I had the opportunity to attend three events this week providing me with perspectives on the current state of the nonprofit sector in light of the federal government’s increased scrutiny of progressive nonprofits and funders and varying state governments’ support of or opposition to the federal government’s actions and rhetoric:

2025 NAAG/NASCO Charities Conference (National Association of Attorneys General / National Association of State Charity Officials)

Get ready for the NAAG/NASCO Annual Charities Conference, where charity regulators, nonprofit organizations, and their professional colleagues come together to share insights and discuss the latest issues in the charitable sector. …

Topics include:

• Defining Religious Organizations in Law and Practice
• Fundraising: Best practices for ensuring transparency and protecting donors
• Update from Charitable Regulators: A review of enforcement activities over the last year
• Untangling the Maze: Complex charitable organizational structures and ethical challenges
• A View from the Sector During Challenging Times

National Town Hall on The Financial State of the Nonprofit Sector (Nonprofit GPS)

Nonprofit GPS is a new action-based community designed to help nonprofits navigate today’s disrupted revenue landscape. Built in consultation with organizations nationwide, it focuses on the real financial challenges nonprofits face—business model risks, capital management, budgeting, governance, and more. Together, we’ll share practical strategies and highlight bright spots of practice that strengthen missions, even in the most disruptive times,

At this event you will hear:

• How to become involved as a practice leader in this community
• An analysis of the current economic landscape for nonprofits and the implications for practice
• What array of critical new resources will be offered by Nonprofit GPS over the next three months and beyond

Webinar – Nonprofits in the Crosshairs: Navigating Legal Risks and Defensive Strategies (BakerHostetler)

In light of recent statements from the current administration regarding an increased focus on progressive advocacy groups and reports of the Department of Justice scrutinizing major foundations and donor networks, nonprofit organizations engaged in policy or ideologically driven work are facing heightened risks. These developments represent a significant escalation in the focus on civil society organizations and raise questions about government power over civil society, the government’s specific legal authorities and potential legal theories and how nonprofits committed to their missions can safeguard themselves.

This webinar will examine the current legal landscape and enforcement risks, and offer practical defensive strategies based on real-world experience. This session is essential for nonprofit leaders who want to stay informed and help their organizations navigate these challenging times.

All of the highlights below are provided from my perspective (with some additional comments or resources) and likely represent the shared thoughts of individual speakers and not necessarily the views of the organizers.

Highlights from the Conference

• Charities are concerned about carrying out activities that were legal and laudable before but are now suspected of not being legal under the current political and legal climate; they are not certain of how to manage this.
• 5 areas of particular concern: (1) aiding and abetting in an immigration context; (2) supporting terrorism; (3) committing child abuse (e.g., gender transition care); (4) aiding and abetting in a discrimination context (e.g., DEI); and (5) violating state tort laws (e.g., trespassing).
• These concerns lead to fears about losing 501(c)(3) status, getting investigated or sued, or being subjected to a raid by ICE.
• 4 areas of risk management: (1) program design; (2) grant agreements; (3) general policies and trainings; (4) external language.
• The biggest risk: funding cuts and their trickle down impact.
• An additional risk for charities receiving federal funds: anti-DEI certifications. [Ed. See, e.g., DOJ Doubles Down on DEI and Antidiscrimination Obligations for Recipients of Federal Funds (Seyfarth Shaw).] A violation could result in treble damages (i.e., 3x the amount of actual damages).
• Some (not all) colleges have eliminated race-based scholarships and some may be refusing to accept privately-funded race-based scholarships.
• Transformation – The nonprofit sector is contracting and restructuring as charities disappear. The speed with which this is happening is unprecedented. In the near future, there will be far fewer nonprofits, far fewer services, higher demand for services, and increased poverty. This will require local and state agencies to maintain the social safety net, which in many places will just break. In other places, it’s uncertain what a restructured social safety net will look like and how the country will try to minimize public suffering and service disruptions. This is an intentional consequence of the Administration and its supporters. The attacks on DEI and anti-Semitism are a smoke-screen to accomplish the Administration’s other priorities.
• Plans – For many charities, the time frames for strategic plans have necessarily been shortened to months due to the uncertainty of funding.

