August 2026 

It continues to be an incredibly challenging time for nonprofits — and their advisors — as organizations with values not aligned with the Trump administration grapple with how to carry out their missions and lead with their values in the wake of the ever-evolving landscape of diversity, equity, and inclusion (DEI) developments. With all that is going on — court decisions, litigation settlements, frozen federal funding for projects and initiatives, State Attorney General actions challenging DEI practices and policies, and new proposed federal grant certification requirements (discussed below) on the horizon — it’s no wonder that nonprofit organizations are confused and concerned about the legality of their DEI initiatives and how to navigate these unique challenges.  

The bottom line is that, although some approaches to DEI are no longer permitted (i.e., very targeted litigation efforts have chipped away at affirmative action and have chilled certain grant and scholarship programs), the law is still in flux, and the public policy debate is very much alive.  DEI is not illegal, and is 100% aligned with this country’s history of legal jurisprudence and our federal anti-discrimination laws. With that said, if your nonprofit is heavily reliant on federal funding, this is not an easy time to navigate.   

In this update: 

• Looming federal grant certification requirements 
• Serious implications 
• What GSA proposed 
• Key compliance concerns 
• Practical steps for federal funding recipients 
• What is the False Claims Act? 
• Bottom line on proposed new certification requirements 

Looming federal grant certification requirements

One significant issue currently on the minds of nonprofit leaders is the proposed set of updates to certification requirements for federal funding recipients in the System for Award Management, commonly known as SAM. In January 2026, the General Services Administration (GSA) proposed updates to the Federal Financial Assistance General Representations and Certifications, which add new attestations about DEI compliance, immigration-related conduct, and terrorism-related concerns, and create a centralized certification framework across federal financial assistance programs, rather than leaving agencies to implement related requirements in a more piecemeal fashion.  The final version of the proposed new certification language was issued on February 18, 2026, and public comments were due by March 30, 2026.  Final language has not been issued. 

Serious implications

While these proposed changes may be designed to discourage certain nonprofits from seeking federal funding, some organizations simply do not have the option as they rely heavily on federal funding to carry out their services. Federal grant certifications require nonprofit leaders to sign under penalty of civil and criminal law, and the consequences are very real, as nonprofit lawyer Ellis Carter, the founder of Caritas Law Group based in Tempe, Arizona, and publisher of the CharityLawyer Blog, explains in her post dated March 16, 2026: 

These new federal grant certifications . . . are broad, ambiguous, and untethered from clear statutory definitions. For nonprofit executives and finance leaders, that creates several immediate problems. 

First, there is personal and organizational risk. Certifications would be signed under penalty of law, exposing organizations and potentially their officers to enforcement actions [see enforcement under the False Claims Act, discussed below] if the government later takes a different view of what compliance means.

Second, there is no clear compliance roadmap. The proposal does not explain how a nonprofit is supposed to assess compliance across complex programs, affiliates, subrecipients, contractors, or community partners.

Third, there is a chilling effect on federal funding. Faced with uncertainty and enforcement risk, many nonprofits may reasonably decide that federal funding is no longer worth it, particularly smaller organizations without in‑house counsel or compliance teams.

Finally, there is direct harm to communities. When nonprofits walk away from federal funding, the impact is not theoretical. Housing, health care, education, food access, disaster recovery, and community development programs are the first to feel it.

This is not a paperwork issue. It is a governance, risk‑management, and mission‑delivery issue.

Vague Rules Plus Aggressive Enforcement Create Real Exposure

One of the most troubling aspects of the proposed new federal grant certifications is how little guidance it provides while simultaneously raising the stakes for getting it wrong. History shows that nonprofits can be accused of wrongdoing without evidence and still be forced to spend enormous time and resources responding to audits, investigations, or litigation.

Even when an organization ultimately prevails, the cost in staff time, legal fees, and disruption to services is substantial. For many nonprofits, particularly those serving vulnerable populations, that cost is simply not sustainable. 

