Republicans Quietly Try To Give Trump Even More Power In Their Budget Bill

House Republicans have included a provision in their budget bill that would allow the Trump administration to unilaterally claim that nonprofits are aiding terrorism, and punish them for it, with little to no due process.

The provision, which mimics a bill that passed the House in 2024, would give President Donald Trump new powers to attack and destroy nonprofit groups at his discretion. If adopted, the treasury secretary would be able to label a nonprofit as providing material support to terrorism on the sole determination of the secretary. This would lead to the nonprofit losing tax-exempt status, suffering significant reputational damage and, most likely, being de-banked.

Since taking office, Trump has launched an autocratic attack on civil society, targeting law firms, nonprofits, universities, Democratic Party infrastructure and individuals he sees as his enemies for punitive sanctions and investigation. This provision would add another tool to aid his attack.

“This is not an authority that any president should have — Republican, Democrat — since it could be weaponized against people across the political spectrum,” said Kia Hamadanchy, senior policy counsel for the American Civil Liberties Union. “But given the various threats from this administration towards people’s nonprofit status, we are especially concerned about granting more authority in this space without any due process.”

The provision is part of the bill that failed in the House Budget Committee on Friday, but the committee plans to vote on it again Monday after negotiating through the weekend.

Originally introduced as a bipartisan stand-alone bill in 2024, the provision came about largely in response to the campus protests that erupted following Israel’s bombardment of the Gaza Strip in response to Hamas’ attack on Oct. 7, 2023. Students and faculty protesting Israel’s indiscriminate bombing campaign were labeled as terrorist sympathizers, and pro-Israel lawmakers sought to increase crackdowns on nonprofit groups that helped organize them.

In 2024, Rep. Jason Smith (R-Mo.), chair of the House Ways & Means Committee, sent numerous letters to the IRS asking for the revocation of the nonprofit tax status for a range of groups that included Jewish Voice for Peace, Students for Justice in Palestine and the Tides Foundation on accusations that they supported terrorism and engaged in illegal activity.

Pro-Palestinian groups would likely be at the front of the line for being labeled as providing material support for terrorism, largely based on flimsy evidence, and subject to the unilateral revocation of their nonprofit status were this provision to be enacted. But, the Trump administration has crudely tossed around accusations of support for terrorism at all sorts of targets.

Trump claimed Harvard University should lose its tax-exempt status due, in part, to it supposedly pushing a “terrorist inspired/supporting” ideology on students. He also said people who vandalize Tesla dealerships or cars, the electric vehicle company owned by Elon Musk, should be labeled “terrorists.” A White House staffer even said a photo of a shell formation that read “86 47” and was posted to Instagram by former FBI Director James Comey was “a Clarion Call from Jim Comey to terrorists & hostile regimes to kill the President of the United States.”

“We have seen a willingness to dramatically expand the definition of what constitutes supporting terrorism in an effort to punish people,” said Caitlin Legacki, communications director for Americans Against Government Censorship, a liberal group combating Trump’s attacks on civil society.

At the same time, Trump has expanded what kinds of groups are identified as terrorists. In February, the State Department designated six Mexican cartels and two transnational gangs — the Venezuelan Tren de Aragua and the Salvadoran-linked MS-13 — as foreign terrorist organizations.

This raises significant questions about how the Trump administration would use the nonprofit-targeting provision, if it were made into law, to home in on immigrant rights groups.

As part of its mass deportation program, the administration has used these terrorist designations to claim that undocumented Venezuelan and Salvadoran immigrants are members of either Tren de Aragua or MS-13, often with no real evidence, and are therefore terrorists.

While the provision of legal services cannot be viewed as material support for terrorist organizations, immigrant rights groups that provide support, know-your-rights training or other services to immigrants accused of being members of these gangs could be targeted and labeled as providing material support to terrorist organizations.

And one of the big problems is that there is essentially no due process afforded to nonprofits if they were labeled as providing support to terrorism by the treasury secretary under this provision.

The provision requires the treasury secretary to provide the nonprofit “a description of such material support or resources except to the extent that the Secretary determines that disclosure of such description would be inconsistent with national security or law enforcement interests.” That creates the opportunity to withhold the reasons the organization was labeled a terror-supporting organization from the targeted nonprofit, as Rep. Don Beyer (D-Va.) teased out during a committee hearing on Tuesday.

“Could the secretary assert that documentation of an offense is classified or ‘law enforcement sensitive’ and therefore provide no substantive description — let alone evidence — to an organization on their alleged offense?” Beyer asked. “In other words, if this legislation were law, are there scenarios where a target organization could have no opportunity to review the evidence against them in order to meaningfully respond to the allegations?”

“The proposal contemplates and allows the secretary to withhold a description of the nature of the material support provided by the organization if the secretary is determined doing so is inconsistent with national security,” Tom Barthold, chief of staff of the Joint Committee on Taxation, responded. “But the secretary must note that he’s made such a determination in a notice to the organization. And so, then the organization may seek a judicial review of that determination.”

This means that the nonprofit could be labeled as a terror-supporting organization without knowing why and before it could contest that designation. That would not only cause the nonprofit to lose its tax-exempt status, but cause immediate reputational harm, lead banks to refuse services and require the nonprofit to incur huge legal costs to challenge the designation after the fact.

“This type of accusation when levied without any evidence has the potential to get groups fundamentally shut down,” Legacki said.

When this provision came up as a bill in the last Congress, the nonprofit community and Democratic Party-aligned groups organized quickly to reduce Democratic support in the House and prevent the Senate from bringing it up for a vote. They hope to do the same now, with over 200 nonprofits issuing a statement against the provision on Wednesday.

The nonprofit community believes the provision is not germane to the budget reconciliation process and should be stripped from the bill.

“I would argue very strongly that this does not qualify under the rules of reconciliation,” Hamadanchy said. “This is not a budgetary item.”