Nonprofits Face Risks Amid Tax Law Changes, Political Pressure

The nonprofit sector in the United States is increasingly under threat from both executive actions and legislative changes. Recent attempts by the president to direct the IRS to revoke the nonprofit status of institutions like Harvard University, though legally dubious, highlight how such threats can be wielded as forms of intimidation, even if actual unilateral removal of nonprofit status remains unlikely. Meanwhile, Congress is moving quickly to pass new tax legislation that may result in significant funding cuts or changes to the tax laws governing nonprofits, potentially shrinking the sector and undermining its traditional stability. These risks are exacerbated by the need to offset projected increases in federal debt, with lawmakers considering changes that could negatively impact charitable organizations. Additionally, new executive orders targeting diversity, equity, and inclusion initiatives have created further uncertainty, with ongoing legal challenges over their implementation and enforcement. Collectively, these developments signal a period of heightened vulnerability and adjustment for American nonprofits.