Seminar Recap: Navigating EOs: What Nonprofits Need to Know 

Impact of Executive Orders on Nonprofits 

Even organizations not reliant on federal funding may find themselves affected by the consequences of recent EOs. These orders often shape the broader framework of what is deemed acceptable for nonprofit activities, affecting areas such as program design, communication strategies, and the tone of public messaging. While a nonprofit may not directly breach federal grant terms, it could still lose funding if its activities are perceived as misaligned with the administration’s directives. 

Given these developments, it is essential for nonprofits to remain informed and consider how they may be impacted, even if there is no direct financial connection. The landscape surrounding federal funding and advocacy efforts is evolving, and it may create ripple effects for organizations that are not directly tied to federal grants. By staying vigilant and assessing potential risks, nonprofits can continue to uphold their missions while adapting to the changing environment. 

HR 9495: Understanding Potential Risks and Safeguarding Nonprofit Missions 

The potential implications of HR 9495, often referred to as the nonprofit killer bill, remain a significant concern for nonprofit organizations. Although the bill has not passed, it sought to grant the Treasury Secretary authority to revoke a nonprofit’s tax-exempt status if the organization was found to be supporting terrorism. The bill’s broad and ambiguous definition of “supporting terrorism” has raised concerns across the nonprofit sector. 

While this bill has not passed, there is a provision in the current law, which does allow the Treasury Secretary to unilaterally strip a nonprofit of its tax-exempt status should they be deemed to be supporting terrorism.  

The concern lies in how such vague provisions could be wielded in the future against nonprofits that criticize government policies or actions and publicly oppose the agenda of the administration. As a result, it is important for nonprofits to carefully assess their programs, activities, and public-facing communications to ensure that they are not unintentionally positioned as targets. Remaining aware of these risks and adapting as needed will allow nonprofits to continue fulfilling their missions while safeguarding their tax-exempt status and independence. 

Clarifying Definitions and Understanding Requirements 

EOs have introduced terms that are still vague and open to interpretation, such as “prohibited DEI activities,” which could apply to a range of actions or policies. Nonprofits are encouraged to take a proactive approach in defining these terms within the context of their own mission and operations. A thorough risk assessment of all programs, messaging, and partnerships will help identify areas where compliance may be at risk under current or potential future regulations. 

Additionally, nonprofit organizations receiving government contracts or grants should be aware of the specific terms that could lead to funding being revoked. It is essential to carefully review the terms of any agreements to understand under what circumstances funding may be at risk, allowing organizations to make informed decisions moving forward. 

While the administration has not given a clear definition on what “prohibited DEI activities” are, the HHS Grant Policy Statement did define what discriminatory equity ideology is by stating that it has the meaning set forth in Section 2(b) of Executive Order 14190 of January 29, 2025. In that order, the definition of “discriminatory equity ideology” means an ideology that treats individuals as members of preferred or disfavored groups, rather than as individuals, and minimizes agency, merit, and capability in favor of immoral generalizations. 

Steps Nonprofits Can Take Now 

Nonprofits are encouraged to take proactive steps to assess how EOs may affect their operations and to develop strategies for mitigating potential risks. Here are a few essential steps to consider: 

1. Inventory Federal Funding. Review any federal grants or contracts the organization receives and assess the associated requirements and potential risks. 

2. Review Public-Facing Profiles. Audit communications, mission statements, and public messaging to ensure alignment with current EOs, making any necessary revisions. 

3. Engage with Stakeholders. Reach out to key donors, community partners, and like-minded organizations to align advocacy efforts and reduce collective risks. 

4. Advocate for Legislative Change. While advocacy is encouraged, nonprofits should continue to engage with lawmakers to promote policies that support their missions and values. 

Preparing for Uncertainty 

As the executive landscape continues to evolve, it is important for nonprofits to stay informed and adaptable. Ongoing monitoring of federal policies will help organizations stay ahead of potential risks, allowing them to continue their vital work without interruption. AAFCPAs is here to help guide clients through this process, offering the expertise and support needed to navigate these challenges. 

These insights were contributed by Joshua England, LLM, Esq., Partner & Tax Attorney and Chris Consoletti, Esq., Consulting Attorney, Director. Questions? Reach out to our authors directly or your AAFCPAs partner. AAFCPAs is closely monitoring shifts in funding and offers strategic insights as developments unfold to support clients in navigating funding uncertainty. Subscribe to get alerts and insights.