Good afternoon,

What you need to know this week: The latest on the tax bill, 17 anti-domestic violence and anti-sexual violence coalitions file suit, one third of nonprofits surveyed ended last year with a deficit, philanthropy is failing Latinos, and more.

—Tamara Straus, senior editor

Architect of the Capitol

• An improvement over the House bill: On Monday, the Senate Finance Committee released legislative text for its part of the reconciliation package. Advocates for the nonprofit sector largely cheered the Senate version of the tax bill, reports Ben Gose in the Chronicle.
• Expanded universal deduction: The SFC text establishes a charitable deduction for non-itemizers of $1,000 for individuals and $2,000 for joint filers, and it maintained the 60 percent increased charitable deduction for itemizers but included a 0.5 percent floor. “It’s too early to know for sure,” Ben Soskis of the Urban Institute commented, “but there’s a possibility that this combination could result in a decrease in aggregate charitable dollars but an increase in donors.”
• No new foundation tax: The SFC text doesn’t include an increase to the private foundation excise tax. The House version proposed escalating taxes on private foundations that would have cost the largest foundations tens or hundreds of millions per year in additional taxes.
• College endowments catch a break: The Senate version would keep the House proposal for an excise tax on net investment income at 1.4 percent for endowments worth $500,000 to $750,000 per student. But it would lower rates to 4 percent for endowments worth more than $750,000 up to $2 million per student, and to 8 percent for endowments above $2 million per student.
• Other provisions: Diane Yentel, president of the National Council of Nonprofits, remarked: “Several other provisions that take resources away from the nonprofit sector, reducing its ability to serve people in communities nationwide, remain in the Senate bill. And the Senate bill deeply cuts safety net programs, such as Medicaid and the Supplemental Nutrition Assistance Program (SNAP), which provide essential health care and food security to millions of people.”

• ‘An impossible position’: 17 statewide anti-domestic violence and anti-sexual violence coalitions filed a lawsuit Monday against the Trump administration over grant application requirements that they don’t promote “gender ideology,” run DEI programs, or prioritize noncitizens, reports the Associated Press. The groups say the requirements, articulated in Trump’s executive orders, put them in “an impossible position” because they demand language “antithetical to their core values” that could result in legal risk.
• ‘Void and illegal’: Judge William G. Young of the Federal District Court for the District of Massachusetts declared some of the Trump administration’s cuts to National Institutes of Health grants “void and illegal,” accusing the government of racial discrimination and prejudice against LGBTQ individuals, reports the New York Times. At issue is the White House’s effort to end grants on topics such as health equity and maternal health for women of color. The Department of Health and Human Services said it would explore an appeal.
• EPA grant ruling: On Tuesday, Judge Adam Abelson of the Federal District Court for Maryland ruled that EPA’s termination of $600 million in environmental justice grants issued by the Biden administration for low-income areas and communities of color was unlawful, reports Politico. Abelson ruled that the EPA’s termination of these grants violated the Administrative Procedure Act. “EPA contends that it has authority to thumb its nose at Congress and refuse to comply with its directives. That constitutes a clear example of an agency acting ‘in excess of statutory jurisdiction, authority, or limitations, or short of statutory right,’ and thereby violating the APA,” wrote Abelson.

• Stressful times: A survey from the Nonprofit Finance Fund finds that wide swaths of the sector are “close to reaching a breaking point,” reports Eden Stiffman in the Chronicle of Philanthropy. More than a third of the organizations that responded said they ended last year with an operating deficit.
• Multiple forces: Among the financial strains are rising costs, government funding cuts and delays, and growing demand for services. “It’s a bit of a perfect storm,” said Jen Talansky, a co-author of the survey report.
• One foundation’s response: The California Endowment, with assets of $4 billion, has decided to double its payout to 10 percent each of the next three years. Cal Endowment President Brenda Solórzano told the Chronicle, “If you’re going to achieve your mission, it requires you to spend money, and in this moment, it requires you to spend more.”

• Underfunded: Armando Zumaya, executive director of Somos El Poder, a Latino fundraising institute, reminded the Chronicle that although Latinos make up almost 20 percent of the U.S. population, less than 2 percent of foundation grants go to Latino-focused nonprofits. “We are living through one of the most challenging times for the Latino community in United States history,” he said. “The messaging is clear across the U.S.: We are described as an invasion, criminals, illegals. We’re being dehumanized.”
• Largely unsupported: Somos El Poder surveyed 200-plus member organizations and found: 55 percent have seen funding reductions due to retreat from racial-justice funding; 38 percent have been asked by funders to remove or tone down “Latino” or racial-justice messaging; 28 percent have experienced increased threats or verbal hostility since the election; 54 percent characterize their current funding as at risk, very concerning, or ended. On a positive note, 30 percent have received new or increased funding because of the political climate.
• However: On Tuesday, the Latino Community Foundation announced a new round of emergency grants — $175,000 — in response “to the intensifying ICE raids and threats facing immigrant families in Los Angeles and across California” and “to support grassroots organizations providing legal defense, emergency aid, and community protection.” The Chronicle’s Stephanie Beasley has reported that Latino nonprofits are overwhelmed by the demand for services amid Trump administration policies affecting immigration, higher education, and health care.

“Progress is not linear. It zigs and zags, and despite the unpredictability, pursuing equality for all is the duty of each generation. As Juneteenth reminds us, the fight for freedom is a forever endeavor.”

— Nicholas Turner, president and director, Vera Institute of Justice, in statement “The Legacy of Juneteenth Demands We Fight for DEI.”

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