Public policy news and updates for the philanthropic sector

September 19, 2025

What's Happening This Week...

• What We're Tracking
• Additional Updates
• Happening in the States
• News, Resources, and Events

What We're Tracking in DC

Government Funding

With less than two weeks left before the government funding deadline, Congress is working to pass a continuing resolution (CR) to avoid a government shutdown. Earlier today, the House passed a CR to extend federal funding at current levels through November 21. Senate Democratic leaders have stated that they intend to oppose the CR in part because it does not include an extension of expiring subsidies for healthcare premiums, but it is still unclear how the final votes will shake out.

Members of Congress Request Oversight of Nonprofits and Funders

In the past week, Congressional Republicans have increased their scrutiny of funders and nonprofits they consider left-leaning. Last week, Rep. Chip Roy (R-TX) and 34 House Republicans sent a letter to House leadership requesting the establishment of a select committee on “the money, influence, and power behind the radical left’s assault on America and the rule of law.” The letter asks that the proposed select committee investigate nonprofits and donors that the members argue are funding activities described as attacks on Americans and the rule of law.

Similar sentiments were later reflected in statements made by some Republican members of both the House and Senate Judiciary Committees in hearings with FBI Director Kash Patel. Several lawmakers made statements raising concerns about organizations funding or engaging in political violence, in some cases citing specific funders and nonprofits. On Wednesday, Director Patel told the House Judiciary Committee that the FBI is “following the money” and investigating actors suspected of wrongdoing. The Council is closely monitoring this situation and will share additional updates in future editions of Snapshot or our other channels.

Congress Holds Hearing Related to the Tax-Exempt Sector

On September 16, the House Ways and Means Committee Oversight Subcommittee held a hearing titled “Oversight Subcommittee Hearing on Virtue Signaling vs. Vital Services: Where Tax-Exempt Hospitals are Spending Your Tax Dollars.” In the hearing, Subcommittee Republicans criticized nonprofit hospitals for not providing charitable benefits to communities and operating with limited accountability and transparency while receiving tax-exempt benefits. Subcommittee Democrats noted that nonprofit hospitals face many threats, arguing that cuts to Medicare and Medicaid contribute to the vulnerability of nonprofit hospitals. 

Additional Updates

• The Council submitted comments responding to the Department of Education’s Notice of Proposed Rulemaking concerning Public Service Loan Forgiveness (PSLF). Our comments ask the Department to reconsider harmful changes to PSLF, including removing some nonprofits from the definition of qualifying employer.
• On September 15, House Ways and Means Chairman Jason Smith (R-MO) sent a letter to Budget Committee Chairman Jodey Arrington (R-TX) on the views and estimates of the fiscal year 2026 federal budget within the committee’s jurisdiction. Within the letter, Chair Smith noted that the committee’s future work will include an “examination of the growth in the tax-exempt sector over the last several decades.” We’ll keep you updated on any developments.
• In August, the IRS issued a Private Letter Ruling confirming that a nonprofit corporation created and controlled by a community trust, the purpose of which is to support the charitable activities of the community trust, qualifies for treatment as a component part of the community trust for federal tax purposes. This means that the nonprofit corporation's assets and activities can be reported on the community trust's Form 990 rather than having its own separate filing requirement, in the same way that a community trust's component funds are treated as parts of a single entity. 

Happening in the States

State and Local Partnerships to Support Nonprofits

Ongoing changes to federal grants and contracts have affected many charitable nonprofits receiving direct or pass-through funding. These shifts have forced many organizations to reduce staff, provide fewer services, or close entirely. In response, governments, foundations, and fellow nonprofits are allocating resources to support local missions. Examples from Colorado, Maryland, Massachusetts, North Carolina, and Tennessee can be replicated or adjusted around the country.

Trendspotting: Nonprofit Regulations

State governments continue to revisit nonprofit regulations with varying degrees of success. In Florida, a bill to prohibit nonprofits and related entities from soliciting or accepting donations tied to "foreign sources of concern" was signed into law. Nevada’s Governor vetoed a measure that would have required companies applying for certain tax credits and abatements to certify that the business will collaborate with the community in which the business is located. In North Carolina, the General Assembly overrode the Governor’s veto of a bill that will require the Legislature to approve state regulations with an aggregate economic impact of more than $20 million over 5 years. 

News & Resources

• Red Cross official calls on philanthropy to assist in crisis zones, Devex
• Majority Of Companies Say Federal Pressure Impacts Their Philanthropy, Forbes
• America’s Rural Future, Brookings Institution & American Enterprise Institute

Keep in Touch!

Please feel free to reach out to any of us on the Government Relations Team with comments or concerns, or to share an issue, article, event, or op-ed you would like to see covered in a future Washington Snapshot.

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