Overview
Due to heightened scrutiny of diversity, equity, and inclusion (DEI) initiatives, many colleges and universities have been reviewing scholarship programs and other donor-restricted funds that include race- or gender-based eligibility criteria. To reduce potential legal risks, some institutions have considered replacing those criteria with eligibility requirements that do not reference protected characteristics. But this approach can raise questions regarding the extent to which institutions may or should modify criteria established by charitable donors, sometimes decades prior.
In June 2026, the Iowa Supreme Court issued one of the first judicial decisions touching on this open question, In re Ezra L. Totton Scholarship.[1] The Court held that any modification of donor-restricted funds must remain consistent with the donor's charitable purposes. Compliance with US Supreme Court guidance (i.e., Students for Fair Admissions, Inc. v. President & Fellows of Harvard College (SFFA)[2]), the Iowa Supreme Court held, was not a basis to ignore a donor's core intent for the scholarship, even if its race- or gender-based criteria increased risk for the University of Iowa.
While this decision is only precedential in Iowa, it may prove influential and meaningfully add to the conversation on factors to consider when reviewing donor-restricted scholarships. Below is a brief overview of the case and a few key points for institutions to consider.
Court Decision on Modifying Donor-Restricted Endowments
The case involved a scholarship established through the estate of Dr. Ezra L. Totton, a distinguished Black chemist and educator. When Dr. Totten was a student, he applied to graduate school at the University of Tennessee and was rejected because of his race. He sued to challenge this discrimination, but the lawsuit was dismissed. Dr. Totten was later accepted into the University of Iowa, where he matriculated and graduated. Dr. Totten passed away in 1997, but in his will, he left funds to the University of Iowa to create a scholarship for Black students majoring in the physical sciences, preferably chemistry. At the time of its establishment in March 1997, Dr. Totton's estate advised, "If you are unable to comply with the requirements of this bequest, please return the check and notify us immediately."[3] The University administered the scholarship in accordance with these directives for nearly three decades.
Following the US Supreme Court's ruling in SFFA, the University of Iowa, represented by the state's Attorney General, filed a petition in state district court to modify the scholarship restrictions.[4] Under Iowa's Uniform Prudent Management of Institutional Funds Act (UPMIFA),[5] an institution may petition a court to modify a donor-restricted scholarship when the original restriction becomes "unlawful, impracticable, or impossible to fulfill."[6] The University argued that administering a race-restricted scholarship had become at least "impracticable," if not "unlawful" under SFFA. Although SFFA directly addressed admissions policies, the University argued that the breadth of its holding arguably also applied to scholarships. It further pointed to recent caselaw and executive guidance lending credence to such legal claims.[7] The University proposed replacing the race-based criterion with one that targeted first-generation students.
The district court declined to allow the requested modification on grounds that it was unclear SFFA was "conclusively determined to apply to scholarships that have been donated to an academic institution and designated as provided for in the scholarship at issue."[8] On appeal, the Iowa Supreme Court reversed and remanded that decision. It agreed with the University that an institution need not wait until a court definitively declares a restriction unlawful before seeking modification. The Court acknowledged the district court's finding that there was no legal authority making it unlawful to continue the race-restricted endowment, but concluded that the changing legal DEI landscape created sufficient uncertainty and risk to render the restriction "impracticable" under the UPMIFA statute.[9]
Nevertheless, the Court declined to grant the specific relief the University requested. The Court held that, on the record before it, there was no evidence that Dr. Totton intended for first-generation status to serve as a substitute criterion if the original restriction could no longer be carried out. This was especially so given that the estate expressly directed the University to return the check if it could not follow the requirements of the bequest.[10] The court noted that there is "a world of difference" between Dr. Totton's personal experience as a victim of racial segregation, which inspired the scholarship, and the life of a first-generation college student today at the University.[11]
The Court remanded for the district court to evaluate alternative remedies that evince the donor's perspective.[12] It explained that, under UPMIFA, permissible modifications are interpreted broadly and might include releasing the restriction altogether (i.e., allowing the scholarship funds to be used for any student) or directing the funds to a separate institution if doing so better effectuates the donor's original charitable objectives.[13]
The Court advised that determining donor intent may include reviewing extrinsic evidence and allowing participation of parties with a special interest in the enforcement of the charitable trust. Notably, both the ACLU and the NAACP filed amicus briefs in the appeal to defend the donor's original purpose. Dr. Totton's surviving family members also provided statements indicating that his purpose was to support Black students in higher education and that he would have objected to the modification proposed by the University. The Court instructed the district court on remand to ensure that an independent "advocate for the donor's intent" is allowed to participate in the proceedings.
