Federal – Budget, Tax-Exemption, + Nonpartisanship | State – Working Pennsylvanians Tax Credit
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We're back - with the correct link for Action #4 for this time! Thanks to those who already tried to take action and let us know the link was broken. Second time's a charm!
The PANO network is working together to bring you continuous updates, resources, and actions you can take as the nonprofit community collectively responds to recent federal and state-level announcements.
UPDATE #1 - Federal Budget Reconciliation
As a reminder, on March 15, 2025, Congress enacted a continuing resolution (CR) [HR 1968] to fund the federal government through September 30, 2025.
Maintained funding levels similar to FY2024, with some adjustments.
Most federal agencies continue to operate at prior-year funding levels, with targeted adjustments.
The CR did not include mandatory programs (e.g., Social Security, Medicare, Medicaid) or interest on national debt (projected over $1T) also excluded.
President Trump Releases “Skinny” Budget Request - May 2, 2025 The President sent a letter to the chair of the U.S. Senate Appropriations Committee setting forth his proposal for domestic spending for FY2026. The President’s proposal calls for a $163B reduction in discretionary, non-defense spending – a 22.6% reduction from current spending levels. Notably, it calls for the elimination of a wide range of federal funding streams for nonprofits not aligned with the Administration's priorities, including social safety net funding, programs like Substance Abuse and Mental Health Services Administration (SAMSHA), rental assistance, heating assistance for low-income households, community services block grants, and AmeriCorps Programs.
While the President’s budget proposal is the start of the federal appropriations process, Congress ultimately decides what is (and is not) included in the federal budget, and Congress has typically not deferred to the President’s budget, regardless of which party has controlled the White House, the U.S. Senate, and the U.S. House of Representatives. Read the National Council of Nonprofit’s more detailed analysis.
U.S. House Ways & Means Committee Set to Advance Major Tax Legislation The U.S. House Ways and Means Committee is working quickly to advance their tax reconciliation legislation, with a draft bill to be released as soon as this week; this may then be scheduled for a vote in committee as soon as May 12, 2025. Using the budget reconciliation process, policy makers can enact significant policy changes – impacting taxes and safety net programs, including the Supplemental Nutrition Assistance Program (SNAP) and Medicaid – with only a simple majority in the House and Senate. Our best opportunity to protect nonprofit organizations is to ensure that the draft bill includes helpful provisions to bolster nonprofits and to exclude potentially harmful provisions. We want to remind our congressional delegation that Pennsylvania nonprofits employ 16% of the Commonwealth’s workforce, driving a minimum of $56.6B in economic activity annually; strengthening nonprofits' efforts boosts our economy.
ACTION #1 To contact your Congressional Representative and Senators regarding this tax legislation, simply sign your name on this draft email template and click send! You can also edit the template to:
Include the name of your organization in the second sentence (in place of “my nonprofit organization”)
Include the number of employees or volunteers that work for your organization (right after the three bullet points in Paragraph 2)
Delete any tax incentive that does not apply to your organization (e.g., if you are fully volunteer-run, you may choose not to include the tax incentives in the section titled Expand Tax Policies to Offer Existing Employer Tax Credits to Nonprofits.
UPDATE #2 - The Federal "Nonprofit Tax-Exempt Status" Storyline
Over the weekend, reports emerged confirming the Administration’s intent to challenge charitable nonprofits’ tax-exempt status. Meetings among attorneys and senior officials at the Internal Revenue Service (IRS) discussed altering rules governing how to deny tax exemption, prioritizing investigations of targeted types of nonprofits, and changing public policy to allow for easier revocation, according to the Wall Street Journal. Many of us have followed Harvard University’s opposition of the Administration’s demands to comply with audits of academic programs and departments and changes to the University’s governance structure and hiring practices. These discussions are broader in nature; read the President’s most recent response to Harvard.
In addition to these developments, the President signed another Executive Order on May 2, eliminating PBS or public media funding.
ACTION #2 Click here to contact Congress in support of public media.
ACTION #3 The best way to prepare is to focus on what you can control: ensure your organization’s compliance with local, state, and federal regulations. Relevant resources:
UPDATE #3 - Federal Level Nonprofit Nonpartisanship
501(c)(3)s may be the last place where nonpartisanship still exists – a place where people from all persuasions can come to together to innovate, finding solutions to common problems. The National Council of Nonprofits (NCN) has long followed potential threats to this guideline so critical to our work. Released last week, the Executive Order establishing the Religious Liberty Commission has the potential to weaken the Johnson Amendment, the Internal Revenue Code which protects charitable nonprofits from those who wish to use charitable donations to support or oppose candidates for public office.
UPDATE #4 - State Level Policy Movement - The Working Pennsylvanians Tax Credit (HB 820)
Last week, HB 820: Working Pennsylvanians Tax Credit passed out of the House Finance Committee and is scheduled for a vote this week. United Way of Pennsylvania, in partnership with University of Texas’ Child and Family Partnership, found that for every $1 spent on a state Earned Income Tax Credit by the Commonwealth, Pennsylvania receives $4 back in economic growth and saves $3 dollars in social spending.
ACTION #4 If your work supports or intersects with Pennsylvania residents working to afford everyday essentials like food, childcare, and transportation, https://www.votervoice.net/UWPennsylvania/campaigns/124165/respond to support HB 820: The Working Pennsylvanians Tax Credit – an investment that strengthens the financial security for workers, and also fuels local economies.
