Catalyst Weekly Policy Briefing Issue XI: Revoked, Revised, Reduced

Hello again.

After much speculation and rapid action across the sector, the administration confirmed on Tuesday that, for the time being, no executive orders targeting environmental groups or nonprofits are being drafted or considered. At Catalyst, we have been in close conversation with our partners in California and beyond. While there is no immediate action required, we will continue to stay closely tuned in and ready to respond if anything changes.

Here’s a look at what happened this week. (Catch up on our previous installments of this briefing here.)

THE FACTS

EXECUTIVE ORDERS THAT DID NOT COME TO PASS

• ​​​​​​Late last week, credible news circulated that the administration planned to announce several executive orders challenging the validity of climate work as a reason for organizations to hold tax-exempt status. Legal and tax law experts quickly noted that a lengthy process, including opportunity for appeal, is required to revoke nonprofits’ tax-exempt status – and that only the IRS can do so.
• Despite this reprieve, our sector continues to organize information, networks, and resources to protect the independence of nonprofits, including foundations, to operate according to established law and legislation.
• The White House said on Tuesday that it is not drafting or considering an executive order targeting nonprofits’ legal status.
• Local and national organizations rose to the occasion, organizing meetings about the implications and planned responses that saw 5,000 attendees participate.

FEDERAL AND LOCAL BUDGETS

• The National Council of Nonprofits and their co-plaintiffs received a preliminary injunction against the Office of Management and Budget and five federal agencies. This ruled that the administration’s freeze on billions of congressionally approved funds under the Infrastructure Investment and Jobs Act and Inflation Reduction Act is not permitted, and agencies must resume payment of awarded funds.
• The City of San Diego’s preliminary budget proposes steep cuts and revenue enhancements to close a $300 million deficit. Local leaders and community members spoke against the proposed cuts during a City Council meeting on Monday.
  • Cuts include reductions to the police department, arts, recreation centers, and libraries.
  • New revenue might come from increased trash fees, parking meter rates, and hotel-room taxes.
• An appeals court paused the release of $625 million from the Greenhouse Gas Reduction Fund. A previous ruling on the Climate United lawsuit stated that funds were withheld and contracts canceled without due process and therefore must be reinstated and paid. This pause stops the funds from being distributed while a decision is being made.
• Feeding San Diego shared in a newsletter that it expects to lose $1 million in Local Food Purchase Assistance funding when that program is cancelled by the U.S. Department of Agriculture.​​​

IMMIGRATION MOVES CHALLENGED

• Court rulings continue to reject the administration’s expedited deportations.
  • The Supreme Court temporarily blocked the deportation of a group of Venezuelan migrants under the Alien Enemies Act.
  • A judge in Maryland accused the administration of “a willful and bad faith refusal to comply with discovery obligations” in the case of a mistakenly deported man. The judge ordered the Justice Department to produce documents outlining what the administration has done to reverse the deportation.
  • Another judge in Maryland ruled on Wednesday that the administration must return a man who was deported to El Salvador in violation of a previous court order.
• UC San Diego and San Diego State University report that at least 40 international students have had their visas revoked, among over 1,000 nationwide. Puerto Rico along with four other states filed a lawsuit asking courts to reinstate visas for students in their regions and to certify those students as a class action group.
• President Trump commented on Wednesday that undocumented immigrants should not get trials before deportation.

HIGHER EDUCATION AND PUBLIC SCHOOLS

• Harvard University sued the administration over its freeze of $2.2 billion in research funding. The lawsuit alleges that the administration ignored procedural requirements, making their actions illegal. The full complaint can be read here.
  • The White House informally reached out to Harvard to open negotiations, but Harvard has not indicated any interest.
• A judge ruled Thursday morning that guidance from the Department of Education to withhold funds from public schools that engage in any DEI programs likely violates the Constitution and issued a preliminary injunction halting enforcement against schools that employ members of the National Education Association (NEA), who is the plaintiff in the case. Over 3 million educators in the United States are NEA members.
• The executive order “Reforming Accreditation to Strengthen Higher Education” calls on the attorney general and secretary of education to investigate, and potentially terminate, accreditation for any American higher education institution participating in discrimination, which includes diversity, equity, and inclusion (DEI) requirements. This may also affect which higher education institutions can access billions of dollars in student loans and Pell grants. Another executive order, “Reinstating Common Sense School Discipline Policies,” calls to end restorative justice programs in public schools and directs an assessment of federally funded nonprofits that promote or provide these programs.

STAFF REDUCTIONS CONTINUE

• A judge temporarily halted mass firings at the Consumer Financial Protection Bureau until April 28.
• Most AmeriCorps staff were placed on administrative leave this week. This came a day after members of AmeriCorps’ National Civilian Community Corps were discharged early and all new opportunities were removed from the website. The positions eliminated include hurricane response and wildfire prevention and mitigation.
• Reduction in force notices went out this week to more than 200 Environmental Protection Agency (EPA) staff focused on environmental justice and DEI programs as part of the administration’s goal of reducing the EPA budget by 65%. Layoffs will take place on July 31.

TAKEAWAYS

• Coordinate with other funders.  
  • Talk regularly to learn from others and collaborate in this moment. If you are an individual funder or foundation decision-maker interested in joining a regular meeting with philanthropic leaders in San Diego and Imperial Counties to share knowledge and coordinate support of local community organizations, reach out to learn more.
  • Join the trust-based philanthropy community for a virtual discussion series that will break down insights and recommendations for how funders can meet this moment to support the strength and resilience of our communities.
• Learn more about community needs directly from communities being impacted. To hear insights from those directly affected by changing immigration policies, join us for a trip to the border region of San Diego and Tijuana at Do the Work: Border Region on May 13–14.
• Support legal actions. While private foundations cannot lobby, they can fund and participate in legal challenges, including filing amicus briefs.

RESOURCES

• This article by nonprofit attorney Jeff Tenenbaum explains the thorough IRS process of examination and appeals that must take place before a nonprofit’s tax-exempt status can be revoked.
• National Council on Nonprofits maintains this resource on myths vs realities of nonprofit law, including the role of the IRS, the authority of the administration, and more.
• “Civil society—and the charitable nonprofit sector that gives it form and voice—must remain independent of government influence.” Read the joint statement by United Philanthropy Forum, Council on Foundations, Independent Sector, and National Council of Nonprofits in response to the administration’s targeting of Harvard University on ideological grounds.
• Local nonprofit leaders’ top need to address recent federal actions is assistance with strategic fundraising and grant writing. See the full results of the most recent survey by The Nonprofit Institute at USD here.

Talk to you next week,

Megan Thomas
President & CEO
Catalyst of San Diego & Imperial Counties