Key Takeaways
The In re Ezra L. Totton Scholarship decision suggests that universities assessing race-based scholarship endowments' compliance with current administration civil rights enforcement policy should not assume that substituting "socioeconomic status" or "first-generation status" for a donor-restricted scholarship will automatically pass either judicial muster or conform with the intent of the original donor. Modifications cannot simply serve the University's generalized compliance goals but must be anchored to the original donor's intent. This decision is one indication that courts addressing this issue will likely look beyond the restrictions placed by the donor on the endowment to evaluate the entirety of the will, the donor's relationship with other charitable organizations, and historical context to establish a clear picture of the donor's probable intent before allowing a modification. For those donors whose intent was to provide support for students who have experienced discrimination, colleges should engage with the donor's estate administrators early to find a way to reformulate an endowment's restriction in a way that minimizes enforcement risk. These discussions may focus on alternative ways to advance the donor's primary interest, which would be consistent with Justice Kavanaugh's observation in his SFFA concurrence that "governments and universities still ‘can, of course, act to undo the effects of past discrimination in many permissible ways that do not involve classification by race.'"[14] Colleges may also want to engage potential donors early, prior to death, to assist with their expressions of intent in their estate planning. These discussions should involve consideration of more precise ways to identify the types of students the donor intends for the endowment to benefit.
The Totton decision suggests that before filing an UPMIFA or cy pres petition or otherwise seeking to modify a restricted endowment, institutions should thoroughly research the donor's original intent. It may be prudent to consult with relatives of the donor, if there are known relatives. Different institutions will likely have varying views on whether and when to take such steps, depending on their risk tolerance and future legal developments, among other factors.
In any event, universities and other institutions awarding educational endowments should be conducting a comprehensive review of their scholarships and other forms of endowment, including their criteria and evaluation process, and should address any potential post-SFFA enforcement risks before they become enforcement matters.
[1] In re Ezra L. Totton Scholarship, No. 25–0462, 2026 WL 1614078 (Iowa June 5, 2026).
[2] Students for Fair Admissions, Inc. v. President & Fellows of Harvard Coll., 600 US 181 (2023).
[3] Ezra L. Totton Scholarship, 2026 WL 1614078, at *1.
[4] SFFA held that the race-conscious admissions programs at Harvard University and the University of North Carolina were unconstitutional in violation of the Equal Protection Clause of the Fourteenth Amendment and Title VI of the Civil Rights Act.
[5] The UPMIFA is in effect in 49 US states and the District of Columbia.
[6] Ezra L. Totton Scholarship, 2026 WL 1614078, at *4.
[7] The Court notes at *5 that the University referenced Rabiebna v. Higher Educ. Aids Bd., 416 Wis. 2d 44, 20 N.W.3d 742, 747, 772–73 (Ct. App. 2025), rev. granted, 30 N.W.3d 26 (Wis. 2025); Am. All. for Equal Rts. v. A.B.A., 2026 WL 161596, at *6–8 (N.D. Ill. Jan. 21, 2026); and Constitutionality of Race-Based Department of Education Programs, 49 Op. O.L.C. (Dec. 2, 2025) (slip op.).
[8] Ezra L. Totton Scholarship, 2026 WL 1614078, at *2.
[9] Id. at *6.
[10] Id. at *7.
[11] Id.
[12] Id. at *7-11.
[13] Id. at *11 (citing Iowa Code section 540A.106(3)).
[14] Students for Fair Admissions Inc v. President and Fellows of Harvard College, 600 US 181, 317 (2023) (citation omitted) (Kavanaugh, J., concurring).
