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With political chaos dominating headlines, it’s simple to overlook the quieter strikes popping out of Washington — strikes that might do severe, long-term hurt to civil society in the US. Because the expiration of the 2017 Tax Cuts and Jobs Act (TCJA) approaches on the finish of 2025, Congress is contemplating easy methods to fund its extension. One of many targets? The nonprofit sector.
Behind closed doorways and buried in committee reviews, lawmakers — particularly these on the Home Methods and Means Committee — are intensifying scrutiny of tax-exempt organizations. Committee Chair Jason Smith, R-Mo., has voiced considerations in regards to the “proliferation” of nonprofits and whether or not their actions align with the “spirit or letter of the legislation.” Some members, equivalent to Rep. Randy Feenstra, R-Iowa, are questioning whether or not nonprofits that provide comparable companies to for-profit entities ought to retain tax-free standing. In the meantime, influential voices like Scott Hodge — previously of the Tax Basis and now with Arnold Ventures — are advocating for sweeping adjustments, arguing that the nonprofit sector represents a hidden tax hole that must be closed.
Proposals into consideration embody making use of the total company tax fee — 21% — to any income that isn’t strictly charitable donation-based. That would come with membership dues for commerce {and professional} associations, registration and tuition charges for academic applications and trade certifications, sponsorship earnings from conferences and conventions, and even returns on funding portfolios. These aren’t fringe funding sources — they’re core working revenues for the overwhelming majority of nonprofit organizations. Focusing on them will not be about curbing abuse. It’s about reshaping the complete construction of how nonprofit establishments are allowed to operate.
Let’s be clear: This isn’t a tax technicality. It’s a basic shift in how the U.S. views — and helps — its nonprofit establishments. And it threatens to dismantle one of many few sectors left that also instructions broad public belief.
I work intently with organizations throughout the nonprofit spectrum: faith-based establishments, charitable organizations, trade associations {and professional} societies. I’ve seen the influence they’ve firsthand — from workforce improvement to emergency response to civic training. Due to the persistent efforts of the American Society of Affiliation Executives (ASAE) and the Affiliation Societies Alliance (ASA), we all know this menace will not be hypothetical — it’s in movement.
If enacted, these proposals gained’t simply harm a couple of outliers. They’ll hit every thing from native meals banks and scientific analysis foundations to skilled medical societies and nationwide commerce associations. The influence will likely be felt by People who depend on nonprofits for housing help, elder care, habit restoration, catastrophe aid, group security applications and extra.