For nonprofits and other recipients of federal financial assistance, the proposed updates raise practical questions about how to certify compliance with vague requirements while legal standards and agency expectations continue to evolve. In other words, how to stay in compliance with shifting, opaque, and possibly arbitrary expectations?  

What GSA proposed

GSA’s proposal would amend SAM’s financial assistance certifications to align with Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity, and Department of Justice guidance issued by Attorney General Pamela Bondi in July 2025 (the “Bondi Memo”) regarding unlawful discrimination by federal funding recipients.   

The proposed certification language would require organizations to certify compliance with the U.S. Constitution, federal laws, and relevant executive orders prohibiting unlawful discrimination on the basis of race or color in the administration of federally funded programs. The draft language also references programs or initiatives labeled as diversity, equity, and inclusion, or DEI, and identifies examples that GSA suggests may present compliance concerns. These include race-based scholarships or programs, preferential hiring or promotion practices, access to facilities or resources based on race or ethnicity, segregation in programs or resources, and retaliation against individuals who oppose practices they reasonably believe violate federal antidiscrimination laws. 

The proposal would also add certifications that an organization will not knowingly bring, transport, conceal, harbor, shield, hire, or recruit for a fee an illegal alien, and will not fund, subsidize, or facilitate violence, terrorism, or other illegal activities that threaten public safety or national security. 

Key compliance concerns

The proposed certifications create uncertainty for federal funding recipients, including nonprofit organizations, in several ways. First, the certification language references executive orders and agency guidance that reflects the Trump administration’s interpretation of unlawful discrimination, even where courts have not yet resolved the scope of particular practices – i.e., organizations would be required to comply with the administration’s interpretation of illegality, not with the definition of illegality defined by the law (legislation and the courts’ interpretation of legislation). Organizations may therefore face pressure to certify compliance with concepts that are still being tested through litigation and agency implementation. 

Second, the proposed SAM certification language for contracts and grants is drafted a bit differently than the certification language required by EO 14173. In particular, the proposed SAM certification language does not include an express reference to the certifications being “material” for False Claims Act purposes (as did EO 14173), although organizations should not assume that the absence of express materiality language eliminates False Claims Act risk.  More on this below. 

The proposed certifications also include language stating that unlawful discrimination is prohibited “in the administration of federally funded programs,” which, because it focuses on federally funded programs, is more limited in scope than EO 14173’s broader language requiring an organization to certify that it does not “operate any programs promoting DEI that violate any applicable Federal antidiscrimination laws.”  

Third, the wording of the proposed certifications includes language stating that to the extent any of the certifications are the subject of an active court order or injunction that is legally binding on a particular organization (and the awarding agency) and prohibits enforcement of such certification requirements, the relevant certifications will be deemed inapplicable to that organization. This carve-out is important, especially for the organizations that brought the relevant lawsuits, but it does not fully resolve how non-parties to litigation should assess the effect of injunctions or other court decisions on their certification obligations.  Unless courts or federal agencies provide clearer guidance, organizations may need to make difficult, case-specific judgments about whether particular certification requirements apply. 

Practical steps for federal funding recipients

Nonprofits that rely on federal funding should consider a practical compliance review focused on certifications and contract/grant conditions. This does not need to be unnecessarily burdensome, but it should be intentional and documented. 

• Identify all federal funding streams, including direct grants, sub-awards, contracts, and pass-through funding. 

• Review federally funded programs for eligibility criteria, selection practices, scholarships, training programs, hiring or promotion practices, vendor requirements, and participant access rules that may be affected by the proposed language. 

• Review publicly accessible websites, job postings, program descriptions, and media reporting for compliance purposes. 

• Document legitimate, nondiscriminatory rationales for program design, selection criteria, and funding decisions, especially where programs use criteria that could be characterized as proxies for DEI.  

• Review the certifications and assurances attached to each award, including nondiscrimination, immigration-related, program eligibility, reporting, and financial requirements. 

• Confirm who within the organization is authorized to make certifications and submit claims or reports to the government and train program, finance, human resources, and grants-management staff on the importance of accuracy in federal submissions. 

