On September 25, 2025, the Trump administration issued an executive order addressing domestic terrorism and organized political violence. On December 4, 2025, the Attorney General issued a memorandum that “reshapes how domestic terrorism will be defined, investigated, charged, and resourced across the federal government.” Taken together, these developments prompted many funders to consider their possible implications for grantmaking practices, governance, and tax-exempt status.
As federal agencies, including the Department of Justice and the IRS, increase their scrutiny of foundations and nonprofits, lean funders are likely to be affected. Here we examine the current legal landscape, assess potential risks, and share strategies to safeguard your nonprofit partners and ensure your work continues to strengthen communities.
What’s in the Executive Order?
The day after the executive order was issued, the Chronicle of Philanthropy summarized its key provisions:
[The] memorandum calls for the creation of a National Joint Terrorism Task Force to investigate “institutional and individual funders, and officers and employees of organizations, that are responsible for, sponsor, or otherwise aid and abet the principal actors engaging in the criminal conduct.”
The order directs the Internal Revenue Service to refer tax-exempt organizations to the Department of Justice it suspects of aiding, indirectly or directly, acts of political violence or domestic terrorism.
To help law enforcement identify groups to investigate, the memorandum includes a list of attitudes and ideologies that should serve as red flags.
Attorneys at Arnold & Porter summarized the December 4 memorandum as follows:
The key message is unmistakable: federal law enforcement will target individuals, organizations, and funders whom the U.S. Department of Justice (DOJ) contends are “domestic terrorists,” under a definition that links political violence to “anti-fascist” ideologies.
The Legal Ground Rules Remain the Same
Despite the changing political rhetoric, the foundation of charitable law remains steady:
- Foundations must be organized and operated exclusively for charitable purposes.
- They cannot have a substantial non-exempt or illegal purpose, or act contrary to public policy.
- Courts, not the IRS, determine what constitutes illegal activity.
Today’s climate echoes earlier eras when philanthropy’s support for civil rights, education reform, or racial equity prompted calls for oversight. Recent executive orders referencing Supreme Court decisions on affirmative action and education have added uncertainty, especially for funders supporting DEI or advocacy-related work.
Understanding this context, both the legal fundamentals and the political history behind them, can help funders separate political noise from legal reality and continue strengthening communities with confidence.
Practical Steps for Funders
While the legal landscape may feel uncertain, most foundations already have the tools they need to navigate it effectively. The key is to stay informed, document intent, and communicate clearly across staff, board, and grantees.
The following practical steps were shared by attorneys Alex Reid (BakerHostetler) and Andras Kosaras (Arnold & Porter) during an Exponent Philanthropy webinar:
1. Stay Informed
Designate someone, such as a staff member, board officer, or legal advisor, to monitor policy changes and provide periodic updates. Tracking developments through trusted nonprofit and philanthropy networks can prevent confusion and overreaction to headlines.
2. Clarify the Board’s Role
Boards should understand that their role is dynamic, not static. In times of uncertainty, trustees may need to engage more directly in scenario planning and oversight. Clear delineation of responsibilities helps maintain compliance and confidence.
3. Conduct Risk Assessments
Identify potential risks specific to your foundation:
- Which executive orders or agency actions could affect your grants or operations?
- What types of risk, financial, reputational, or legal, are most relevant?
- Who enforces these rules (federal or state regulators, or even financial institutions)?
Foundations should regularly review their grant agreements, due diligence procedures, and recordkeeping practices. If necessary, consult legal counsel to ensure safeguards are up to date.
4. Communicate Internally and Externally
- With staff and board: Reinforce what remains legal and mission-aligned to avoid unnecessary self-censorship.
- With grantees: Be transparent about compliance requirements while affirming your continued support for their charitable work.
- With the public: Stay consistent and clear about your foundation’s mission and values to build trust amid changing rhetoric.
5. Keep Perspective
Regulation of philanthropy tends to intensify during social and political upheaval, but the core principles of charitable law have endured for decades. Lean funders can continue to advance equity, innovation, and community well-being with confidence by staying grounded in mission and law.
Looking Ahead
While executive orders and agency priorities may shift, your foundation’s commitment to the public good remains constant. By understanding the history, staying proactive, and strengthening internal processes, you can continue your work with confidence, reducing the noise and focusing on what truly matters: building stronger, more equitable communities.
Members can explore the companion resource, Navigating the 2025 Executive Orders, for deeper legal context and practical guidance.
- For additional analysis from Arnold & Porter on the September 25 executive order, see Turning Powerful Post-9/11 Counterterrorism Tools Onto Domestic Policy Targets: A Sweeping National Security Memorandum Transforms the Risk Landscape for U.S. Tax-Exempt Organizations and Their Funders.
- For analysis of the December 4 memorandum, see DOJ Issues Sweeping New Domestic Terrorism Directive: What the Attorney General’s December 4 Memorandum Means for You.
Note: This blog post is based on the Exponent Philanthropy webinar on 11/3/2025 with attorneys from Baker Hostetler and Arnold & Porter. While we pride ourselves on our advice, please realize Exponent Philanthropy is not a law or accounting firm. The information contained in this blog post is for informational purposes only and not as part of an attorney-client relationship. The information is not a substitute for expert legal, tax, or other professional advice tailored to your specific circumstances, and may not be relied upon for the purposes of avoiding any penalties that may be imposed under the Internal Revenue Code. It is our advice that you seek independent counsel for any tax, accounting, or legal issues you may have related to matters that are of a material concern to you or your organization.