Nonprofit Leaders: Why We Must Oppose the House Reconciliation Bill

The House of Representatives is advancing a reconciliation bill that—while dressed in the language of fiscal responsibility—contains provisions that would dramatically weaken the nonprofit sector, strain our capacity, and endanger the communities we serve.

Though some aspects of the bill may appear favorable, they are a thin veil for sweeping measures that are deeply harmful. This is not business as usual. This is a moment for clear, coordinated, and lawful opposition.

What’s in the Bill—and Why It Matters

Here’s what you need to know:

An Attack on Tax-Exempt Status

A now-removed—but easily revived—provision would have given the Treasury Secretary unchecked power to revoke a nonprofit’s 501(c)(3) status if it was deemed to support terrorism. No hearings. No trial. Just an accusation.

Even with that language temporarily stripped, its appearance signals a new willingness to politicize nonprofit regulation. That’s a threat to every nonprofit—left, right, or center.

Punishing New Taxes on Foundations and Endowments

The bill imposes up to a 10% tax on private foundation investment income and up to 21% on university endowments. These funds support scholarships, health clinics, research, and social services. Taxing them is a direct blow to charitable impact.

Disincentives for Giving

The bill:

• Caps the value of itemized deductions for high earners (reducing incentive for major donors)
• Imposes a minimum giving threshold (1% of income) before corporate donations qualify for deductions
• Offers a tiny above-the-line deduction for non-itemizers—$150 for individuals, $300 for couples

This structure favors a sound bite over sound policy. The net result? Less giving, just when we need more.

Cuts to the Safety Net

The bill slashes Medicaid and nutrition programs—programs that directly affect our clients. It will result in millions losing coverage and benefits, escalating demand on already strained nonprofits.

The message: “You handle it. But now, with fewer resources.”

Yes, You Can Speak Out—and You Must

Opposing this bill qualifies as lobbying, and that’s entirely allowed for 501(c)(3) organizations—as long as it’s done properly.

You don’t need to stay silent. In fact, staying silent now is a failure of leadership.

Here’s how to do it right:

Stay Nonpartisan

• Focus on the bill’s provisions, not the party that proposed them.
• Avoid language that suggests regime change or endorses/attacks political figures.
• Frame your position around mission impact, not ideology.

Treat It as Lobbying

Because you are taking a stance on a specific piece of legislation, it’s lobbying—and that’s OK. You just need to:

• Track the time and money spent on advocacy
• Ensure you stay within IRS limits

Best practice: File the simple, one-page IRS Form 5768 to take the 501(h) election, which gives you clear, generous lobbying limits based on your budget. For most organizations, the cap is more than enough.

Action Steps for Nonprofit Executives

Here’s how to mobilize—today:

1. Educate Your Board and Team

Make clear:

• This bill threatens your mission
• Taking a public stance is legally permitted
• Advocacy is part of effective nonprofit leadership

2. Use Talking Points That Focus on Impact

Customize these for your organization and outreach:

• “Please oppose any provision—past or future—that allows executive agencies to revoke tax-exempt status without due process. That threatens every nonprofit.”
• “Taxing foundation and university endowments pulls vital dollars from scholarships, community programs, and research.”
• “Caps on deductions discourage giving. Now is the time to incentivize, not penalize, generosity.”
• “Cutting Medicaid and food assistance harms the most vulnerable—and shifts the burden to nonprofits who are already at capacity.”

3. Contact Lawmakers—Today

• Call your U.S. Representative and Senators
• Be concise, polite, and mission-focused
• Ask for their position—and urge them to oppose this bill, which punishes the vulnerable to protect the wealthy

4. Empower Your Community

Share your position with:

• Donors and volunteers
• Peer organizations
• Clients (where appropriate)

Provide sample language so others can join you in contacting Congress.

5. File a 501(h) Election

If you haven’t already, submit IRS Form 5768. It gives your organization:

• Clear rules for lobbying
• Higher activity limits
• Protection from vague enforcement

It’s fast, free, and lasts until you revoke it. For most nonprofits, this is a no-brainer.

Final Word: This Is What Leadership Looks Like

You didn’t enter nonprofit work to watch your impact be hollowed out by legislation. This is the moment to protect your mission, your team, and the people you serve.

Speak up. Be loud. Be legal. Be clear.

This reconciliation bill must be opposed—vocally and collectively.

If you’d like help crafting messaging or filing a 501(h) election, contact us. This is what Risk Alternatives was built for.

(This post and tedbilich.com do not provide legal advice.)