• Maintain records showing how the organization evaluated compliance before making certifications. 

• Escalate uncertainty early, especially where a certification involves evolving federal policy or unclear legal standards, reaching out to legal counsel when appropriate or necessary. 

• Track litigation, agency guidance, and final GSA action before assuming that proposed certification language is either fully enforceable or inapplicable.  There are likely to be court challenges once the certifications are implemented.  

• Join (or create) associations of similarly situated organizations. National, state, and local associations that track developments can help keep you apprised efficiently.  

• Work collaboratively with peer organizations you connect with to support efforts to bring (and strengthen) any litigation challenges and to ensure that the scope of organizations that benefit from any court rulings is appropriately defined, and broad enough to address concerns in the sector.  

What is the False Claims Act? 

The False Claims Act (FCA) provides that any person who knowingly submits, or causes to submit, false claims to the government is liable for three times the government’s damages plus a penalty that is linked to inflation.  In addition to allowing the United States to pursue perpetrators of fraud on its own, the FCA allows private citizens to file suits on behalf of the federal government (called “qui tam” suits) against those who have defrauded the government.  Private citizens who successfully bring qui tam actions may receive a portion of the government’s recovery.   

Nonprofit organizations that receive federal grants, contracts, or other federal financial assistance should pay close attention to the FCA. While the law has long been associated with billing fraud, overcharging, and misuse of government funds, current enforcement priorities may expand the practical risk for nonprofits that certify compliance with federal requirements as a condition of receiving funds. 

Why this matters for nonprofits now

The FCA is a powerful enforcement tool, and its potential use in connection with federal certifications creates a heightened risk environment for nonprofits.  

Historically, False Claims Act claims have generally involved the following types of situations: 

• government contractors overcharging the government for work performed; 

• improper receipt of federal funds (for example, a company receiving funds through the Paycheck Protection Program to which it was not entitled); and 

• fraudulent billing and/or unnecessary procedures in government-funded health care services. 

The Trump administration seeks to use the False Claims Act as a tool to enforce this administration’s public policy positions on issues such as DEI and immigration.  

• This is a major shift in application of the False Claims Act. 

• The risk of potential False Claims Act liability will have a chilling effect on the activities of nonprofit organizations. 

• There is a financial incentive (the qui tam provisions) for persons disgruntled with a nonprofit organization to file claims under the False Claims Act. 

Bottom line on proposed new certification requirements

GSA’s proposed SAM certification requirements may reshape how recipients of federal funding assess anti-discrimination compliance, DEI-related programming, and certification risk across federally funded activities. For nonprofit boards and executives, the key takeaway is not panic but governance. Organizations should understand what they are certifying, document how they monitor compliance, and make sure program staff, finance teams, and leadership (executive teams and the organization’s board) are aligned before submitting claims, reports, or certifications tied to federal funding.  However, until the final language is issued and courts provide more clarity, recipients should prepare for continued uncertainty and ensure that any SAM certification is supported by careful internal review. 

February 2026  

Two proposed bills, both called the “SPONSOR Act” (S. 3942 and H.R. 7799) 

Sen. Ted Cruz (R-TX) and Rep. Nathaniel Moran (R-TX-1) have introduced identical bills — the Stop Proxy Organizations Nurturing Subversive Operations and Riots (SPONSOR) Act — that would amend Section 501(c)(3) of the Internal Revenue Code (IRC) to make fiscal sponsors responsible for any criminal liability related to or arising from the fiscal sponsorship, and civil liability for a “covered activity” related to or arising from the fiscal sponsorship. 

Covered activities include:

1. aiding and abetting an act of international terrorism,
2. interfering with any person lawfully exercising or seeking to exercise a constitutional right through force, threat of force, or physical obstruction, and
3. intentionally preventing the “lawful movement of interstate and intrastate commerce” using force (or a credible threat of force) or by physically blocking the movement of any article or commodity used in commerce.   

