The anti-racial discrimination laws do not have an exception for religious institutions, so the fact that this was a religious entity does not make this legal. BUT the anti-discrimination laws do not apply to all organizations: to oversimply, you can't discriminate in housing, in employment (i.e. can't deny someone a job due to race), in "public accommodation" (malls, stores, restaurants, bars, etc.--places that invite the public at large in) or if you receive government support or funding. But an organization that is wholly privately funded and which is not generally open to the public (and is not housing or a job situation) actually *can* discriminate in many cases. For example, you can can a private "whites only" (or "blacks only," Chinese only," etc. club.) So whether or not your friend has any right to get money back or to other compensation will depend on the exact nature of this organization. Your friend should contact a civil rights attorney and discuss the specifics of the situation in some detail with him or her, to understand if this is a case where he or she has some rights.