I recently joined fellow Nonprofit Radio contributor Amy Sample Ward (CEO, NTEN) in conversation with host Tony Martignetti about what we expect to see in the new year. Listen to the podcast here.

Our esteemed contributors share what they’re looking to next year, with the uncertainty of a new president and administration. On the table is HR 9495, which some call the NonprofitKiller; government agencies no longer given deference by the federal courts, with the Supreme Court overruling the long-standing Chevron Doctrine; and, uneasiness around the economy rippling out to preemptive nonprofit budget cuts. Our legal contributor is Gene Takagi at NEO Law Group. Amy Sample Ward, CEO of NTEN, is our technology contributor.

The following is a list of topics we discussed along with some additional thoughts and resources applicable to each:

H.R. 9495

H.R. 9495, the Stop Terror-Financing and Tax Penalties on American Hostages Act, passed the House of Representatives on November 21, 2024, and has been received in the Senate as S. 4136. We’ve written about the bill here and here. In sum, it’s a terrible bill for the nonprofit sector aimed at chilling nonprofit advocacy that is viewed as adverse to the values of the political party that will control the three branches of government, including both bodies in Congress, in 2025, but framed in the guise of an anti-terrorism law.

• H.R. 9495 will allow the Secretary of the Treasury Department to unilaterally revoke 501(c)(3) status from organizations the Secretary designates as a terror-supporting organization (TSO) that provides material support or resources to a terrorist organization.
• The Secretary must first provide notice to the organization the Secretary has selected to designate and allow 90-days for the organization to respond. While the notice must identify the terrorist organization the Secretary has accused the alleged TSO of supporting, the notice may or may not include a description of the material support or resources, depending on whether such disclosure would be consistent with national security and law enforcement interests. This may effectively prevent the opportunity for a fair response and compromises the due process provided by the bill, particularly if the Secretary is allowed to unilaterally determine whether or not to make such disclosure without additional checks and balances from bodies that have expertise with national security and law enforcement.
• H.R. 9495 does not empower the Secretary to freeze a designated organization’s assets or stop the organization from operating. However, the federal government and state governments have other laws that they can turn to for such remedies. The IRS also has other laws it can use to strip an organization of its 501(c)(3) status for operating inconsistent with fundamental public policy. H.R. 9495, if passed, would not be the most dangerous law facing an individual nonprofit, but it might become the tool of choice by an executive branch that wants to target certain nonprofits and chill free speech and the rights of lawful dissent and protest.
• Many nonprofits and civil rights leaders have advocated against H.R. 9495, including the Council on Foundations, Independent Sector, National Council of Nonprofits, and United Philanthropy Forum.

End of Chevron Deference

Earlier this year, in Loper Bright Enterprises v. Raimondo, the Supreme Court of the United States overruled the principle of Chevron deference and held that the Administrative Procedure Act requires courts to exercise their independent judgment in deciding whether an agency has acted within its statutory authority, and courts may not defer to an agency interpretation of the law (including in a regulation) simply because a statute is ambiguous.

• Federal statutory law is passed by Congress and signed into law by the President; regulations are promulgated by executive branch agencies and serve to interpret, implement, and enforce the statutory laws. There are many steps involved in the drafting and promulgation of regulations, which typically includes, for substantive rules, gathering information from experts and from the public during a notice and comment period. See A Guide to the Rulemaking Process Prepared by the Office of the Federal Register.
• Regulations are critical to the public as Congress neither has the time nor the expertise to draft regulations. Regulations may serve to protect public health and safety, ensure fairness in markets, protect the environment, safeguard worker rights, support economic stability, and promote social equity.
• The loss of Chevron deference means that more companies and persons of wealth can challenge administrative regulations for their individual benefit even if contrary to the public interest. They can also seek out a ‘friendly’ court that might side with business interests over general public interests. See What Does the End of the “Chevron Doctrine” Mean to Charitable Nonprofits? (National Council of Nonprofits)

Fundraising and Budgeting Challenges

The nonprofit sector is bracing for significant federal funding cuts that will directly and adversely impact the income of many nonprofits. The effect of these spending cuts, tariffs, other economic policies, and immigration policies, combined with the continuing impacts of climate change may increase inflation and further lower overall charitable giving for the next several years. All of these forces will heighten the need for charitable services. However, it’s currently the uncertainty of the economy and the laws that will shape our country that may prevent organizations from making the investments necessary to manage the changes that are to come.

• Nonprofits are unsure of what changes will come and when they will come and how they will impact their missions.
• Funders can become conservative in their funding decisions, both in terms of the amounts they grant and the organizations and causes they will fund.
• During times of uncertainty, particularly with respect to the economy, nonprofits tend to make cuts to preserve core programs. This can result in a failure to fund the things that may make the greatest impact, including professional development, training, and technology.
• Nonprofits can use technology to help do more with less, but there must be investments made in such technology and equitable technology policies.
• Nonprofits should engage in advocacy to address, protect, and advance policies that are critical to their missions, charitable activities, and communities.
• Nonprofits should engage and build their communities at the start of the new year. If they don’t, there may be no communities to support them when the times get even more challenging. The communities nonprofits serve can also inform and help provide solutions. And they can be powerful advocates and allies.