Public policy news and updates for the philanthropic sector

September 4, 2026

What's Happening This Week...

• Breaking News
• What We're Tracking in DC
• Additional Updates

Breaking News

Treasury and the IRS Release Draft Regulations on the Public Policy Doctrine

On September 3, the Department of the Treasury and the IRS released proposed regulations addressing racial nondiscrimination requirements for private schools. The proposal states that a private school cannot qualify as tax-exempt under section 501(c)(3) if it discriminates on the basis of race, color, or national or ethnic origin in the administration of any educational policy, admissions policy, scholarship or loan program, athletic program, or other school-administered program.

The rule applies to private schools as defined in section 170(b)(1)(A)(ii) — private primary and secondary schools, colleges, professional and trade schools, and universities. It does not, on its face, mention charitable foundations. However, depending on how it is applied, it could impact grantmaking done to educational institutions. This includes funding scholarships or any race-related programs at private schools, such as loans, athletics, facilities, and other school-supported programs.

We continue to evaluate the implications for philanthropic organizations. Read our detailed summary of the rule, and join us for a webinar September 9 at 2 p.m. ET to make sense of what it could mean for your organization.

At the moment, nothing changes - the proposed regulation would go into effect in May 2027. The proposed regulations are subject to a public comment period open for 60 days. Reach out to govt@cof.org with questions.

What We're Tracking in DC

Members of Congress Speak Out About Tax-Exempt Organizations

Senate Finance Committee Ranking Member Ron Wyden (D-OR) and Sen. Raphael Warnock (D-GA) sent a letter to Treasury Secretary Scott Bessent and IRS CEO Frank Bisignano regarding recent reports that Treasury and the IRS are investigating certain tax-exempt organizations. The reports say that the IRS will audit and potentially revoke the tax-exempt status of certain charitable organizations, including Open Society Foundations and the Southern Poverty Law Center. Sens. Wyden and Warnock expressed concerns that Treasury and the IRS are unlawfully targeting left-leaning nonprofits in their investigations.

Reps. Lloyd Doggett (D-TX) and Terri Sewell (D-AL) also sent a letter to Bisignano about the reports. They also asked for updates on an April letter sent to the agency requesting answers to concerns about the Trump Administration’s use of the agency to increase scrutiny on the tax-exempt sector. Aligned with this, Reps. Doggett and Sewell introduced the Protecting the Rights of Organizations Fairly (PROOF) Act, legislation that would strengthen due process protections for nonprofits.

Additional Updates

• On Tuesday, the House of Representatives voted 370-48 to approve the continuing resolution (CR) passed by the Senate last month. President Trump signed it into law on Wednesday. The CR extends funding for the federal government through December 11. It also includes a provision that temporarily blocks the Office of Management and Budget from finalizing proposed regulations on the Uniform Guidance for federal financial assistance.
• Last week, Reps. Greg Steube (R-FL) and Suzan DelBene (D-WA) introduced the Safeguarding America’s Nonprofits Act (H.R.10148). This legislation would amend the Internal Revenue Code to clarify a federal income tax exemption does not count as federal financial assistance for organizations described under sections 501(c), 501(d), or 401(a).
• This week, the Department of Justice announced the establishment of the National Fraud Enforcement Division. The new division will be tasked with the prosecution and investigation of fraudulent use of taxpayer dollars in the health care, defense, technology, tax, trade sectors and setting national priorities related to fraud enforcement.

Keep in Touch!

Please feel free to reach out to any of us on the Public Policy 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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