Why it Matters: The Escalated and Unwarranted Targeting of the Nonprofit Sector

The September 25 Presidential Memorandum titled “Countering Domestic Terrorism and Organized Political Violence” raises significant concerns for nonprofit organizations that echo earlier troubling policy actions and rhetoric taken by this administration and Congressional legislative actions. This Presidential Memorandum, while ostensibly focused on public safety and criminal justice, contains elements that could have far-reaching implications for tax-exempt organizations across the country.

The memorandum describes a new National Joint Terrorism Task Force (JTTF) and a resulting law enforcement strategy. The JTTF will investigate participants in “criminal conspiracies” with little justification for how such organizations or participants would warrant such scrutiny. Quite simply, it creates mechanisms that could be used to target nonprofit organizations based on their advocacy positions rather than their compliance with established regulations.

This memorandum bears striking similarities to H.R. 9495, the controversial 2024 anti-terrorism bill that would have granted the Treasury Department unprecedented authority to revoke 501(c)(3) status from organizations deemed inconsistent with the administration’s priorities. Both measures represent significant expansions of executive power with minimal oversight or accountability. Both include language to significantly expand federal authority into areas traditionally governed by more nuanced regulatory frameworks. Most notably, both measures create mechanisms that could be weaponized against organizations advocating positions contrary to the administration’s policies.

The new directive empowers federal agencies, including the IRS, to conduct more aggressive investigations of organizations perceived as opposing the administration’s policies. This could include scrutiny of Form 990 filings, confidential Schedule B donor information, advocacy activities and public statements, and grant-making priorities and recipients. Nonprofits working in areas including justice reform, legal aid and representation, human rights advocacy, and policy research and education will grapple with increased pressure to self-censor or modify their activities to avoid potential targeting. The impact goes beyond mission delivery and messaging, creating significant uncertainty for those supporting nonprofit work. Donors may fear their confidential information could be accessed and scrutinized through expanded investigations. Funders supporting organizations that advocate positions contrary to the administration’s policies may face public criticism or implied threats. There is no question that this will stimulate a chilling effect on philanthropic support. Importantly, the vague standards create unpredictability about which organizations or funding priorities might trigger scrutiny.

The potential impacts on organizational independence and donor privacy extend well beyond the initial focus area defined in the White House memo, and are a concerning, albeit not unexpected, escalation of executive overreach into the vital role of civil society in our democratic system. The Nonprofit Alliance will continue to defend and protect the independence of the nonprofit sector at every opportunity through public messaging, advocacy, and with our strong coalition of nonprofit, philanthropic, and commercial partners that recognize the imperative of this substantial work.

Author: Shannon McCracken

Shannon McCracken is the founding President and CEO at The Nonprofit Alliance.