Nonprofit Trends

A controversial bill, described by critics as a calculated strike against pro-Palestinian groups, cleared the House of Representatives in November but stalled in the Senate as the session came to a close. The legislation, however, is expected to resurface in the new Congress, where it could gain fresh momentum. Analysts warn the measure could be wielded as a powerful tool to silence a broad spectrum of organizations at odds with President Donald Trump’s agenda, far beyond those protesting the war in Gaza. To many observers, the bill underscores a growing willingness among Republicans to help Trump target his political adversaries.
But it’s not just Republicans who supported the legislation. H.R. 9495, or the Stop Terror-Financing and Tax Penalties on American Hostages Act, initially garnered the support of 52 House Democrats before a public pressure campaign reduced the number to 15. With Republicans controlling both chambers next Congress, the bill could pass the House and Senate on a party line vote and send shockwaves through the nonprofit ecosystem.
H.R. 9495 would grant the secretary of the treasury the ability to strip nonprofit organizations of their tax-exempt status if they are deemed “terrorist supporting organizations,” and if those organizations fail to successfully appeal within 90 days of being notified. 
During a House floor speech before a vote on the bill, Republican Congressman and Chairman of the Ways & Means Committee Jason Smith said H.R. 9495 was necessary to stop “abuse of our tax code that is funding terrorism around the world.” 
Subscribe to the Compass newsletter.Fast Company’s trending stories delivered to you daily
SIGN UP
Privacy Policy
|
Fast Company Newsletters
But the Internal Revenue Service already has a process for revoking the tax-exempt status of nonprofits found to be supporting terrorist organizations, which has critics like Kia Hamadanchy, senior policy counsel at the American Civil Liberties Union, calling the bill…

The “poison pill” in H.R. 9495 that could hurt progressive nonprofits lies in the expanded authority to terminate the tax-exempt status of “terrorist-supporting organizations.” While the intent appears focused on combating terrorism, the language and implementation could lead to unintended consequences, particularly for nonprofits engaging in politically sensitive or controversial activities. This is why 100’s of leading nonprofits have signed letters opposed (We Oppose H.R.9495 | Council on Foundations | We Oppose H.R. 9495 – Independent Sector ). 
Jump to bottom for a longer description on H.R. 9495
How Trump could use H.R. 9495 to hurt the Nonprofit Sector
For Immigration Nonprofits:
Tenuous ties to “open-border” ideologies:
Claim: “Certain immigration nonprofits, by advocating for more permissive border policies, inadvertently facilitate the entry of individuals who might have ties to terrorist organizations, thus supporting terrorism.”
Flaw: This reasoning relies on a distant, unproven connection between immigration advocacy and terrorism support.
Allegations of “abetting” undocumented immigrants with potential terrorist links:
Claim: “By providing aid to undocumented immigrants, these nonprofits might unintentionally assist individuals with undisclosed terrorist affiliations, thereby indirectly supporting terrorism.”
Flaw: This assumes a lack of proper screening and vetting processes, which most reputable nonprofits already employ.
Misinterpreting humanitarian work as “material support”:
Claim: “Providing food, shelter, or legal assistance to immigrants can be seen as material support for individuals who might have terrorist connections, even if the nonprofit is unaware.”
Flaw: This misapplies the concept of material support, which typically requires intentional and knowledge-based assistance to terrorist organizations.
For Public Radio Nonprofits:
Cherry-picked broadcasting of “anti-administration” or “pro-terrorist” content:
Claim: “Public radio nonprofits, through their editorial choices, promote a narrative that undermines national security efforts or sympathizes with terrorist ideologies, thereby supporting terrorism.”
Flaw: This justification would target freedom of the press and the editorial independence of public radio, ignoring…

When planning their gifts, people often consider their passions, current events, recommendations from friends and family, or well-known organizations. It is another step to think about how donations support under-resourced…