Because nonviolent protests or demonstrations may delay or obstruct traffic or commercial activity, the final provision could be interpreted to cover nonviolent protest activity, which could have a chilling effect on nonprofit advocacy, particularly advocacy related to areas targeted by the current administration.  

This is a very broadly worded scope of liability, and the burden would be on fiscal sponsors to show they are not liable.    

The bills also provide for a “presumption of responsibility” such that a fiscal sponsor is presumed to be responsible for ensuring that the manner in which its funds are used under the fiscal sponsorship complies with applicable laws, regulations, and tax obligations.   

The bills propose rules that would be a big departure from current law

Current law already requires that fiscal sponsors charitable funds received on behalf of a sponsored organization or project are distributed for purposes that are consistent with and in furtherance of the sponsor’s exempt purpose.  In addition, under the Model A (Direct Project) form of fiscal sponsorship, in which the project is part of the sponsor’s program activities, the sponsor often bears liability for unlawful conduct by the sponsored project.  The SPONSOR Act would, however, expand this liability to all types of fiscal sponsorship, including arrangements in which the sponsor merely provides grants or administrative support to a separate entity.  

Potential impact

If passed, the SPONSOR Act would likely suppress the willingness of organizations to serve as fiscal sponsors — or may cause many organizations to begin to back away from supporting causes and activities that are viewed by some as controversial or that are under federal scrutiny.  For now, the SPONSOR Act bills have not moved beyond referral to the Senate Finance and House Ways and Means Committees, but regardless of whether the SPONSOR Act is passed, to mitigate risks, organizations serving as fiscal sponsors should regularly review their processes and policies and identify ways to shore up potential risks associated with being a fiscal sponsor.    

The collapse of several prominent fiscal sponsors in 2025, including the late 2025 collapse of the Federation of Neighborhood Centers (FNC), a Philadelphia fiscal sponsor that was supposed to help community groups manage grants and provide other supports, is another important reminder that all organizations serving as fiscal sponsors should be vigilant about compliance and adhere to best practices.  

For more about the collapse of FNC and other fiscal sponsors, and the impact on their sponsored projects and organizations, see Hot Topic Insight Fiscal sponsors are imploding — Do something different, and these articles from the Philadelphia Inquirer:  

• A nonprofit thought it had $170,000 in the bank. Then the payroll didn’t clear. (December 11, 2025)  

• A Philly nonprofit lost $426,000 meant for small neighborhood organizations, an audit showed (March 21, 2026). 

August 2026  

Implosions and near-implosions of fiscal sponsors made headlines in 2025, underscoring the impact of these failures and the need for reflection, restitution, and reform.

In December 2025, The Philadelphia Inquirer reported that the Federation of Neighborhood Centers (FNC) – a Philadelphia fiscal sponsor with 104 projects under its umbrella that was supposed to help community groups manage grants and provide other supports — could not make payroll. Things only got worse, and in March of 2026 the Inquirer followed up to report that FNC could not account for $426,000 meant for small neighborhood organizations. Fiscal sponsors are struggling in other jurisdictions as well. There was a philanthropic bailout of the San Francisco Parks Alliance in fall 2025, and the collapse of Fusion Partnerships in Baltimore in March 2025, following the 2021–23 shittering of two other Baltimore fiscal sponsors (Thrive Arts and Strong City Baltimore).  

Fiscal sponsorship is one of the toughest business models in the nonprofit sector to get right — and it’s so critical that sponsors do get it right

Fiscally sponsored projects and organizations only benefit from fiscal sponsorship arrangements if sponsors actually deliver on their commitments, and the consequences of failure are significant (even when there is a bailout).  

Implosions and near-implosions take a serious toll on the projects and organizations that depend on sponsors – and, in turn, unjustly impact the communities and individuals supported by these projects. The toll is not only financial, but emotional and psychological as well. Fiscal sponsor failures consume precious time and other resources necessary for the projects they support, many of which operate with thin margins and often very limited capacity (the driving reason they may have turned to fiscal sponsors in the first place).

