The second Trump administration has been marked by a series of executive orders (EOs) that have significant implications for various sectors, including nonprofit organizations. In the first ten days alone, over 50 new EOs were signed, and more than 70 were revoked, reshaping the landscape in which nonprofits operate.
This article explores the impact of these EOs on nonprofits, highlighting key areas of concern and potential challenges.
Federal Hiring Freeze: Challenges for Nonprofits
One of the first EOs signed by President Trump was a federal hiring freeze, which has direct implications for nonprofits, particularly those that interact with federal agencies like the IRS. The hiring freeze, which applies to all executive departments and agencies, except for military personnel and positions related to immigration enforcement, national security, or public safety, should be lifted after ninety days upon issuance of a plan to reduce the size of the federal government (except with regard to the IRS which freeze will continue indefinitely). The indefinite hiring freeze at the IRS is expected to result in longer processing times for tax exemption applications as well as increased delays in engaging with the IRS. This could hinder the operational efficiency of nonprofits, especially those relying on timely IRS interactions.
Return to In-Person Work
Another significant EO mandates the return to in-person work for federal employees. This order and the deferred resignation program offered to federal employees, with some exceptions, could exacerbate the delays caused by the hiring freeze, as it may lead to the exit of IRS employees who had remote work arrangements. Nonprofits might face further delays and confusion as roles are consolidated and reassigned in response to resignations and the new work arrangements.
Pause on Federal Financial Assistance: Navigating Funding Uncertainty
A memorandum issued by the Office of Management and Budget (OMB) temporarily paused all activities related to the obligation or disbursement of federal financial assistance. Although this memo was later rescinded, it highlighted the potentially precarious nature of federal funding for nonprofits. Organizations whose programs are impacted by the EOs could face temporary pauses or even permanent cuts in federal funding, necessitating a search for alternative funding sources.
Of note, a temporary restraining order was entered after the memo was rescinded prohibiting federal agencies from pausing any federal funding based on the OMB memo or as a result of the president’s EOs, further specifying that only agencies, based on their discretion, may pause federal awards or obligations. Given this administration's stated intent to overhaul many federal agencies, it is not clear whether this order fully resolves the uncertainty nonprofit organizations that receive federal funding may face.
Anti-Terrorism Measures: Compliance and Risks for Nonprofits
Proposed legislation and EOs aimed at combating terrorism could also impact nonprofits. The Stop Terror-Financing Act, for instance, proposes terminating the tax-exempt status of organizations designated as terrorist-supporting. Nonprofits could be designated with limited time to respond to the proposed revocation and with limited information as to why they were designated, emphasizing the need for stringent compliance documentation and protocols.
DEI Initiatives: Navigating New Definitions and Restrictions
Several EOs signed by President Trump target and terminate diversity, equity, and inclusion (DEI) initiatives, programs, contracts, and funding, which could significantly impact nonprofits.
One such EO, "Ending Illegal Discrimination and Restoring Merit-Based Opportunity," addresses the use of race- and sex-based preferences in the shape of DEI or diversity, equity, inclusion, and accessibility (DEIA). The EO claims that these policies “can violate the civil-rights laws of this Nation” and “undermine our national unity, as they deny, discredit, and undermine the traditional American values of hard work, excellence, and individual achievement in favor of an unlawful, corrosive, and pernicious identity-based spoils system.”
This EO revokes multiple executive orders and presidential memoranda regarding DEI, DEIA, and affirmative action. It also requires federal agencies to take certain steps to eliminate DEI, DEIA, and affirmative action activities and programs in the federal government, place DEI/DEIA-focused employees on administrative leave, and remove all outward-facing media of DEIA offices. Additionally, it directs the attorney general and federal agencies to "combat illegal private-sector DEI preferences, mandates, policies, programs, and activities.”
The attorney general was also directed to issue a report within 120 days outlining all "illegal DEI" from the current administration's perspective, including recommendations. Federal contractors and organizations that receive federal funding to further various DEI/DEIA-focused initiatives may see those funds eliminated, necessitating alternative funding through state grants or private donors.
Another notable EO, "Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government," mandates that federal agencies interpret "sex" as an immutable biological classification, excluding gender identity. This order and several others aimed at ending DEI programs could affect nonprofits that support LGBTQIA+ rights, environmental justice, and other equity-focused initiatives.
Until the federal government provides further guidance, nonprofits are encouraged to review their policies, procedures, public-facing websites, and social media. They should discuss with counsel whether modifications are necessary and exercise caution when drafting tax exemption applications to avoid DEI/DEIA descriptions.
Immigration Policies: Operational Challenges for Nonprofits
The Trump administration's immigration policies, including EOs challenging birthright citizenship and suspending refugee admissions, have implications for nonprofits working with immigrant communities.
One specific EO, "Protecting the American People Against Invasion," directs federal agencies to take action to remove "all inadmissible and removable aliens from the country." It also requires the attorney general and the Department of Homeland Security to undertake any lawful actions to ensure "sanctuary" jurisdictions don't receive federal funds. It describes "sanctuary" jurisdictions as interfering with federal law enforcement operations. Another EO, “Protecting the US from Foreign Terrorists And Other…Threats,” imposes enhanced vetting and screening processes for “admitted aliens,” which could disrupt the operations of nonprofits that employ or serve immigrants, leading to heightened scrutiny and operational challenges.
The Department of Homeland Security secretary also issued a directive rescinding the Biden-era policy restricting Immigration and Customs Enforcement arrests near sensitive locations, including schools, churches, healthcare facilities, and shelters. In conjunction with the EOs, this directive will impact nonprofits as many of the sensitive locations are tax-exempt organizations now subject to raids.
Environmental and Energy Policies: Impact on Environmental NGOs
EOs aimed at "Unleashing American Energy" and declaring a national energy emergency prioritize traditional energy sources over clean energy. These orders revoke previous Biden-era policies on clean energy and climate change, potentially impacting environmental nonprofits. The suspension of offshore wind leasing and the prioritization of fossil fuels could hinder the efforts of nonprofit organizations advocating for renewable energy and environmental conservation.
Misinformation and Free Speech: Challenges for Advocacy Groups
The "Restoring Freedom of Speech and Ending Federal Censorship" EO prohibits federal involvement in combating misinformation, which could affect nonprofits fighting disinformation. These organizations may face increased challenges in securing federal grants and could be subject to heightened scrutiny.
Adapting to a Changing Landscape
The Trump administration's executive orders present a complex and challenging landscape for nonprofits. These orders have far-reaching implications, from federal hiring freezes and return-to-work mandates to stringent anti-terrorism measures and the rollback of DEI initiatives and funding. Nonprofits must navigate these changes carefully, ensuring compliance while seeking alternative funding and adapting their programs to continue serving their communities effectively. The evolving political environment underscores the nonprofit sector's need to prioritize resilience and adaptability.