Highlights from the Town Hall

• The overall decline in revenues throughout the sector is leading to boards and managers making big shifts in their strategies and operations.
• Major shifts – 163 Executive Orders since Trump’s inauguration date; new uniform grants guidance giving politically appointed department heads ultimate control (taking away power of peer review panels); contract cancellations (even for convenience); change in funding conditions (e.g., HUD grants awarded then rescinded and the grant program redesigned, including required certification that grantees not have any DEI activities); many of the federal government’s actions are now the subject of litigation or have been ruled unlawful.
• Federal shut down – unknown how long it will last and how much harm it will do to nonprofits.
• Cuts in federal funding – what’s different from past financial challenges is the breadth of the cuts which will force a contraction of the nonprofit sector with no offsets in the horizon.
• Road forward – See Nonprofit Impact Matters (National Council of Nonprofits); flexible funding and simpler applications help; collaborations, and connections, and new solutions are needed; join your state association of nonprofits. FInd them here.
• See Long-Term Outlook for U.S. Nonprofits by Sector: The Crossroads of Transformation (BDO USA) and StrongNonprofits Toolkit (Wallace Foundation & BDO).
• Nonprofit GPS offers free support to help nonprofits make well-informed decisions and navigate business model risks in times of uncertainty. Types of supports available include free webinars, peer convenings and forums, in addition to a public helpline where you can seek advice from financial consultants.
• Boards can support executives but must make sure they (1) are educated on financial literacy, (2) helping determine the organization’s business plan on risk tolerance, and (3) appropriately delegating decision-making to allow for timely (sometimes rapid) responses.
• Accountability – It’s not only about the organization; it’s about the mission, movement, and work. This sounds like Purpose-Driven Board Leadership!

Highlights from the Webinar

• National Security Presidential Memorandum 7: Countering Domestic Terrorism and Organized Political Violence (September 25, 2025).
• Fact Sheet: President Donald J. Trump Develops New Strategy to Counter Domestic Terrorism and Organized Political Violence (September 25, 2025).
• Things that were not thought of as criminal matters are now being framed as criminal matters when not in line with the Administration’s priorities.
• The National Joint Terrorism Task Force and its local offices (collectively, “JTTFs”) shall investigate, among other things, potential Federal crimes relating to acts of recruiting or radicalizing persons for the purpose of (1) conspiracy against rights; and (2) institutional and individual funders, and officers and employees of organizations, that are responsible for, sponsor, or otherwise aid and abet the principal actors engaging in the described criminal conduct.
• In response, nonprofits can create a culture, not of fear, but of caution.
• There are greater risks now, but many of these types of risks have been around and trending for the past decade.
• Nonprofits and their leaders should recognize the gap between the rhetoric in speeches and media coverage vs. the language in the formal executive actions, which are more artfully drafted in terms of conditioning when enforcement would apply (e.g., “shall be implemented consistent with applicable law”).
• Congress may be less of a risk to nonprofits than certain state attorneys general, who have great powers over nonprofits formed, operating, or fundraising in their states.
• Risk areas – (1) basic compliance; (2) collaborations, grantees, and networks; (3) race-based programs; (4) political activities.
• Being confident about risk assessment and risk mitigation allows for more options to negotiate, push back, or fight back. Also, consider both the strength of the evidence of the other side attacking the nonprofit and the importance of the activity in dispute.
• Power to investigate is often the power to destroy. Nonprofits must make sure their insurance coverages are appropriate, particularly relative to their risk.
• Delegate power carefully – the riskier the decision, the higher up the decision should be made.
• Find the time and resources to prepare ahead of any attack.
• Compliance and governance are ways to accomplish your mission because failures can and often do defeat a nonprofit’s ability to further its mission. Fighting an unfair attack can be a win for a nonprofit’s mission as well as for civil society and plurality.
• 3 Questions for Nonprofits to Ask:
  • Can you demonstrate that you communicated and trained your workforce on your policies?
  • Are you doing anything to audit compliance with your policies?
  • What are you doing to enforce your policies and hold people accountable?
• Fighting back against fishing campaigns – abusive document requests and subpoenas- if it appears clearly abusive, a court may support a nonprofit’s argument against compliance (e.g., First Amendment privileges, retaliation, improper and disparate enforcement) – but tougher in the criminal law context.

Miscellaneous

• “Facing unprecedented uncertainty, nonprofit financial experts warned at a recent FASB advisory meeting that sudden cancellations of grants and contracts are creating new risks for charities—risks that current accounting rules may not fully address. … [I]ndustry leaders described a landscape where long-standing funding arrangements can be revoked with little warning, leaving organizations scrambling to adapt.” – Denise Lugo, Checkpoint News
• “Following the landmark Loper Bright Supreme Court case … (2024), which overturned the Chevron deference doctrine, commentators and practitioners began to speculate what the holding could mean for the Internal Revenue Code and the interpretation of its statutes as well as the impact it might have on regulations and other Treasury/IRS guidance.  … Many of these early indications suggest that courts will indeed exercise greater independent judgment and decreased deference and reliance on Treasury and the IRS’s interpretations.” – Paul Haimowitz, Practical Tax Strategies
• “A senior Justice Department official has instructed more than a half dozen U.S. attorney’s offices to draft plans to investigate a group funded by George Soros, the billionaire Democratic donor whom President Trump has demanded be thrown in jail. … The official’s directive … goes as far as to list possible charges prosecutors could file, ranging from arson to material support of terrorism.” – Devlin Barrett, NY Times