The impact of fiscal sponsorship failures hits grassroots initiatives and pilot projects especially hard, and especially the project leaders who were inspired to do good things and invested their own time and energy to make a difference. These closures are also likely to disproportionately impact certain populations and communities that benefit from the efficiencies and cost-sharing advantages that fiscal sponsorship arrangements offer.  

Behavioral and structural change

As more and more fiscal sponsors struggle or shutter their operations, public trust in fiscal sponsorship erodes. Clearly there is a need for behavioral and structural change. 

If you are a 501(c)(3) organization and are considering sponsoring a project, you’ll want to be sure to understand the risks and rewards involved. A quick must-read is Fiscal Sponsorship: Six Ways to Tank Your Organization, published on August 9, 2025, by Gene Takagi.    

If you are leading a project that is seeking sponsorship, you’ll want to get up to speed on the options available and do your own due diligence, too.  

Also trending: calls for reform

There is currently no Pennsylvania law governing fiscal sponsorship arrangements, though accountability is so critical — and the impact of the 2025 sponsor collapses seems significant enough to justify a push for state legislative reform and accountability of fiscal sponsors.  

Minds will differ on how to regulate fiscal sponsors, and a debate is shaping up, with a December 10, 2025, Wall Street Journal opinion commentary (paid article) by Tal Fortgang, a legal policy fellow at the Manhattan Institute; a blog post (December 11, 2025) by law professor Darryll K. Jones; and the introduction of two “SPONSOR Act” bills proposed by two U.S. Congressmen in March 2026.   

Careful, though, and remember it’s 2026, and political agendas are widespread. It’s important with any legislative or regulatory reform to:

1. remain focused exclusively on considering what essential measures must be in place, to help to curb bad behavior and ensure the accountability of organizations that choose to become fiscal sponsors; and 
2. approach the initiative with a mindset that presumes fiscal sponsorship arrangements are largely beneficial, as they leverage economies of scale and help incubate important new ideas and initiatives.  

More on fiscal sponsorship best practices coming in early fall! 

August 2026  

On the very first day of his second term, President Trump began issuing  Executive Orders affecting immigrants and the immigration process. In the summer of 2025, Trump signed into law the One Big Beautiful Bill Act (OB3), which allocated over $170 billion for immigration and border enforcement, allowing for a 120% increase in the In U.S. Immigration and Customs Enforcement (ICE) workforce over a four-month recruitment campaign, with more than 12,000 new officers added by the end of 2025.   

With this surge, ICE hiring practices and training standards changed in ways that have considerably heightened the risk of violence and the disregard for protocols that protect civil rights. These heightened risks are especially challenging for nonprofits that serve children and families, as schools and daycares, food pantries and community centers, and social service organizations increasingly become targets for immigrant enforcement. Even religious organizations are targets.  

Additional funding for immigration enforcement

On June 9, 2026, Congress passed the Secure America Act, which funds ICE and U.S. Customs and Border Protection (CBP) with $69.5 billion dollars through September 30, 2029 (nearly an entire fiscal year of Trump’s successor’s first term after the 2028 election). This funding is in addition to the $170 billion dollars that was allocated for immigration and border enforcement in OB3, which also lasts through September 30, 2029.   

Increase in immigration arrests

As reported in a July 1, 2026 article in the New York Times, “Immigrant Arrests Surge to 10,000 in 5 Days as ICE Clamps Down,” ICE arrested more than 10,000 people in the last five days of June, in a major push prompted by guidance from the White House to increase the number of immigrant arrests to 2,000 per day.  While this increased enforcement is occurring without the displays of force and aggression seen last year in Chicago, Los Angeles, and Minneapolis, the increasing number of arrests emphasize the Trump administration’s focus on its promise of “mass deportations.”  

