When Donald Trump won the U.S. presidential election earlier this month, many nonprofits – especially those focused on issues like immigrant rights, racial justice, and climate change — worried they could be in for a bumpy four years.
Judging by recent activity on Capitol Hill, the turbulence could get severe.
The House of Representatives this week is poised to approve H.R. 9495, the Stop Terror-Financing and Tax Penalties on American Hostages Act, a bill that would enable the Secretary of the Treasury to rescind the tax-exempt status of any nonprofits that the Secretary concludes are “terrorist-supporting organizations.”
Nonprofits, foundations, media organizations, and social service providers worry the legislation could have wide-ranging, negative ramifications on their work.
H.R. 9495 “would give any Treasury Secretary unprecedented powers to designate nonprofits as ‘terrorist-supporting organizations’ with little transparency or accountability,” the Council on Foundations said in a statement.
“This could have devastating consequences for the nonprofits that Americans rely on – and it undermines the principles of fairness and due process that are cornerstones of American democracy,” the statement continued.
Kia Hamadanchy, senior policy counsel at American Civil Liberties Union (ACLU), went further, warning that “passing this bill would hand the incoming Trump administration a dangerous new tool it could use to stifle free speech, target political opponents, and punish disfavored groups.”
The timing of the vote is curious. Even if the legislation is approved during the current lame-duck session of Congress, it is unlikely to be taken up by the Senate while it is still controlled by Democrats.
And once Republicans take control of the Senate in January, passage could still be a challenge.
“To overcome the legislative filibuster in the Senate either this year or next, advocates for the bill and its original purpose will need to address the very real concerns nonprofits have about the knock-on effects of the proposal,” said Lindsay Plack, Partner in FGS Global’s Public Affairs division.
An Ominous Signal
Regardless, the aggressive push by House Republicans to win approval of H.R. 9495 sends an ominous signal to progressive nonprofits about the heightened scrutiny their activities – and their tax status – may receive during Donald Trump’s second term.
As previously reported, Vice President-elect J.D. Vance has a well-documented history of calling for revoking the tax-exempt status of private foundations, nonprofits, and university endowments. “We should eliminate all of the special privileges that exist for our nonprofit and foundation class,” Vance said in a May 2021 speech on the topic of “woke capital.”
The ACLU this week sent an open letter co-signed by nearly 300 nonprofits to Republican House Speaker Mike Johnson and Democratic House Minority Leader Hakeem Jefferies that expressed “deep concerns” that H.R. 9495 “creates a high risk of politicized and discriminatory enforcement.”
Despite the objections, there is little doubt the legislation will pass. The bill was brought to the House floor on November 14 and received 256 yes votes and only 145 no votes, but it failed because of procedural rules that required it to receive a two-thirds majority to become law.
This week’s vote, which is expected to happen Thursday, will only require a simple majority to pass, and most observers expect the tally to closely mirror last week’s vote.
Surprisingly to some, 52 Democrats joined 204 House Republicans voting in favor of H.R. 9495 on November 14, while the remaining 144 Democrats in the House – joined by one Republican – voted no.
Links to Campus Protests
The origins of H.R. 9495 extend back to the widespread protests on college campuses over the Israeli invasion of the Gaza Strip that followed the violent attacks on Israelis led by the terrorist group Hamas on October 7, 2023.
Many conservatives alleged that the protests were being funded by nonprofit organizations that were not only sympathetic to the Palestinian people but also supportive of Hamas itself.
Much of the Democratic support for H.R. 9495 is believed to be coming from lawmakers who are supporters of Israel, even if they might normally side with progressive nonprofits on other issues.
Despite the long odds, nonprofit leaders and advocates have pushed aggressively in recent days to urge supporters to call their representatives and urge them to oppose the legislation.
At least one appears to have changed her mind.
According to a LinkedIn post from Vu Le, a well-known advocate and defender of the nonprofit sector, Democratic Rep. Angie Craig of Minnesota decided Wednesday to reverse course and oppose H.R. 9495 after previously voting in favor.
“Over the past several days as the president-elect has rolled out his cabinet nominees, I’ve become increasingly concerned that H.R. 9495 would be used inappropriately by the incoming Administration,” Craig wrote in an e-mail to Le. “I’ve heard from constituents in my district and non-profit leaders from across Minnesota who share those concerns.
For those reasons, I will vote against H.R. 9495 this week and will continue to do what’s in the best interest of Minnesotans.”
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