Policy Briefing

Catalyst Biweekly Policy Briefing Issue XIV: Budget & Enforcement

Hello again. 

 

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

 

THE FACTS 
Federal Budget 
  • The Senate has been actively negotiating its version of the reconciliation bill that passed the House several weeks ago, with today set as an informal deadline to finalize the writing. The ultimate goal is to pass the final bill by July 4. However, some leaders in Congress are suggesting they won’t meet that deadline. 
  • As of now, the Senate version of the bill still includes several provisions that could negatively affect the work of philanthropy and nonprofits that serve vulnerable communities, including: 
    • Tiered tax increase on private foundation investment income: This provision could divert billions of dollars from grantmaking.
    • New 1% floor for corporate charitable giving: This provision could lead to a significant decline in corporate support for communities nationwide.
    • Unrelated business income tax (UBIT) changes: Limitations on research income exclusions and UBIT from disallowed fringe benefits still pose financial and administrative burdens.
    • Major social safety net spending cuts: The broader context of the bill includes potential cuts to vital programs such as Medicaid and SNAP, which would dramatically increase demand for nonprofit services.

 

  • As of early Thursday morning, there was still enough opposition to the bill to concern Senate leaders, who worried it wouldn’t pass in its current form. All Democrats and two Republicans have said they will vote against the bill, meaning it can only afford to lose one more vote. At least four additional senators have expressed concern over specific provisions—particularly cuts to Medicaid and SNAP. 
  • One major concern among legislators is the Congressional Budget Office (CBO) analysis of the House version of the bill. The CBO estimated the bill would add $2.4 trillion to the U.S. deficit and leave almost 11 million Americans uninsured if enacted as written. Several lawmakers from both parties expressed dissatisfaction with those projections. 
  • Late Thursday, senators suggested they were considering Medicare as a potential source of additional spending cuts to offset the bill’s deficit impact. Like Social Security, Medicare has traditionally been off-limits for cuts due to expected backlash. In 2024, nearly 600,000 residents in San Diego County and 35,600 in Imperial County relied on Medicare for health insurance. 
  • Because the House and Senate must agree on a single final bill, the Senate version would need to return to the House for approval. The House passed its version of the bill by only one vote, leaving little room for disagreement. 

 

Higher Education, Research, and Volunteers 
  • In late May, a federal judge blocked the Trump administration’s attempt to ban international students from Harvard. On Wednesday, President Trump signed a proclamation to suspend all international visas for new students at Harvard University and directed the secretary of state to consider revoking visas for current students who meet the proclamation’s criteria. International students make up 27% of Harvard’s student body. The administration also directed all federal agencies to cancel remaining contracts with the university.
  • The Department of Education has threatened to revoke Columbia University’s accreditation, claiming the university does not meet standards and has not done enough to protect Jewish students on campus. The university has responded that it is addressing concerns directly with its accreditor, the Middle States Commission on Higher Education.
  • The Trump administration has cut more than 2,100 National Institutes of Health (NIH) grants totaling approximately $9.5 billion. The most detailed accounting of terminated grants is available from a Harvard researcher. Our region sees nearly $300 million of NIH funding according to research published by the Policy and Innovation Center.
  • In late May, the senior counsel at the Department of Justice announced that the administration’s next target would be the University of California system. On Thursday, UC Berkeley faculty filed a class-action lawsuit against President Trump to recover lost research funding. UC San Diego has updated its guidance for international students and held a town hall for concerned students on June 4. In fall 2024, 18.6% (8,134 students) of UCSD’s total enrollment was international students.
  • A U.S. district judge issued a temporary block Wednesday, releasing hundreds of millions of dollars in previously frozen grants and contracts to AmeriCorps and clearing the way to reinstate its volunteer force, which was laid off in April. California Gov. Gavin Newsom issued a statement noting that more than 6,000 AmeriCorps members supported 1,200 locations in 2024, including in the response to the fires in Los Angeles.

 

Immigration 
  • On Wednesday, President Trump issued a proclamation banning entry to the United States for citizens of 12 countries: Afghanistan, Burma, Chad, the Republic of the Congo, Equatorial Guinea, Eritrea, Haiti, Iran, Libya, Somalia, Sudan and Yemen. It also partially restricts entry from Burundi, Cuba, Laos, Sierra Leone, Togo, Turkmenistan and Venezuela. The bans apply to both immigrants and nonimmigrants. 
    • Immigrants and refugees make up 21% of San Diego County’s population, which includes a large Somali community.
    • Advocates have advised residents currently out of the country to return before the June 9 proclamation effective date, and those already here not to travel internationally.
  • Also Wednesday, a San Diego judge ruled that the Trump administration violated two provisions of a 2018 legal settlement requiring immigration services for parents and children separated at the border during Trump’s first term. The judge found the administration failed to employ an independent contractor to assist the 9,000 people covered by the settlement and to provide required legal assistance. 
  • ICE has ramped up enforcement across the country as part of “Operation at Large,” which includes 5,000 personnel from various departments and more than 20,000 National Guard troops. ICE released policy guidance overturning previous limitations on enforcement at courthouses. 
  • In San Diego, ICE raided two Buona Forchetta restaurant locations on May 30, acting on a five-year-old tip. Twenty armed agents conducted the raid just before dinner service at 4:30 p.m. The use of flash-bang grenades against South Park residents protesting the raid drew widespread criticism. 
  • Meanwhile, California lawmakers are advancing a package of bills to limit information sharing with ICE, restrict ICE access to nonpublic areas of schools and hospitals without a warrant, and protect homeless and domestic violence shelters. 

 

The Takeaways: What Philanthropy Can (and Is!) Doing 

In times of uncertainty, there is strength in connection and power in coming together with a shared purpose. Across the Catalyst network, funders are meeting the moment — responding to uncertainty with clarity, compassion, and collaboration. You can join them by taking the following steps: 

  • Share the San Diego Resilient Response Fund. Promote the launch of this fund through your nonprofit and social impact networks, and consider contributing. The fund offers timely, flexible support for organizations navigating the effects of shifting federal policies and funding. 
  • Learn about the California Immigrant Inclusion Initiative by attending their virtual meeting on June 12. Join the conversation and consider becoming a member to take part in peer learning and collaboration. 

 

Resources 
  • Join CEP’s panel discussion on July 10, 2025, from 9-10:15 a.m., about the findings in Navigating Complexity and Challenge Right Now: Nonprofits’ Needs and Funder Responses and how the sector is responding to current challenges. 
  • Read testimony from Diane Yentel, president and CEO of the National Council on Nonprofits, delivered Wednesday before the House Subcommittee on Delivering on Government Efficiency. In her statement, Yentel highlights how 1.5 million nonprofits serve the public good nationwide and calls for nonpartisan support of their essential work.