Prior to the recent surge in arrests, as of March 11, 2026, Pennsylvania and New Jersey ranked in the top 10 states with the most immigration arrests from the start of the Trump administration, with New Jersey ranking eighth in the country and Pennsylvania ranking 10th.  Pennsylvania’s high number of arrests may be attributable to a significant increase in the number of collaboration agreements between local law enforcement agencies and ICE under the ICE 287(g) Program, which provides several models under which local law enforcement agencies can cooperate with ICE in carrying out federal immigration enforcement operations.  See more information as reported by WHYY news in late June 2026.   

Interaction with ICE

In the face of what is unquestionably escalated risk, nonprofits are discovering that they must continue to prepare for interactions with federal immigration enforcement agents.    

To help prepare your organization and for answers to frequently asked questions from nonprofits about ICE interactions, download our free Fact Sheet and FAQs on ICE Interactions. The following  free resources are also designed to help your nonprofit prepare a plan and mitigate risks:  

• Our how-to guide Preparing your nonprofit for ICE interactions and document requests provides an overview of the current immigration enforcement climate and legal landscape, which includes a roadmap for assessing your organization’s risk and preparing for enforcement encounters, and more. This guide explains sanctuary jurisdictions and sensitive locations and also highlights Pennsylvania-specific developments to help your nonprofit stay abreast of current developments.   

• For more on Form I-9 compliance, see also our Hot Topic Insight Would your nonprofit pass a Homeland Security I-9 compliance audit? A self-audit can help.   

Finally, if you missed it, be sure to watch the on-demand recordings of the educational sessions presented in late March 2026 on these topics in partnership with the Pennsylvania Bar Institute (PBI) and the Pennsylvania Association of Nonprofit Organizations (PANO):  

• Available on demand through PBI, this course offers CLE credit for legal professionals: Federal Threats to Nonprofits: Navigating Today’s Unprecedented Challenges 2026 

• Available on demand through PANO, this course was designed for nonprofit leaders and does not offer CLE credit for legal professionals: ICE Interactions Impacting Nonprofits: Unique Considerations & Clear Guidance in a Quickly Escalating Landscape   

April 2026  

Flipcause, a for-profit fundraising platform that promised much lower processing fees (1.5%) than other similar companies, filed for bankruptcy at the end of 2025, revealing it owed $30 million to creditors, including $29 million in charitable funds to over 3,200 nonprofit organizations nationwide, but did not have the cash on hand to make good on its commitments. Bankruptcy filings listed $20.2 million in assets — $15 million of which was the Flipcause website and platform — and just $70,000 in cash.  It was also revealed that Flipcause executives paid themselves $3.8 million over several years prior to filing for bankruptcy. 

In this update: 

• Timeline of Events
• Bad news for nonprofits
• What should burned nonprofits do?
• Impact on Pennsylvania nonprofits
• What can be done to prevent this from happening in the future?

Timeline of Events   

• November 11, 2025: The Latino Medical Student Association-Northeast (LMSA-NE) and 28 other nonprofit organizations across the country filed an amended complaint in a federal lawsuit against Flipcause, alleging that Flipcause and its executives ran a “nationwide scheme … to defraud and systematically deprive non-profit organizations of the very funds they raised for their charitable missions.”
• December 19, 2025: Flipcause filed for Chapter 11 bankruptcy (the type that allows for reorganization and continued operations while debts are managed and some portion of money owed is paid out over time to creditors under court supervision).
  • Nonprofits were permitted to file claims in Bankruptcy Court to recover unpaid charitable funds through the bankruptcy proceeding.
• January 28, 2026: Bankruptcy Court approved the formation of an unsecured creditor’s committee, which includes 4 of the 20 nonprofits owed the most.
• March 18, 2026: As part of the bankruptcy proceedings, Software4Nonprofits purchased Flipcause for $400,000, or about 3% of the $15 million Flipcause’s co-founder Emerson Ravyn said a sale would bring.
  • Software4Nonprofits reinstated all of the platform’s features and campaigns as the DONATION Pro plan under its own branding. A letter from the CEO of Software4Nonprofits detailing what this means for Flipcause customers can be accessed by clicking the following link, CEO Letter to Flipcause Customers.
• April 28, 2026: Bankruptcy judge converted the Flipcause Chapter 11 reorganization case to a Chapter 7 liquidation case, which means that:
  • Nonprofits with unpaid charitable funds will no longer be able to file claims through the Bankruptcy Court.  

