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February 26, 2025

Dear Michael,

AZ Impact for Good continues to collaborate with our national partners including the National Council of Nonprofits and United Philanthropy Forum to bring our members timely news and resources on federal executive actions affecting nonprofits and related litigation (see article below for important updates on the lawsuits and new NCN and AZIFG resources, upcoming member briefings and more.)

Closer to home, the Arizona Legislature on Monday entered the period known as Crossover Week. Lawmakers introduced more than 1,800 bills, resolutions and memorials before the final bill-introduction deadlines earlier this month. Many did not clear the Feb. 21 deadline for committee consideration of bills in their chamber of origin and are dead unless later revived by amendment. The next major milestone for this legislative session is March 28 when committees must finish hearing bills from the opposite chamber.

With most committees not meeting, legislative action this week shifted to the House and Senate floors where lawmakers spent long hours debating and voting on scores of bills before sending them to the opposite chamber.

One of those bills was AZIFG-backed SB 1496 – tax credit; qualifying charitable organizations. The Senate today passed SB 1496 and it now heads to the House of Representatives (see full story below).

Among the bills that did not receive a committee hearing before last Friday’s deadline was HB 2822 – nongovernmental organizations; contracts; transparency. The bill requires undefined "nongovernmental organizations" in this state that have been awarded state contracts and that "operate near this state's international border," also undefined, to submit quarterly financial reports to the speaker of the House of Representatives and the president of the Senate. The AZIFG advocacy team earlier this month shared Policy Council members’ questions and concerns about the bill with its sponsor, Rep. Leo Biasiucci, R-Lake Havasu City, who agreed to confer with AZIFG if he decides to pursue the legislation this session or in the future.

Negotiations over the fiscal year 2026 state budget have yet to begin in earnest as Republican lawmakers continue to criticize Democratic Gov. Katie Hobbs over several alleged budget missteps including submitting an unbalanced state budget recommendation. The legislature and governor face a looming constitutional deadline to enact a balanced budget when the next fiscal year starts on July 1.

AZIFG continues to advance its 2025 Public Policy Agenda and keep members informed about legislative issues affecting Arizona’s nonprofit and philanthropic sector through monthly Policy Council meetings. Interested in joining the Policy Council? Learn more here.

Questions? Email Chief Public Policy Officer Laurie Liles at lauriel@azimpactforgood.org.

-Your Advocates at AZ Impact for Good

Judges Block OMB Funding Freeze and DEI Orders

A federal judge on Feb. 25 granted a request for a preliminary injunction barring the White House from implementing the pause on federal funding attempted under a since-rescinded agency directive issued last month.

Judge Loren AliKhan ruled in National Council of Nonprofits et al. v. Office of Management and Budget that OMB is prohibited from implementing, giving effect to, or reinstating under a different name the unilateral freeze of all new federal spending, attempted under its funding freeze directive. OMB must instruct all federal agencies of the preliminary injunction. The Department of Justice is expected to appeal the ruling. Read more.

A second federal judge on Feb. 21 issued a preliminary injunction blocking two executive orders (EO 14151, and EO 14173) attempting to terminate or change federal grants and contracts for programs related to diversity, equity and inclusion. The judge ruled that the policies and term “diversity, equity and inclusion” as used in the EOs were potentially vague, discriminating, and unconstitutional by penalizing private organizations, including charitable nonprofits. However, agencies are permitted to proceed with reviewing various programs related to these EOs and to issue any reports as required under the EOs. The ruling applies nationwide.

To help nonprofit professionals cut through the noise and determine actions to take, the National Council of Nonprofits recently published these resources on actions impacting nonprofit organizations:

AZ Impact for Good this week launched a new Federal Executive Actions resource page on our website, a one-stop place for members to get the latest EO-related news and updated resources.

Federal Executive Actions Page

"Hear and be Heard" Meetings About Executive Actions

Beginning March 6, members can join AZIFG and other nonprofit/grantmaker organizations for bi-weekly virtual Hear and Be Heard meetings about the current status of executive actions.

