The U.S. House of Representatives voted to pass H.R. 9495, giving President Trump and the Secretary of the Treasury power to shut down any tax-exempt organization that the administration believes is engaged in misconduct, whether the accusation is based on proof or, merely, suspicion. It’s going to be at the discretion of the administration, therefore potentially promoting favoritism and revenge.
What exactly will H.R. 9495 do to nonprofits?
H.R. 9495 poses significant threats to the not-for-profit and nonprofit PR sectors. If the tax-exempt status of an organization is revoked, it will no longer be eligible to receive funding and will therefore be shut down. This could have devastating consequences for a wide range of nonprofits including food banks, schools, and religious organizations. These groups play a vital roles in supporting vulnerable populations and providing essential services.
A report from the National Council of Nonprofits highlights the crucial role that tax-exempt organizations play in the United States, noting that they contribute over $1 trillion to the economy annually and employ more than 12 million people. Losing their tax-exempt status could dismantle the support systems that millions of Americans rely on, particularly in times of crisis.
Which nonprofits will be targeted?
The new administration is likely to target a wide range of philanthropic organizations based on their ideological perspectives or their efforts to hold the government accountable. According to Philanthropy.com, this includes groups fighting against misinformation, government watchdog organizations, voter advocacy initiatives, LGBTQ rights organizations, environmental NGOs, as well as immigration and reproductive rights groups.
The implications of H.R. 9495 extend beyond domestic nonprofits to global NGOs. Trump has expressed a desire to withdraw from various international agreements, which would likely reduce funding to them. The administration’s focus on redirecting funds to local responders and religious-based groups aligns with this approach.
How to protect nonprofits from the new administration’s threats
To safeguard organizations, nonprofits should ensure that all their activities are fully compliant, according to Philanthropy.com. This includes maintaining accurate records, adhering to financial reporting requirements, and ensuring that their operations align with their filed tax-exempt purpose. By doing so, they can minimize the risk of facing legal challenges or government intervention/scrutiny. Organizations should consider conducting regular audits and staying up to date with evolving regulations, especially with the new government seeking to strip nonprofits of their tax-exempt status.
In addition to legal compliance, nonprofits must strengthen their digital security to protect against the increasing threat of online harassment and cyberattacks. This involves implementing strong cybersecurity measures such as secure data storage, regular system updates, and staff training on phishing and other digital threats.
Lastly, nonprofits should engage in advocacy by forming coalitions with other organizations to collectively push for policies that safeguard the sector’s ability to operate freely with less government involvement. Public advocacy and transparency initiatives can help build a supportive environment and ensure that nonprofits can continue their work without undue interference.
Stay informed
In conclusion, H.R. 9495 presents a severe risk to the nonprofit sector, potentially dismantling organizations that provide essential services to millions of Americans and contribute significantly to the economy. To defend against these threats, they must prioritize compliance, strengthen cybersecurity, and engage in collective advocacy. By taking these measures, not-for-profits can better protect their missions and continue serving vulnerable populations despite the challenging political environment. Staying informed and educated on the implications of H.R. 9495 is key to managing upcoming changes in the sector.