Bad news for nonprofits

The Bankruptcy Court focus has turned to liquidation of assets in an attempt to repay the $30 million Flipcause owes to creditors, the majority of whom are nonprofit organizations that are considered “unsecured” creditors under the bankruptcy. This means nonprofits will only receive payment after claims from secured creditors, such as the bankruptcy attorneys and trustees and Flipcause investors, are settled.  Even if the Chapter 7 trustee manages to “claw back” some portion of the $3.5 million Flipcause paid to its founders prior to filing for bankruptcy, it is unlikely that the nonprofits owed thousands of dollars in donated funds meant to support their charitable missions will receive repayment of any kind.   

What should burned nonprofits do?

Nonprofits affected by the Flipcause collapse should download or take screenshots of remaining Flipcause balances and correspondence for any consumer complaints, future audits, or regulatory inquiries, and download all donor, transaction, and payout records to help preserve historical information. It may also be helpful to work with an attorney who can help you stay informed about the Chapter 7 liquidation process. Eisenberg & Baum, LLP, the firm leading the class-action lawsuit on behalf of dozens of organizations, would be a good place to start. 

For more details, see this series of articles authored by Rasheed Shabazz published in the Oakland Voices, which broke the story on September 11, 2025 and the Nonprofit Quarterly article “Nonprofits in Limbo as Flipcause Bankruptcy Unfolds” (dated March 13, 2026), which have helped raise national awareness about this situation.  

Impact on Pennsylvania nonprofits

In Pennsylvania alone, according to information gleaned from the bankruptcy filings and compiled by Shabazz, 134 organizations are owed a total of $956,410.81. Affected organizations are located throughout Pennsylvania (Harrisburg, Lancaster, York, Reading, Philadelphia, Pittsburgh, Paradise, etc.) and the amounts due to most of these nonprofits are in the thousands of dollars. Over 25 organizations are owed amounts over ten thousand dollars (and many more than a few of those are owed amounts in the tens of thousands of dollars, with an organization in Pittsburgh owed over $108,000).   

One Pennsylvania organization, which is owed about $50,000, reports that this amount is more than half of its total assets. The organization is a small nonprofit that provides grief counseling to parents who have lost babies to SIDS, which the founder started after losing her own child. She now believes the organization will have to dissolve. 

What can be done to prevent this from happening in the future? 

The impact of these losses is truly significant and calls for more oversight of and accountability for fundraising platforms.  Charities can help the situation by staying vigilant and by advocating for additional regulatory enforcement.  Here are a few tips:  

• Do your due diligence prior to choosing a fundraising platform – check reviews and ratings and speak with other nonprofits who use the platform. 

• Always sign a contract with the platform and obtain legal review before doing so.  

• Choose a platform that deposits donations directly into your account.  

• Insist on the ability to view your customer portal/account at any time and monitor platform activity regularly. 

• If the fundraising platform will solicit contributions on your organization’s behalf, confirm that it is registered as a “professional solicitor” in Pennsylvania.   

• Professional solicitors are required to register in Pennsylvania with the Bureau of Corporations and Charitable Organizations (BCCO) prior to soliciting for charitable organizations in Pennsylvania.  Search the Pennsylvania Department of State Charities Search database to confirm registration (this is the same database that lists charities registered to solicit charitable funds in Pennsylvania); click on the drop-down arrow on the left under the word ‘Category’ to search for professional solicitors and professional fundraising counsel).   

• Immediately report any unregistered fundraising platforms that should be registered as professional solicitors to the BCCO, and any concerns about the activities and/or business practices of fundraising platforms to the Pennsylvania Attorney General.  

