In today’s highly politicized environment, executive orders often make headlines. Occasionally, there are claims that executive actions could be used to target nonprofits, particularly those working on environmental issues, supporting migrants, or engaging in international programs. However, it is essential to understand that executive orders cannot revoke or alter the tax-exempt status of organizations recognized under Section 501(c) of the Internal Revenue Code.
1. Tax-Exempt Status Is Created by Congress, Not the Executive Branch
Nonprofit tax exemption — whether under Section 501(c)(3), 501(c)(4), or another category — is based on federal statute, enacted by Congress. An executive order cannot rewrite the Internal Revenue Code or unilaterally change the criteria for obtaining or maintaining tax-exempt status. Only Congress has the power to amend the underlying rules.
While executive orders can influence enforcement priorities within agencies like the IRS or the Treasury Department, those agencies must still administer the law as written. Nonprofits that comply with existing legal requirements are protected, regardless of changes in administration.
2. Enforcement Actions Must Follow Legal Process
Even if an executive order directed the IRS to prioritize audits of certain types of organizations — such as nonprofits that work on environmental conservation, support migrant communities, or make foreign grants — the IRS would still be legally bound to follow established procedures.
The IRS cannot revoke a nonprofit’s tax-exempt status without:
- Initiating a proper examination (audit)
- Identifying a legal violation (such as private benefit, excessive lobbying, or political campaign activity)
- Providing the organization due process, including appeal rights
If an organization were to be referenced by name or inference in an executive order, its operations can continue as normal until an actual revocation notice is received from the IRS. Any such revocation would follow the well-established audit, appeal, and litigation pathways defined by law.
3. Foreign Activities Are Heavily Regulated but Not Prohibited
Nonprofits that conduct foreign programs or make grants internationally must already navigate strict regulatory requirements, including:
- Demonstrating that foreign activities further recognized charitable purposes
- Exercising expenditure responsibility over grants to non-501(c)(3) entities
- Complying with anti-terrorism, sanctions, and financial controls
An executive order could direct agencies to enforce these standards more aggressively, but it cannot invent new restrictions without Congressional action. If a nonprofit carefully follows existing law, including Office of Foreign Assets Control (OFAC) regulations and IRS guidance, it can continue international operations lawfully.
4. Political Activity Rules Remain Intact
Restrictions like the Johnson Amendment, which prohibits 501(c)(3) organizations from making comments in support of or opposition to candidates for public office, remain fully in force. While some executive orders have opposed the Johnson Amendment or directed agencies to relax enforcement, those orders have not changed the underlying legal standards. Charities that stay within the permitted bounds of advocacy and refrain from political campaign activity remain protected.
5. Constitutional and Statutory Protections Against Selective Targeting
Government agencies, including the IRS, are prohibited from selectively targeting taxpayers based on viewpoints, causes supported, or geographic focus. The First Amendment protects nonprofit organizations’ rights to freedom of speech and association. The Fifth Amendment guarantees equal protection principles applicable to federal agencies, requiring neutral and nondiscriminatory application of the law. Additionally, 26 U.S.C. § 7805(b) restricts retroactive application of new interpretations absent exceptional circumstances.
6. Procedures for and Consequences of Revocation
The IRS must follow a formal administrative process before revoking tax-exempt status. Organizations are entitled to:
- Receive a proposed revocation notice with reasons cited
- File a protest and appeal internally through the IRS Independent Office of Appeals
- If necessary, litigate in U.S. Tax Court, the U.S. Court of Federal Claims, or the U.S. District Court for the District of Columbia
During this entire process, contributions generally remain tax-deductible. Only after final determination would tax-exempt status officially end.
7. Recent Events: The Harvard Example
On April 15, 2025, President Trump called for the revocation of Harvard University’s 501(c)(3) status. However, neither the President nor the IRS can unilaterally revoke an organization’s tax-exempt status. Like any nonprofit, Harvard is entitled to due process through the IRS administrative and judicial appeal systems. Executive actions cannot bypass these protections.
This example highlights how nonprofits retain strong legal defenses against political threats to their tax-exempt status.
Conclusion
Executive orders can influence government priorities, but cannot change the tax laws or revoke nonprofit status without due process. Therefore, universities, environmental groups, migrant support organizations, humanitarian relief organizations, and those engaged in foreign programs can confidently continue their work. Understanding the limits of executive authority and maintaining strong compliance practices is the best path forward.
Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on federal tax and fundraising regulations nationwide. Ellis also advises donors concerning major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.