Hear the latest on executive actions and their impact to your work
Share your voice with AZIFG and key stakeholders to inform our efforts to support you
Connect with colleagues to share insights, collaborate on solutions and support each other
Click on each date below to register for the member meetings

Every other Thursday: 3/6 | 3/20 | 4/3 | 4/17 | 5/1 | 5/15 | 5/29 | 6/12 | 6/26

9–10 a.m.

Tell Your Lawmakers in Washington How the Funding Freeze is Affecting Your Nonprofit

Despite recent court rulings blocking implementation of the funding freeze, some Arizona nonprofits and the communities they serve have already been and continue to be impacted. AZ Impact for Good members report being forced to lay off staff, close or delay programs, and more.

Members of Arizona’s congressional delegation need to hear how recent federal executive actions are affecting Arizonans. Some Arizona lawmakers have forms on their websites nonprofits can complete to share their concerns about the funding freeze. For example, this week U.S. Rep. Raul Grijalva, D-AZ, asked AZIFG to invite entities that continue to be impacted in Arizona district 7 to fill out this form: Federal Funding Freeze Concern Form - Raúl Grijalva.

Even if your congressional representative doesn’t have a specific funding freeze form, you can still contact them via their websites to share your concerns. Be sure to include data as well as stories about the impact of specific executive actions on your organization.

Look up your member of Congress here.

Contact U.S. Senator Mark Kelly

Contact U.S. Senator Ruben Gallego

Senate Passes Qualifying Charitable Organization Tax Credit Bill

The Arizona Senate on Feb. 26 passed AZ Impact for Good-supported legislation to aid qualifying charitable organizations by a vote of 18-10, mostly along party lines.

Sen. J.D. Mesnard, R-Chandler, introduced SB 1496 – tax credit; qualifying charitable organizations at AZIFG’s request to clarify the qualifying charitable organization statute following the Arizona Department of Revenue 2024 publication of final Tax Credit Guidelines for Qualifying Charitable Organizations.

In a February 2024 informational session, ADOR staff noted public comments they incorporated into the final guidelines, as well as those that would require amendments to the governing statute, ARS 43-1088.

AZIFG supports SB 1496 to help prevent certain QCOs from being decertified for technical reasons and to improve ADOR’s ability to administer the tax credit. The bill aims to:

Ensure Donations to “Pass-Through” Organizations Continue to Qualify for the Tax Credit. It amends the definition of “Qualifying charitable organization” to include an organization that “directs” or spends at least 50% of its budget on services for low-income people. This change would allow donations to “pass-through” organizations—those that collect qualifying donations and then arrange for the delivery of services through outside providers (e.g., Delta Dental of Arizona Foundation)—to continue to qualify for the tax credit. The Senate adopted a floor amendment adding a definition of “direct.”
Clarify Definition of “Services.” The bill amends the definition of “Services” to apply to both QCOs and QFCOs to create parity between the two tax credits.
Clarify “Job training services.” It modifies the definition of “Job training services” to include job “placement” and “work activities…and any other preparation and training used toward obtaining a high school equivalency diploma” to better describe the services relevant QCOs provide.

Senators did not explain their votes on the floor, but Democrats have privately and publicly expressed general concerns about tax credits, which may have led to their no votes.

SB 1496 now heads to the House of Representatives for consideration.

AZ Impact for Good Hosts 2025 Nonprofits & Philanthropy Day of Advocacy

Members of AZ Impact for Good’s board of directors and Policy Council from across Arizona gathered at the state Capitol on Feb. 19 for the 2025 Nonprofits + Philanthropy Day of Advocacy.

AZIFG sponsors a Day of Advocacy annually for members to build relationships with policymakers, educate them about Arizona’s nonprofit and philanthropic sector, and share information about their own organizations. Participating members receive pre-Day of Advocacy training resources on advocacy, public policy and how to effectively engage legislators and public officials.

Federal Advocacy Issues

As seen in the Nonprofit Champion Newsletter from the National Council of Nonprofits. If you are an AZ Impact for Good member and are not receiving this newsletter, please contact us.

Nonprofit Champion Newsletter: February 24 Edition

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