Ninth Circuit Verifies Nonprofit Status for Grand Canyon University

Ninth Circuit Verifies Nonprofit Status for Grand Canyon University

Today marks a significant victory for Grand Canyon University as the United States Court of Appeals for the Ninth Circuit delivered a unanimous ruling affirming the university's nonprofit status. The court found that the U.S. Department of Education (ED) had applied the incorrect legal standard in evaluating GCU's nonprofit designation, ultimately remanding the case back to the department for proper consideration.

Ruling Details and Legal Implications

Over the years, GCU has received nonprofit approvals from several credible organizations, including the State of Arizona and the IRS. Yet in 2019, the Department of Education controversially denied recognition of these designations, inciting legal challenges that would ultimately require judicial intervention. The Ninth Circuit conclusion is that the Department exceeded its authority as outlined in the Higher Education Act when it concluded that GCU did not qualify for nonprofit status.

Understanding Nonprofit Status

At the heart of this legal battle is the private inurement test, which serves as an essential criterion for nonprofits. This test allows organizations to engage in transactions with for-profit entities as long as they do so at fair market value—something that GCU has consistently demonstrated. Independent studies, which were tasked by the Department, confirmed that GCU has complied with this standard over the years.

Looking Ahead

In light of the Ninth Circuit's supportive ruling, there is optimism that the Department will acknowledge GCU's nonprofit status swiftly, with the IRS’s previous endorsement standing as a crucial element in this dialogue. The Ninth Circuit's decision resonates with recent rulings in other significant cases, reflecting a trend toward accountability for administrative actions and a recalibration of authority within federal agencies.

Historical Context of GCU's Nonprofit Status

GCU faced extensive challenges when it sought to revert to its original nonprofit status in 2018, after a period as a for-profit institution. The university, which has a long-standing reputation for quality education, aimed to ensure its viability for future generations by returning to its nonprofit roots. The Board of Trustees believed this decision would fortify GCU’s commitment to being an affordable, private Christian university in the region.

GCU's Strong Growth Over the Years

Despite facing numerous legal challenges and fluctuations in the higher education landscape, GCU has continued to thrive, with enrollment figures climbing even as other institutions face declining rates. The university has introduced 171 new academic programs, emphases, and certificates since reestablishing itself as a nonprofit. Moreover, GCU has consistently invested in its campus and surrounding communities, demonstrating a commitment to accessibility and educational excellence.

Investment in Infrastructure

The university has also significantly contributed to enhancing its parameters of excellence, with total investments in academic infrastructure nearing $2 billion over the past 16 years. GCU functions as the largest residential campus among private universities and has received accolades for the quality of its facilities, making it a sought-after choice for students seeking a Christian worldview in their education.

Commitment to Student Success

GCU prides itself on its ability to offer a unique educational experience that balances academic rigor with Christian values. As it stands, the university remains steadfast in its objective to empower students from diverse socioeconomic backgrounds, ensuring access to quality education that prepares them for meaningful careers.

Conclusion

The Ninth Circuit's ruling underscores the importance of adhering to established laws and standards in determining nonprofit status. GCU remains hopeful that the Department of Education will respond positively and promptly to this ruling, reaffirming GCU’s position as a nonprofit institution moving forward. With this confirmation, GCU aims to continue expanding its educational offerings while benefiting its students and community alike.

Frequently Asked Questions

What did the Ninth Circuit rule regarding Grand Canyon University's status?

The Ninth Circuit ruled unanimously that the Department of Education unlawfully denied GCU's nonprofit status, citing improper legal standards.

What is the private inurement test?

The private inurement test allows nonprofits to purchase goods and services from for-profit entities at fair market value, which GCU has proven it meets.

How has GCU performed since returning to nonprofit status?

Since returning to nonprofit status, GCU has seen enrollment growth, introduced numerous programs, and made significant investments in infrastructure.

What are the implications of this ruling for GCU and its students?

This ruling potentially paves the way for GCU to reinforce its nonprofit status, allowing further development in educational offerings and community contributions.

How can students benefit from GCU's position as a nonprofit institution?

As a nonprofit, GCU can better focus on student success, offer affordable tuition, and enhance access to resources aimed at fostering personal and professional development.

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