The Context
For those unfamiliar with the history of the class action lawsuit in the United States, Arizona State University legal scholar David Marcus writes extensively about its formation and outcomes as an “aggregate litigation” tool on “behalf of an undifferentiated groups.” Traditionally used as a means to hold corporations accountable for harmful practices, the Class Action lawsuit in principle serves as a means to make whole those damaged or harmed by the corporate practices. In practice, it has resulted in relatively small amounts of financial renumeration for victims, but large administrative financial wins for the legal teams. This is what is increasingly happening to HBCUs.
According to publicly available data there are 147 registered 501c(3) non-profits throughout the country with a mission or title specific to HBCUs. These third-party entities engage in fundraising activities for scholarship giving and capacity and economic development activities as intermediary organizations. Increasingly they have been leveraging HBCUs as Class Action victims needing representation. These non-profit organizations solicit resources from individuals and corporations on “behalf of the undifferentiated group” of HBCUs, frequently doing so while failing to recognize the unique needs and individuality of each campus.
These registered non-profit organizations dedicated to “advocating” for and raising scholarship dollars on the behalf of HBCUs between 2024-2025 collected $243,299,682 in donations, program service fees, and membership fees. IRS data, which does not include the institution affiliated foundations or institutionally affiliated alumni associations, indicates that of the 147 registered organizations they have endowments valued at nearly $200 million, when the average HBCU endowment is $60,079,549.
Between 2024 and 2025, according to federal tax documents, 56 of 147 organizations (38%) submitted no federal tax records in the form of 990s in two to three years, which is problematic for transparency as to how much is being raised in the name of HBCUs; 46 of the organizations (31%) submitted 990 documents but reported no collections or revenue for two years despite still being operational; and of those organizations with contributions and/or program service revenue reported (29%), only 17 of them reported distributions of funds to HBCUs directly. These 17 organizations reportedly distributed $51,349,692 in direct funding through scholarships or grants to our nation’s HBCUs yet spent $274,007,375 in operational support for their own staff salaries, travel, marketing, or lobbying activities. They have collectively reported spending 116% more money on the apparatus of appearing to do good than their actual distributions. For example, one organization reported expending $101,000 for an internship program that yielded them $330,000 in revenue. Another organization provided Part III (Program Service Accomplishments) narrative claiming distribution of $26 million in scholarships in 2025 despite the details of their 990s reflecting only $729,986 in distributions.
The depth of the problem as to how much funding has been siphoned from HBCUs in their name is unknown, but a brief longitudinal analysis of available 990s documents since 2015, indicates these organizations have collected over $2.2 billion in contributions in the name of HBCUs with the same 990 tax records reporting only $453,274,521 has been given back to HBCUs (20.6%).
