May 22, 2025

The U.S. House of Representatives voted early this morning to approve H.R. 1, the One Big Beautiful Bill Act, following an all-night debate. Nonprofit and philanthropic sector advocacy led to several significant improvements in the House-passed version compared with the bill as introduced:

• Protects Nonprofit Independence: The provision that could have allowed administrations to terminate the tax-exempt status of nonprofits designated as "terrorist supporting organizations" was removed. 

• UBIT Licensing Provision Removed: Additionally, the provision that would have treated income from the licensing of an organization's name or logo as Unrelated Business Taxable Income was also struck from the bill.

The bill now headed to the Senate still contains several provisions that could negatively impact the nonprofit and philanthropic sector:

• Tiered Tax Increase on Private Foundation Investment Income: The bill imposes substantially higher excise tax rates on the net investment income of private foundations based on their asset size. These increases could significantly reduce funds available for charitable nonprofits.

• 1% Floor for Corporate Charitable Contributions: The bill retains the 1% floor, meaning corporations could only deduct charitable contributions exceeding 1% of their taxable income. The floor could lead to a decrease in corporate philanthropy.

On a positive note, H.R. 1 temporarily reinstates a universal charitable deduction for non-itemizers ($150 for individuals, $300 for joint filers for tax years 2025-2028). 

Read the National Council of Nonprofits’ updated analysis of the revised bill.

National Council of Nonprofits Resources

Updated Chart on Tax Provisions

Chart of implications of specific sections in the draft tax legislation including revoked items.

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Major Tax Package Heads to the Senate 

Analysis of the draft tax legislation and suggested actions for nonprofit advocates.

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Factsheet on Tax Reconciliation

Overview of how and why nonprofits should be protected in the tax reconciliation process.

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U.S. Supreme Court to Decide on Nationwide Preliminary Injunctions

The U.S. Supreme Court last week heard oral arguments on whether federal district court judges have the authority to issue nationwide preliminary injunctions. While the consolidated case brought by nonprofits, state attorneys general, and individuals challenged an executive order outlawing birthright citizenship, the hearing focused largely on whether a single federal court should have the power to halt executive actions nationwide.

The outcome of this case could affect both cases brought by the National Council of Nonprofits to stop federal funding freezes. Two district court judges have issued nationwide preliminary injunctions in those cases. SCOTUS is expected to reach a decision by late June.

AZ Impact for Good continues to monitor executive actions and related litigation closely. Check out AZIFG’s Federal 2025 Executive Actions resource page where members can find timely updates and information. You’ll find links to NCN’s resources including Myth v. Reality: Executive Branch Lacks Authority to Target Nonprofit Organizations, The Impacts of Recent Executive Actions on Nonprofits page, and United Philanthropy Forum’s Executive Actions Impacting the Philanthropic & Nonprofit Sectors page.

AZIFG members can also register for our bi-weekly Hear & Be Heard member briefings where we’ll bring you insights from national and local experts and share actions you can take right now to advocate for your nonprofit. 

State GOP Lawmakers File Complaint, Demand Investigation into Phoenix’s Gift Policy

Three Republican representatives on May 14 filed a complaint alleging the

City of Phoenix violated the Arizona Constitution’s Gift Clause and other laws by awarding multiple donations of up to $32,000 to non-governmental organizations without approval from the city council.

Reps. David Marshall (R-Snowflake), Walt Blackman (R-Snowflake) and Quang Nguyen (R-Prescott) requested that state Attorney General Kris Mayes investigate Phoenix’s gift policy.

The press release announcing the lawmakers’ demand includes a spreadsheet (Exhibit E) of city department expenditures compiled by the House of Representatives using data from the city’s accounting system. It shows at least 634 expenditures to NGOs from city departments since April 15, 2020, although the lawmakers indicated their list may be incomplete.

Under state law, the attorney general must respond to the complaint in writing within 30 days.