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The U.S. Department of Justice (DOJ) issued pivotal guidance in July 2025 clarifying how federal antidiscrimination laws apply to programs and initiatives that receive federal funding. Institutions are expected to strictly comply with statutes, including Titles VI and VII of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, and the Equal Protection Clause of the Fourteenth Amendment. These laws prohibit discrimination based on race, color, national origin, sex, religion, or other protected characteristics. 

The memo, titled Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination, provides guidance to ensure that recipients of federal funds comply with federal antidiscrimination laws. It applies broadly across sectors, including higher education, healthcare, workforce development, and research.  

Institutional risk exposure 

Colleges and universities operate at the intersection of educational mission, public accountability, and legal compliance. Recent executive orders, along with the heightened enforcement and expanded application of existing federal laws, have significantly reshaped the compliance risk landscape for institutions. New compliance challenges have prompted colleges and universities to reassess their risk exposure and evaluate whether social responsibility and justice initiatives, recruitment strategies, and student support programs align with federal law.  

Key areas of risk include: 

• Employment practices: Faculty and staff hiring processes that incorporate demographic preferences may be vulnerable to legal challenges. Institutions must ensure diversity goals do not override merit-based selection criteria. 

• Admissions and scholarships: Race-conscious admissions policies, even those designed to promote diversity, must be reevaluated in light of recent Supreme Court decisions and DOJ guidance.  

• Academic programming and outreach: Events, mentorship programs, or affinity groups that promote specific ideologies or exclude participants may create risk for institutions. 

• Global and international engagement projects: Projects that promote international cultural exchange or global equity may face scrutiny. Funding involving foreign gifts or contracts over $250,000 must be disclosed semiannually under Section 117 of the Higher Education Act and may be audited. 

• Capital projects: New or renovated buildings intended to support cultural identity groups or promote inclusion may be scrutinized if federal funding is involved.  

• Federal and research grants: Funds received through grants should be closely examined to ensure compliance with regulations, proper application of direct and indirect cost rates, and use of funds in alignment with grant requirements and agency priorities. 

• Endowments: Funds received through endowments may be restricted. Controls should be in place to ensure compliance with each endowment’s intended purpose. 

• Name, image, and likeness (NIL): Internal frameworks for NIL activities are required, including processes for athletes to report income from endorsements, social media posts, and appearances. NIL deals must be closely monitored to ensure they do not violate existing agreements or institutional/National Collegiate Athletic Association (NCAA) policies.  

• Athletic programs: Third-party pay-for-play arrangements involving student athletes are prohibited, and their employment status will be clarified under federal labor laws with significant implications for benefits, unionization rights, and institutional responsibilities. Safeguards to preserve non-revenue sports are encouraged. 

• National security: Partnerships with institutions in adversarial countries may be flagged as a national security risk and trigger federal investigations.  

Strategic response and risk mitigation 

Many colleges and universities are adopting a proactive, data-driven approach to understanding and addressing their dynamic and evolving compliance risk. Risk mitigation strategies include: 

• Program, policy, and partnership reviews: Conduct comprehensive reviews of admissions, hiring, financial aid, and fundraising campaigns, along with capital planning and academic, research, and athletic programming – particularly those involving third-party partnerships – to identify potential areas of noncompliance.  Engage with legal counsel to assess risk exposure and recommend corrective actions. 

• Risk mapping: Use structured and unstructured data to analyze admissions, hiring and promotion activity, resource allocations, funding sources, campus surveys, and student outcomes. Identify potential patterns and red flags that may indicate signs of unintentional bias, unequal treatment, or compliance gaps. 

• Documentation and transparency: Maintain clear records of decision-making processes, including the rationale for any diversity-related initiatives. This documentation can be critical in defending against legal challenges. 

• Training and education: Provide regular compliance training for faculty, staff, and administrators. Ensure those involved in hiring, admissions, and programming understand compliance risks and institutional policies. 

Conclusion 

The compliance landscape for colleges and universities is shifting rapidly, creating a need for higher education institutions to seek professional advice. The recent DOJ memo is more than guidance; it is a strategic signal for college and university leaders to review existing programs and fortify compliance systems to withstand evolving enforcement priorities. 

This is a pivotal moment for colleges and universities, not simply to conform, but to adapt. Institutions that fail to recalibrate may face reputational damage, funding challenges, or federal scrutiny, resulting in costly investigations and litigation. Alternatively, those that respond with strategic clarity and operational agility can turn risk into resilience.  

Advancing compliance in today’s climate requires not only good intentions; it also demands a nuanced understanding of enforcement trends, a readiness to pivot, and a willingness to engage stakeholders across legal, academic, and community spheres. The challenge is real, but so is the opportunity to lead with purpose while navigating uncertainty with confidence. 

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About HKA 

HKA is a leading global consultancy specializing in investigations, risk mitigation, dispute resolution, expert witness, and litigation support. Our experts provide a robust suite of services tailored to the unique needs of academic institutions, helping them manage financial and compliance risks in an increasingly complex environment, including: 

• Internal investigations 
• Compliance risk assessments 
• Fraud risk assessments 
• eDiscovery 
• Asset and funds tracing 
• Name, image, and likeness (NIL) compliance  

For more information about HKA’s services, please visit www.hka.com. 

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About the authors 

Ramon (Ray) de Legorburu is a Certified Public Accountant with over 25 years of experience. He has been appointed as a forensic accounting expert on multiple occasions. Ray has testified in both depositions and trials as an expert witness on matters involving economic damages and business valuation, with disputed values of up to $ 100 million. He has presented to the U.S. Securities and Exchange Commission regarding a financial statement restatement for a large, publicly traded packaging company. 

Contact Ramon de Legorburu – HKA 

Pamela (Pam) Verick is a Certified Compliance and Ethics Professional and a Certified Fraud Examiner with over 25 years of experience in corporate compliance and forensic investigations. She has assisted organizations, key stakeholders, and legal counsel on fraud governance matters and unplanned event response in 40 countries across six continents. Pam has also performed investigations and root-cause analyses of economic crime and misconduct by corporate directors and officers, management, employees, and third parties. 

Contact Pamela Verick – HKA 

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