Nonprofits across the country are grappling with fear and uncertainty in the wake of President Donald Trump’s executive orders. As organizations dedicated to service and justice strive to fulfill their missions, they must confront pressing questions: Where do we stand in relation to these executive orders? What does the spectrum of responses — from full compliance to complete resistance — look like? What risks must we assess, and what frameworks can guide us? And importantly, what discussions should nonprofit boards and staff engage in to make informed, principled decisions?
Every nonprofit must weigh the tension between upholding its mission and navigating new legal, regulatory,and funding risks. The stakes are high: Organizations must protect their constituents, members and employees, while preserving their operational integrity.
Nonprofits must start by clarifying what is legally required of them and how to effectively manage associated risks. Key elements include: 1) Whether they receive federal funding directly or indirectly; 2) Whether the executive order targets a core component of its mission (e.g., immigration or diversity, equity and inclusion [DEI]; and 3) What financial, legal and political resources do they have at their disposal?
Nonprofits have several paths forward: a) Full Compliance: eliminating all programs related to the target of the Executive Order, such as DEI; b) Passive-Resistance: making no substantive changes but adjusting language in response to the Executive Order; or c) Active Resistance: maintaining current programs and policies without any changes. Some specific forms of resistance:
A healthcare nonprofit may refuse to turn over patient records out of compliance with HIPPA.
ICE agents typically have steel-toed boots, eye protection and reflective vests, but not hard hats. A nonprofit with construction or safety zones may refuse to lend hard hats to the agents and bar access.
Similarly, a nonprofit with medically sensitive areas may require special masks or other equipment to enter those areas but not lend them to the agents.
Before choosing a path, nonprofits must understand and evaluate potential risks:
Criminal Risks: Nonprofits and staff that refuse to comply with federal agents or federal law may face criminal charges, including obstruction of justice. The legal process can be lengthy, costly, and emotionally draining, even if courts ultimately side with the nonprofit.
Regulatory Risks: Nonprofits holding federal licenses could have them suspended or revoked for noncompliance. For instance, physicians refusing to share patient information may risk losing their DEA licenses. Similarly, nonprofits that deny access to federal agents could jeopardize their 501(c)(3) status.
Civil Risks: Nonprofits with federal government contracts or grants may see those agreements terminated for noncompliance
To navigate these complex decisions, nonprofit boards and staff should engage in open dialogue. Some discussion prompts to guide these conversations include:
Acknowledge Uncertainty: Recognize the uncertainty surrounding the current climate and federal directives.
Audit Programs: Review existing programs and policies that reference the subject matter.
Review Insurance: A nonprofit’s insurance may cover some of the costs for attorneys, commonly up to $50,000, for defending against criminal investigations or charges, and only if they are found not guilty.
Clarify Positioning: Assess your nonprofit’s unique position in relation to mission and funding.
Assess Risk: Discuss the potential challenges and risks associated with the chosen compliance strategy.
Plan Execution: Discuss timelines and communication strategies for both internal and external stakeholders.
This is a frightening time for nonprofits targeted by federal policy. Although each nonprofit’s situation is different, they can find some solace in sharing information and working together. For its part, the Colorado Nonprofit Association is trying to provide some protection, if the IRS revokes federal 501(c)(3) status from nonprofits, by advocating to de-couple Colorado’s nonprofit status from the IRS designation.
Nonprofits are the backbone of our American society, and they need assistance today as never before to support our communities. Please consider donating your time and money and ask your legislators to support decoupling Colorado’s nonprofit status from the federal designation
Tom Downey heads the Regulatory Affairs & Government Relations Practice Group at Ireland Stapleton Pryor & Pascoe, PC, a 99-year-old full-service law firm with offices in Denver, Grand Junction and Fort Collins; he is the outside general counsel and former board chair of the Colorado Nonprofit Association. Paul Lhevine is the President and CEO of the Colorado Nonprofit Association, which has strengthened the nonprofit sector through education, connection and advocacy since 1986.
On weekends, Westword.com frequently publishes commentaries on matters of interest to the community. The opinions expressed here are the authors’ own, and do not necessarily reflect the views of Ireland Stapleton Pryor & Pascoe or the Colorado Nonprofit Association.
