State of Play: Legislative Updates

Ann Hollingsworth, Vice President of Government Affairs
The Nonprofit Alliance

Speech at the DMAW and The Nonprofit Alliance’s Nonprofit Fundraisers Symposium
March 26, 2026

The nonprofit sector is facing one of its most challenging political climates in recent memory. The current administration, building on earlier threats to 501(c)(3) status, is proposing—and in some cases, implementing—changes that could restrict speech, cut funding, increase scrutiny of nonprofit programming, and limit fundraising opportunities. Amid these headwinds, new opportunities for visibility and advocacy are emerging regarding both the challenges and opportunities facing charitable organizations.

The Impact of a Midterm Election Year

As we move through a midterm election year, Congressional priorities are shifting. Legislative topics, hearings, investigations, and even the Congressional calendar are all influenced by the election cycle. The first half of 2026 is expected to be especially busy, with the Fiscal Year 2027 budget process already underway. Key state primaries and ongoing polling are shaping Congressional focus, with economic uncertainty and the cost of living topping constituent concerns. The November elections could shift the current Republican majority in both the House and Senate, which would have implications for nonprofit planning and advocacy.

Issues Consuming Political Attention

● The Iran War

Now in its fifth week, the Iran war is raising difficult questions about U.S. foreign policy. Congress is bracing for a supplemental funding request—potentially as high as $200 billion—which could be bundled into a larger funding package.

● Unresolved Department of Homeland Security Funding

The Fiscal Year 2026 funding for the Department of Homeland Security remains stalled, with Immigration and Customs Enforcement (ICE) reform as the main sticking point. Efforts to pass DHS funding without ICE have failed, and essential workers like TSA employees caught in the crossfire.

These two issues – massive in their scope, complexity, and cost – are consuming the political attention and resources that otherwise would have gone to multi-year priorities and issues we could have expected to advance this year, including federal data regulation standards. They also have the potential to drive down consumer confidence and spending, including charitable giving.

● The Combined Federal Campaign

The Combined Federal Campaign (CFC) has raised over $9 billion in its 60+ year history, supporting veterans, disaster survivors, and vulnerable communities. In August, news broke that the 2025 CFC might be canceled. Our coalition responded quickly, leading a sign-on letter with nearly 400 organizations and mobilizing members to contact Congress. The Office of Personnel Management reversed its decision, and the campaign moved forward. However, challenges persisted, including a government shutdown and the decommissioning of the CFC Charity Portal. The future of the CFC remains uncertain, but our advocacy continues, with over 2,000 emails sent to Congress so far.

Legislative Opportunities on the Horizon

● Data Privacy and AI

Momentum is building for comprehensive federal data privacy legislation, with the House Data Privacy Working Group actively developing a bill. We are working closely with key offices to ensure nonprofit priorities are included. Meanwhile, AI is advancing faster than regulatory oversight can keep up. The Trump administration’s AI action plan, released in July 2025, emphasizes job creation and infrastructure but threatens to limit oversight and penalize states that regulate AI independently. Last week, the administration released its National AI Legislative Plan, which continued a focus on AI job creation and pressed for limiting AI oversight. Members of Congress have introduced legislation limiting oversight of AI but they have not passed.

Appropriations

Congress passed most appropriations bills for Fiscal Year 2026, with the exception of DHS, and the Fiscal Year 2027 process is already underway. Hearings will continue through June/July, with the fiscal year ending September 30, 2026.

● 990 Reform

A recent House Ways and Means Committee hearing on foreign influence in nonprofits signaled continued scrutiny of the sector. While there was bipartisan support for new 990 legislation, concerns remain about increasing compliance burdens. This is a timely reminder for nonprofits to prioritize governance, tax, and financial oversight.

Postal Issues: Rising Costs and Uncertain Future

A new Postal Regulatory Commission rule limits rate increases to once per year, but the USPS is seeking more flexibility to raise prices without oversight. We have filed comments opposing this move. A rate increase will take place in July 2026. Postmaster General Steiner has warned that the USPS could run out of cash within 12 months, raising the specter of higher prices and service disruptions.

CALL TO ACTION: “Own Your Value”

Amid these challenges, it’s more important than ever for nonprofits to “own their value.” This means clearly communicating your organization’s impact, program longevity, job creation, and community partnerships. Our champions on Capitol Hill want to hear directly from you about the service gaps you are filling and the support you provide every day. We encourage you to use the framework on our website to empower your staff and strengthen your external communications.

To build on this exciting new initiative, we are asking you to record a 30-second video to hear from you about the incredible work that your organization is doing! Please go to this link for more information, including a sample script and an easy-to-use record button. Help our efforts to raise your stories and contribute to elevating our sector’s substantial contributions!