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What you need to know this week: DEI nonprofit ruling in California, Los Angeles civil rights leaders on edge, new proposal to revoke tax status, unpredictable giving trends, and more.

—Tamara Straus, senior editor

Eric Thayer, AP

• DEI ruling: On Monday, a federal judge in California blocked the Trump administration from enforcing anti-diversity and anti-transgender executive orders in three grant-funding requirements, which the LGBTQ+ nonprofit plaintiffs say are unconstitutional, according to the San Francisco Chronicle and other outlets. “These three funding provisions reflect an effort to censor constitutionally protected speech and services promoting DEI and recognizing the existence of transgender individuals,” said U.S. District Judge Jon Tigar of Oakland.
• Defunding threats: President Trump is said to be weighing broad cancellation of California funding, citing noncompliance with his executive orders targeting diversity efforts and California universities’ alleged antisemitism on campus. “No taxpayer should be forced to fund the demise of our country,” White House spokesman Kush Desai said in a statement Friday afternoon, criticizing California for its energy, immigration, and other policies.

• National Guard deployed: On Saturday, the president sent 1,000 California National Guard troops to Los Angeles to stop protests against his immigration crackdown, despite the objections of California Gov. Gavin Newsom and Los Angeles Mayor Karen Bass, both Democrats. By Tuesday, per the Associated Press, the president had deployed more than 4,100 National Guard troops as well as 700 Marines to L.A. County, where Latinos account for 48 percent of the population.
• Civil rights nonprofits on edge: “The people’s right to peacefully exercise their collective power and challenge this administration’s unjust policies targeting Black and brown communities must be protected,” leaders of eight civil rights groups, including the NAACP, the National Action Network, and the Legal Defense Fund, said in a statement.

• IRS rule change? To sideline congressional approval, the Treasury Department is considering changing rules to revoke tax-exempt status for nonprofit higher-ed institutions that consider race in student admissions, scholarships, and other areas, Bloomberg reports.
• All about race: While the Supreme Court ruled in 2023 that schools can’t consider race in admissions, existing IRS regulations allow them to keep their tax-exempt status and still favor racial minority groups — as long as the institution maintains a “racially nondiscriminatory policy” and “admits students of any race, color, and national or ethnic origin.”
• Possible outcomes: If implemented, the IRS change could result in multiple audits of more than 1,500 colleges and universities. At risk for these institutions would be collectively billions of dollars in taxes.

• Uncertainty reigns: Tariffs, market volatility, and a legislative proposal to increase taxes on private foundations could reduce grant making this year, new Candid data reveals.
• Bright spot: Yet nearly 40 percent of the 578 foundations Candid surveyed said they expected to increase their giving in 2025, with some citing the need to help grantees affected by federal policy changes and funding cuts.
• Market rules: Foundations with increased asset values expected to give more in 2025, while those that experienced declines expected to give less.

• Great teams: Valerie Jarrett has been around the leadership block — from serving as Chicago’s planning commissioner and CEO of the Habitat Company to working as senior adviser to President Obama and now running his foundation. What matters most, she said in an episode of our podcast Nonprofits Now: Leading Today, is building and maintaining great teams.
• Multiple skill sets: Talent and expertise matter, but they are not the only skill sets to assess, said Jarrett, citing curiosity, toughness, humor, and compassion.
• Fear no pivot: “Just because we’ve done it this way doesn’t mean we always have to,” Jarrett said. “In fact, institutions that really sustain and replenish themselves are the ones that are willing to be courageous enough to look beyond what we already do.”

• DIY: Some communities are coming together to fix what’s broken. “In Reading, Pa., one of America’s poorest cities, they are building after-school, English as a second language, and early-childhood education programs. In swing-state Wisconsin, where red-blue tribalism runs deep, they are promoting mental-health resources. And in Arizona, where disputes over the 2020 election still rage, they’re working to strengthen education, protect the water supply, and create jobs,” reports Drew Lindsay in the Chronicle of Philanthropy.
• Polarization killer? Community advocates from dozens of cities — like Denver, Shreveport, La., and Tallahassee, Fla. — are part of a small movement that’s gaining attention and some philanthropic investment.
• Words matter: These advocates avoid the words “democracy” and “civic,” which research shows Americans see as abstract or ideologically loaded. “They want to counter the narrative that the country is hopelessly divided, and they want to give people an avenue to make change outside national politics, where division has a stranglehold,” reports Lindsay.

• 241% increase: Project Galileo, a project of Cloudflare that provides free cybersecurity protection to vulnerable public interest organizations around the world, reported it blocked 108.9 billion cyber threats from May 1, 2024, to March 31, 2025 — 241 percent more attack-related requests than the previous year.
• Journalism and human rights: Journalism organizations experienced the most attacks, with over 97 billion requests blocked as potential threats across 315 organizations. Ranked second was the human rights/civil society organizations category, which saw 8.9 billion requests blocked.
• The need to protect: “What we’re seeing now is an intensification,” said Janis Rosheuvel of the Building Movement Project, which provides security training for progressive nonprofits, in an article by the Chronicle’s Sara Herschander on new cybersecurity strategies.

Number of documented, full-time jobs that have been eliminated since Inauguration Day. The Chronicle of Philanthropy has built a layoff tracker to provide a snapshot of the nonprofit sector’s financial health. In our May estimate, we find the sector lost jobs mostly in the IRS categories of education, health care, and organizations providing food, housing, and shelter.

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