Donald Trump’s selection of JD Vance as his running mate has elevated many of the Ohio senator’s policy positions and ideological commitments to the national stage, shining a spotlight on his distinctive brand of right-wing populism, including his views on nonprofit organizations. Vance’s outspoken antagonism toward progressive nonprofit organizations has cropped up many times in recent years, with Vance declaring in a 2021 talk called “What to do about Woke Capital” that “All across our country, we have nonprofits, big foundations, that are effectively social justice hedge funds.”

Over the past half-decade, Vance has proposed some of the most sweeping reforms of the nonprofit sector of any politician on the national stage. In that same 2021 talk, he flirted with the idea of removing nonprofits’ tax privileges, and in a 2021 Newsweek op-ed, he specifically proposed new taxes on the Ford, MacArthur, and Gates Foundations and Harvard University to shrink their size and influence.

In the run-up to the election, Vance’s increased prominence will likely keep policies related to the regulation and tax status of nonprofits in the spotlight. Although such issues have “long been relegated to the wastelands of Washington policy debate,” the Chronicle of Philanthropy wrote, they are now “poised to gain visibility.”

It is not clear how much of a priority nonprofit and philanthropy policy might be in a potential second Trump administration. But if such reforms do indeed become a focus, they could transform US civil society. As these reforms gain visibility, policymakers and nonprofits should take time to understand where these calls come from, what they are focusing on, and why they could pose a danger to civil society.

Vance is amplifying existing reform campaigns

Reform campaigns targeting different dimensions of nonprofit and philanthropic operations have surged recently, with a particular intensity over the past year. These campaigns include an increased focus on philanthropic funding of activism, most notably in response to the recent pro-Palestinian campus protests; growing efforts from conservative policymakers and advocates to check the influence of progressive nonprofits and philanthropic institutions; and a movement to accelerate philanthropic spending and promote philanthropic transparency, which was given a boost by the pandemic.

The various points of convergence and tension between these campaigns will likely be the center of reformist energies in the coming year.

Reform campaigns focus on three areas of concern

Much like previous periods of nonprofit reform, current calls largely focus on three major areas of concern.

1. Warehousing of philanthropic funds

   Reformers have long pointed to a perceived disjunction between charitable resources and charitable needs, with funds that could be put to use instead held within the coffers of philanthropic foundations or within the endowments of other charitable institutions. As a senator, Vance has championed this focus, targeting higher education and foundations in particular. Last December, he sponsored legislation that would increase the excise tax from 1.4 percent to 35 percent on the net investment income of secular, private nonprofit colleges and universities with at least $10 billion in assets under management. During his 2021 Senate campaign, he also proposed a 20 percent annual payout rate for any charitable institution with an endowment of more than $100 million (all private foundations currently carry a 5 percent payout rate).

   Although the mandated rates he proposes are exceptionally high, Vance is not the only voice targeting large nonprofit endowments. The federal 2017 Tax Cuts and Jobs Act included a modest excise tax on the investment income of select colleges and universities. Since then, Republicans have put forward a number of legislative proposals that would increase those taxes or others on well-endowed higher education institutions. The last several years have also seen a broad-based campaign to incentivize payouts from donor-advised funds and philanthropic foundations, with these efforts reflected in a bipartisan bill introduced in the Senate in 2021.

2. Philanthropic transparency

   Investigating nonprofits’ funding sources, particularly if they involve foreign funding, has been a long-standing concern (PDF)—and these calls have grown more frequent on both sides of the aisle. Some Republican lawmakers (PDF), as well as other activists and journalists, have sought to unearth the funding sources of campus-based pro-Palestinian protests. They have scrutinized philanthropic intermediaries, such as donor-advised funds and fiscal sponsors, which tend to make “following the money” more difficult. These philanthropic vehicles have also drawn the attention of progressives seeking to promote greater transparency.

   These efforts join older campaigns, stemming from the Citizens United decision in 2010, to shine more light on the “dark money” sluicing through nonprofits that seeks to influence elections and government policy.

3. Staking out the bounds of tax-advantaged charitable activity

   Reformers have focused much of their critiques of tax-advantaged status on two types of nonprofit activity: commercial and business activity unrelated to the charitable mission of the nonprofit and partisan political activity. There has been a renewed advocacy push to tamp down on the former, while with the latter, both congressional Republicans and Democrats have sought to apply increased oversight to nonprofits allegedly crossing the line into impermissible political activity. The spate of recently enacted state-level anti-protest laws might also be included in this category.

   Concerns about terrorism have also encouraged the policing of another boundary around authorized nonprofit activity. In April, the House passed a bill that would allow the secretary of the Treasury to strip nonprofit status from any nonprofit designated as a “terrorist supporting organization.”

Vance’s attacks on nonprofits entangle long-standing concerns with targeted assaults

In 2021, Vance argued that conservatives must “eliminate all of the special privileges that exist for our nonprofit and foundation class,” but then specifically cited organizations promoting diversity, equity, and inclusion (or in Vance’s phrasing, those “teach[ing] literal racism to our children in their schools”). This conjoining of a generalized critique and an ideologically targeted one is characteristic of Vance’s approach to nonprofit reform, but it is by no means an isolated phenomenon.

Recently, conservative attacks on diversity, equity, and inclusion have successfully (PDF) extended to the work of nonprofit funders. When Republican lawmakers raise alarms about the excessive political activity of nonprofits or philanthropy, they almost always focus on progressive organizations or donors. Meanwhile, progressive policymakers and advocates concerned about the dangers of “dark money” tend to shine their spotlight on conservative groups.

This entanglement of nonprofit reform goals and partisan politics underscores the uncertain fate of any nonprofit reform effort. Although the issues at hand and some proposed reforms have bipartisan support, their often partisan framing might make forming coalitions to enact legislation difficult.

Calls for nonprofit reform coincide with concerns about the shrinking space for civil society worldwide

Some scholars have warned that US policymakers are adopting tactics used by authoritarian regimes in other countries to restrict the ability of civil society organizations to function. Overseas, Congress is closely following these trends, and the Senate Foreign Relations Committee recently held a hearing on “anti-NGO laws and other tools of democratic repression.” However, some of these policymakers are also presenting similar tactics as necessary efforts to reform nonprofits and philanthropy back home.

Moving forward, those pushing for nonprofit reform will need to figure out how to do so in ways that empower—and do not weaken or unnecessarily constrict—civil society.