Nonprofits after the midterms face a changed Congress but the same executive branch. Democrats are projected to win control of both chambers, and many nonprofits are asking whether the election results will end the worry about IRS targeting and federal grant conditions. The short answer is not yet. A Democratic Congress can hold hearings and shape funding bills starting in January, but the IRS, Treasury, and OMB are run by the administration, and we do not expect it to ease up on its own. In this post we explain what changes in January, what does not, and what nonprofits should be doing in the meantime.
Reporting from November 4 shows Democrats winning both the House and the Senate, with a few races still unresolved.
Nothing Changes Until January
The new Congress takes office on January 3. Until then the current Congress keeps its powers and the same committees hold the gavels. Even after January, the IRS, Treasury, and OMB are executive agencies. A new majority in Congress can hold hearings, subpoena documents, and write funding bills. It cannot change how the IRS is run day to day, and any bill it passes still needs the President’s signature or a veto override.
What Democrats Have Said They Will Do
Press reports say Democrats plan to open investigations into Treasury and the IRS. Rep. Mark Pocan, likely to be the top Democrat on the appropriations subcommittee that funds the IRS, has said the agency could be a target of oversight if Democrats won the House. In September, Senators Wyden and Warnock sent Treasury and the IRS a letter about the reported plan to review the exempt status of specific organizations, which we wrote about in October. The reported blueprint remains unconfirmed, and we have not seen a public reply.
Rep. Lloyd Doggett and Rep. Terri Sewell have also introduced the PROOF Act, which would write notice, dispute, and appeal rights into the statute instead of leaving them in the IRS’s own manual. A bill like that has a better chance of getting a hearing in a Democratic House. Whether it becomes law depends on the Senate and the President.
What Stays the Same
The law on revocation is the same today as it was on November 2. Outside automatic revocation for three years of missed filings, the IRS has to examine an organization, give notice, and allow response and appeal. The IRS also has a rulemaking agenda that does not depend on who controls Congress. Its 2026-2027 Priority Guidance Plan, released September 29, lists final regulations on racial nondiscrimination for private schools, guidance on the Johnson Amendment, donor advised fund guidance, and new information reporting for fiscal sponsorship.
The Deadline That Matters First
The first test of the new balance is the December 11 funding deadline. The current Congress, not the new one, will decide whether the next Continuing Resolution keeps OMB’s proposed grant rule blocked. We cover that in a separate post. Both parties supported the temporary block in September, so this is one place where the election result may matter less than the calendar.
Practical Steps
Do not treat the election as a reason to relax your compliance. The agencies that carry out enforcement are the same ones that did so last week. Keep your Form 990 filings, lobbying records, and governance documents current and ready for review, and read the certifications attached to every federal award before you sign.
Conclusion
A change in Congress affects oversight and future legislation, but it does not change what the IRS, Treasury, or OMB can do on their own this month. Organizations that were in good shape before the election are still in good shape, and organizations that were behind on their filings or records are still behind. If you would like a second set of eyes on your compliance file, we are happy to help.