsuit targets the amendment on two constitutional grounds. First, it alleges that it encourages affected non-profits to discriminate based on race, in violation of the Equal Protection Clause of the Fourteenth Amendment.

Also, even though it allows affected persons to decline to provide information about themselves, the suit alleges that it violates the First Amendment free speech clause because it compels discussion about a sensitive demographic issue. 

The plaintiff seeks a declaratory judgment regarding the alleged violations and a permanent injunction against implementing the law.