Rep. Steube Introduces Bipartisan Bill to Protect Nonprofits’ Tax-Exempt Status

WASHINGTON-U.S. Representative Greg Steube (R-Fla.) and Representative Suzan DelBene (D-Wash.) today introduced the Safeguarding America's Nonprofits Act, legislation to amend the Internal Revenue Code and clarify that a nonprofit's federal tax-exempt status does not constitute federal financial assistance.

"Nonprofits across the country depend on their tax-exempt status to carry out their work. That status should never be treated as a form of government assistance," said Rep. Steube. "The Safeguarding America's Nonprofits Act puts a clear, permanent rule in statute so nonprofits do not have to worry about their tax exemption being reinterpreted as a government handout."

"Nonprofits across the country rely on clear, consistent federal rules to continue serving their communities effectively. In recent years, conflicting court decisions have created uncertainty by suggesting that nonprofits could be subject to regulations that Congress never intended for them. This bipartisan legislation would clarify that an organization's tax-exempt status is not federal financial assistance. It would protect charities, philanthropies, community-based organizations, and religious institutions from unnecessary regulations so they can stay focused on delivering critical services," said Congresswoman Suzan DelBene.

"Nonprofit organizations are the heart of our communities. They play an essential role in supporting families and hardworking Americans, advancing research, educating students, and providing countless other public benefits, often stepping in where government and business can't or shouldn't. Their strength lies in their independence. The Safeguarding America's Nonprofits Act protects tax-exempt organizations independent from the federal government from unnecessary and burdensome risks of litigation or bureaucratic overreach. We appreciate Congressman Greg Steube (R-FL) and Congresswoman DelBene for their bipartisan leadership so nonprofits can continue to focus on their missions," said Community Impact Coalition Co-Chairs: Tommy Goodwin and Mary Wheatley.

"Associations are among the most trusted institutions in American life," said Michelle Mason, FASAE, CAE, President and CEO, American Society of Association Executives. "They set the standards that keep products safe and professions credible, train and credential the workforce, and convene the people who solve problems no single company or agency can solve alone. That work depends on their independence. The Safeguarding America's Nonprofits Act makes clear what has always been true: tax exemption is not federal financial assistance, and it should never become a lever for government control over organizations that accept no federal dollars. ASAE thanks Congressman Steube and Congresswoman DelBene for introducing this important legislation and urges members of Congress to support it."

"Representing family forestry businesses across Rural America, the Forest Landowners Association understands firsthand the important role nonprofit organizations play in strengthening communities and advancing the interests of the people and industries they serve," said Scott Jones, CEO, Forest Landowners Association. "Tax-exempt status is not a government grant or subsidy, and it should not be treated as federal financial assistance. The Safeguarding America's Nonprofits Act provides important clarity and protects organizations like FLA from unnecessary regulatory burdens that could hinder our ability to carry out our missions. FLA is proud to support this bipartisan legislation."

"Community Associations Institute (CAI) is proud to support the Safeguarding America's Nonprofits Act," said Dawn M. Bauman, CAE, CEO of CAI. "Nonprofit organizations like CAI play an essential role in providing important resources to support the integrity and strength of America's communities. This legislation helps ensure CAI can continue to prioritize our members and provide the education, advocacy, and resources they need to support thriving community associations. We thank Congressman Steube and Senator Lankford for their leadership on this important legislation."

The bill amends Section 501 of the Internal Revenue Code to state that a federal income tax exemption does not count as federal financial assistance for organizations described under sections 501(c), 501(d), or 401(a).

There are roughly 2 million nonprofit organizations in the United States. Many operate without any direct government assistance, thereby avoiding the compliance burdens that federal subsidies often impose. When the tax code was written, Congress intended for a clear distinction between nonprofits that do and do not accept government assistance. This bill affirms Congress' intent and limits legal uncertainty.

The legislation is supported by a broad coalition of nonprofit organizations, including the Community Impact Coalition, Career Education Colleges and Universities, American Society of Association Executives, National Scleroderma Foundation, Women in Trucking, Florida Association of Free and Charitable Clinics, Community Associations Institute, The Handcrafted Soap & Cosmetic Guild, Inc., Household and Commercial Products Association, American Rental Association, American Council of Academic Physical Therapy, Bostrom, National Association for Regulatory Administration, Association Management Services, Inc., Association CEO, American Society for Nondestructive Testing, American Society for Pharmacology and Experimental Therapeutics, and the National Emergency Number Association.

The full text of the Safeguarding America's Nonprofits Act is available here.

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