The new GOP-led Congress will likely pass a bill targeting nonprofits. The results could be chilling

A controversial bill, described by critics as a calculated strike against pro-Palestinian groups, cleared the House of Representatives in November but stalled in the Senate as the session came to a close. The legislation, however, is expected to resurface in the new Congress, where it could gain fresh momentum. Analysts warn the measure could be wielded as a powerful tool to silence a broad spectrum of organizations at odds with President Donald Trump’s agenda, far beyond those protesting the war in Gaza. To many observers, the bill underscores a growing willingness among Republicans to help Trump target his political adversaries.

But it’s not just Republicans who supported the legislation. H.R. 9495, or the Stop Terror-Financing and Tax Penalties on American Hostages Act, initially garnered the support of 52 House Democrats before a public pressure campaign reduced the number to 15. With Republicans controlling both chambers next Congress, the bill could pass the House and Senate on a party line vote and send shockwaves through the nonprofit ecosystem.

H.R. 9495 would grant the secretary of the treasury the ability to strip nonprofit organizations of their tax-exempt status if they are deemed “terrorist supporting organizations,” and if those organizations fail to successfully appeal within 90 days of being notified.

During a House floor speech before a vote on the bill, Republican Congressman and Chairman of the Ways & Means Committee Jason Smith said H.R. 9495 was necessary to stop “abuse of our tax code that is funding terrorism around the world.”

But the Internal Revenue Service already has a process for revoking the tax-exempt status of nonprofits found to be supporting terrorist organizations, which has critics like Kia Hamadanchy, senior policy counsel at the American Civil Liberties Union, calling the bill “a solution for which there is no problem.”

According to Hamadanchy, H.R. 9495 would allow the treasury secretary to bypass formal investigations and label nonprofits as terrorist-supporting organizations without providing evidence. Others point to the bill’s lack of specific language defining support for terrorism to claim H.R. 9495 would allow administrations to weaponize and stretch such accusations beyond reasonable interpretation.

“The criterion of material support for terrorism is going to be expanded to include all sorts of things that don’t include material support for terrorism,” said David Myers, director of UCLA’s Luskin Center for History and Policy. “It will have the capacity to sweep under everything from the Palestine Children’s Relief Fund to certainly Jewish Voice for Peace and even up to J Street.”

The Palestine Children’s Relief Fund funds medical care for Palestinian youth, Jewish Voice for Peace is a progressive anti-Zionist group opposing Israel’s occupation of Palestinian territories, and J Street is a liberal Zionist organization advocating for a diplomatic resolution to Israeli-Palestinian conflicts.

Republicans have already intensified scrutiny of pro-Palestinian organizations in the wake of campus protests against the war in Gaza. A group of 16 Republican senators sent a letter to the IRS demanding an investigation into nonprofits they say are associated with National Students for Justice in Palestine, a grassroots organization that supports a network of autonomous chapters at colleges and universities across North America. (The organization claims hundreds of such chapters.) One of the nonprofits named in the letter, the Tides Foundation, has funded a legal defense organization representing students being prosecuted for activities related to pro-Palestinian activism. The foundation has also supported a wide variety of other progressive causes, including expanding health care access and protecting communities from climate disasters. The Tides Foundation declined a request to comment on the bill.

Once stripped of tax-exempt status, nonprofits are required to pay income tax on all revenue, and donors are no longer able to deduct their contributions from their taxes, posing a significant threat to the cashflow of those organizations. Critics of H.R. 9495 have dubbed the bill the “Nonprofit Killer.”

Myers, who is also a professor of Jewish history at UCLA, compared H.R. 9495 to anti-BDS laws that penalize private companies for boycotting Israel. In his view, the bill fits neatly into “a quite explicit campaign to stifle dissent around Israel/Palestine,” but also poses major threats to the country’s democratic institutions more broadly, with particularly significant implications for nonprofit organizations, journalists and academia.

Trump has been open about his disdain for those institutions, accusing the press of being the “enemy of the people” and threatening to pull funding from universities that promote “wokeness.” He has also said he would target his political opponents, calling Democrats like Congresswoman Nancy Pelosi and Senator-elect Adam Schiff “enemies from within.”

“The goal is to silence political dissenters . . . and reimagine the instruments of government power to be utilized to suppress rather than protect,” Myers said.

That view is shared by other critics like Robert McCaw, the director of the government affairs department for the Council on American-Islamic Relations. He said that even though pro-Palestinian organizations would likely be the initial targets, the bill’s impact would extend far beyond groups advocating on that issue.

“Any future administration could weaponize this unprecedented authority to target any perceived political opposition, whether they’re Christian, Jewish, Muslim, conservative, or liberal,” McCaw said.

In September, the Council on American-Islamic Relations and over 350 other organizations signed a letter urging the House to oppose H.R. 9495, claiming it could embolden future administrations to pursue political opponents across the ideological spectrum and cause a chilling effect on nonprofits that, even if never designated terrorist-supporting, “will curtail their activities as a precaution in order to avoid stigmatizing and financially devastating punishments.”

“This is not something that is going to go away. Whether it’s this bill coming back next year or some other attack on civil society, this is definitely going to be an ongoing battle,” Hamadanchy said.

Trump’s department nominations have only deepened that concern among experts. Kash Patel, Trump’s nominee for director of the Federal Bureau of Investigation, has pledged to go after anti-Trump “conspirators” in government and the media. Pam Bondi, Trump’s second choice for attorney general after former Congressman Matt Gaetz was pressured to rescind his nomination over an ethics investigation involving sex with a minor, said those who prosecuted Jan. 6 rioters would themselves be prosecuted.

By appointing cabinet members who promise to weaponize government power and attacking NGOs that oppose his political agenda, Trump is following in the footsteps of authoritarians like Hungarian Prime Minister Viktor Órban who seek “to defang and dilute the power of civil society actors committed to the ideals of liberal democracy,” said Myers.

—Jeremy Lindenfeld, Capital & Main

This piece was originally published by Capital & Main, which reports from California on economic, political, and social issues.