Nonprofits face existential threat with Trump's tax bill, but not everyone's sympathetic

The bill faces disputes, but the nonprofit provision has drawn little Republican opposition.

PUBLISHED MAY 14, 2025

Advocacy groups argue it undermines free speech and due process.

Washington D.C.: Nonprofit organizations are raising alarms over a Republican-led provision in a major House bill that would allow the government to revoke the tax-exempt status of groups it deems “terrorist-supporting.”

Critics warn the measure could be used to target organizations that oppose President Donald Trump administration policies, such as those advocating for Palestinian rights, racial justice, or environmental causes.

The provision is part of a sweeping spending and tax bill that GOP leaders hope to pass using budget reconciliation, bypassing Senate Democratic opposition.

While the legislation includes Trump-backed priorities like extending tax cuts and funding border security, the nonprofit-targeting clause has drawn fierce backlash.

Advocacy groups argue it undermines free speech and due process by giving the Treasury Secretary unchecked power to penalize organizations without proof of wrongdoing.

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“This is a five-alarm fire for nonprofits nationwide,” Lia Holland of Fight for the Future, told The Guardian. “Any group that doesn’t align with MAGA could be destroyed with a wink from Trump.” The proposal mirrors a House-passed bill from November, but critics say existing laws already penalize legitimate terror-linked groups.

Democracy Forward CEO Skye Perryman called the measure an “attack on civil society,” noting the administration’s history of retaliating against opponents, from deporting pro-Palestinian students to pressuring immigration officials. Nonprofit coalitions, including Independent Sector and the Council on Foundations, warn the rule would violate due process by forcing organizations to “prove their innocence” after being accused.

The bill faces internal GOP disputes over spending cuts and tax deductions, but the nonprofit provision has drawn little Republican opposition. If enacted, advocates fear it would set a dangerous precedent, allowing any future administration to silence dissent.

“No president should have the right to destroy nonprofits for no reason,” Holland told The Guardian. With a House vote possible by July 4, nonprofits are urging lawmakers to reject what they see as a threat to constitutional rights.