FEDERAL UPDATES
1. National Day of Action November 10: Permanently Block the OMB Grantmaking Rule
The big picture: The temporary block on OMB's proposal to overhaul federal grants expires on December 11. When Congress returns the week of November 9, it will have just a few weeks to decide whether to extend that block. The National Council of Nonprofits (NCN) is coordinating with more than 100 national organizations on a National Day of Action on November 10.
Why it matters: NCN reports broad bipartisan opposition to the rule, which would politicize grantmaking, weaken Congress's power to oversee spending, and allow grantees to be chosen based on political favor rather than community needs. On November 10, call or email your members of Congress, post on social media, and sign the national letter by November 11. Use NCN's branded or unbranded toolkit, which includes sample social media posts and a phone script, and their Hill Strategy resource with congressional targets and talking points.
Continue reading about the OMB rule here.
2. 2030 Census Comment Period Now Closed
The big picture: The public comment period on the Census Bureau's proposed 2030 Census rule closed November 2. The proposal would count only U.S. citizens and lawful permanent residents for congressional apportionment — excluding other lawfully present residents such as international students and H-1B visa holders — and would remove race and ethnicity questions from the census form. Separately, a House bill would add a citizenship question to the 2030 Census.
Why it matters: Census data drives federal funding formulas and district lines for a decade. Thank you to every PA nonprofit that commented or signed NCN's national letter. You can read PANO's comments here — we will share next steps as the Census Bureau reviews comments.
Continue reading about proposed census changes here.
3. Pocket Rescissions: $810M Canceled, GAO Finds More Funds Illegally Withheld
The big picture: On September 25, the White House announced "pocket rescissions" of $810 million Congress had appropriated to HHS, Education, HUD, and DOJ — roughly $567 million of it from immigration and refugee services. Lawsuits are underway, and a federal judge temporarily delayed the rescission of some housing funds. In October, the Government Accountability Office (GAO) also found the White House illegally withheld more than $1.4 billion in EPA and HHS grants.
Why it matters: Funds Congress approves on a bipartisan basis can now be held until the fiscal year ends and then canceled — the same unpredictability the OMB grantmaking rule would make permanent. If your organization expected awards from these agencies, confirm their status with your program officer.
Continue reading about pocket rescissions here.
4. IRS Proposes Rule Tying Private Schools' Tax Exemption to Racial Nondiscrimination
The big picture: The IRS proposed a regulation that would deny 501(c)(3) status to private schools that maintain any policy or practice that discriminates based on race, color, or national or ethnic origin — including policies defended as remedial or diversity-related. Comments were due November 3. Treasury's 2026-27 Priority Guidance Plan lists the rule for finalization, along with Johnson Amendment guidance, fiscal sponsorship reporting, and donor advised funds.
Why it matters: As written, the rule applies only to private schools, but it is the first formal step toward expanding the "fundamental public policy" doctrine that tax experts warn could later reach other nonprofits with DEI programs. Private schools, colleges, and organizations administering race-conscious scholarships should review their policies with counsel.
Continue reading about the proposed DEI regulation here.
5. Federal Scrutiny of Nonprofit Advocacy Intensifies
The big picture: According to media reports, DHS investigated more than 150 nonprofits doing voter registration and education ahead of the midterms. Separately, two House committee chairs asked the IRS to investigate nonprofits that advocate against AI data centers, and the IRS asked a federal appeals court to revisit an agreement that would let churches make partisan statements from the pulpit.
Why it matters: Nonpartisan voter engagement and issue advocacy remain fully legal for 501(c)(3)s, and the Johnson Amendment remains in effect. With scrutiny coming from several directions, keep documentation of your nonpartisan practices, funding sources, lobbying expenditures, and board oversight current. Protect Democracy's toolkit for organizations facing government investigations is a useful starting point.
Continue reading about DHS investigations here and the Johnson Amendment here.
6. PSLF: Rule Stays Vacated as Government Appeals
The big picture: The Department of Education's PSLF employer rule, vacated by federal courts on June 30, remains blocked while the government appeals. PA Rep. Brian Fitzpatrick with IL Rep. Bill Foster also introduced the bipartisan PSLF Inclusion Act to let more types of past payments count toward forgiveness.
Why it matters: 501(c)(3) employers remain PSLF-eligible under current rules — let your staff know their eligibility is unchanged for now.
Continue reading about PSLF here.
7. New Federal Grantee Roundtable Series Starts November 16
The big picture: Since early 2025, federal agencies have used funding to advance administration priorities through grant conditions, certifications, funding disruptions, audits, and more. The National Council of Nonprofits (NCN) and Democracy 2025 are launching a Federal Grantee Roundtable Series to help federally-funded nonprofits, subgrantees, and their partners navigate these changes, understand their rights and responsibilities, and identify strategies to protect their programs and communities. Sessions are designed for nonprofit leaders and staff (registration required):
Why it matters: Sessions will be recorded and include resources. From January through May 2027, the series continues with smaller agency-specific sessions, so nonprofits can get the latest on the agencies that fund their work and learn from peers funded by the same agency.
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