• If the platform will solicit donations for your organization, proactively be sure to check these 10 Tips for Charities Working with Paid Solicitors and this list of questions to ask professional solicitors. 

• Stay on the lookout for red flags, such as delayed payments or restricted access to your portal/account.  

• Advocate for broader registration of fundraising platforms and let your state congressional representatives know of your concerns. Like many other jurisdictions, Pennsylvania already has a law governing charitable solicitations and fundraising entities, but it does not explicitly require registration of fundraising platforms.  California and Hawaii are currently the only states that require this registration.   

• Encourage the Pennsylvania Attorney General and the BCCO to include more easily accessible information on their websites regarding oversight and registration of professional solicitors and best practices for fundraising platforms.   

July 2026

Public Service Loan Forgiveness (PSLF) is a federal program that encourages college graduates to work for government agencies or nonprofit organizations by forgiving the remaining balance on their federal student loans after ten years of work in the public sector and consistent loan repayment during that ten-year period. The Trump administration proposed changes to this program in 2025 that would have limited eligible nonprofit organizations to only those aligned with its values.  

Changes to eligibility

On March 7, 2025, President Trump issued Executive Order 14235, Restoring Public Service Loan Forgiveness, which directed the Secretary of Education to propose revisions to the PSLF program and ensure the definition of public service excluded certain organizations that are engaged in activities not in line with the administration’s priorities. In response, the Department of Education (DOE) issued a final rule on October 30, 2025, amending the definition of a “qualifying employer” under the PSLF program to exclude organizations engaged in activities with a “substantial illegal purpose.”  These activities include aiding immigrants, treating minors’ gender dysphoria, advancing alleged illegal discrimination, and protest-related conduct, all activities at odds with the Trump administration’s political agenda. 

Rule blocked by federal courts – eligible PSLF participants can work for nonprofits that align with their personal and professional goals and priorities without restriction 

In response, state attorneys general, municipal governments, nonprofit organizations, and others came together and filed lawsuits in two federal District Courts to block the regulation.  On June 30, a day before the rule was to take effect, U.S. District Court judges in Massachusetts and Washington, D.C. vacated the new rule, prohibiting its implementation nationwide and securing the right of PSLF program participants to work for 501(c)(3) organizations of their choice.   

The courts held that the proposed rule exceeded the DOE’s authority under the Higher Education Act because Congress expressly provides eligibility under PSLF for borrowers who are employed by qualifying organizations, which include all Section 501(c)(3) organizations, and that the Secretary of Education could not “pick and choose” among these organizations to determine which may qualify. The courts also found that the rule is “arbitrary and capricious” in violation of the federal Administrative Procedure Act, and that it violates the First Amendment by conditioning PSLF eligibility on an organization’s speech, advocacy, or viewpoint. 

This was well-received news for graduates with federal student loan debt who work, or wish to work, for nonprofit organizations with missions and programs that are not aligned with the Trump administration’s priorities. As Diane Yentel, President & CEO of the National Council of Nonprofits, stated in their press release after the Court’s decisions were released, “[t]his decision is a win for the communities that depend on local nonprofits and for the workers who serve them. By protecting a proven, bipartisan program, we’re ensuring that dedicated nonprofit employees can keep the benefits they’ve earned and continue doing the work that matters.”   

A win for the nonprofit workforce 

Nonprofit employers: be sure to list this recruiting benefit in your job posts if your organization is a 501(c)(3)! It’s a competitive job market out there, and nonprofit employers should be sure to let candidates know of this job perk. For more about the PSLF program, and how to determine if your organization is eligible, see the Department of Education Federal Student Aid website. For more resources to share with your employees, see the National Council of Nonprofits’ Public Service Loan Forgiveness page. 

August 2026  

As of 2025, Pennsylvania now requires all nonprofit corporations and certain other entity types formed in or doing business in Pennsylvania to file an annual report every year, regardless of whether the organization’s officers have changed.  There’s no filing fee for nonprofit entities that make timely filings.  

If you did not file your nonprofit’s Pennsylvania corporate annual report with the PA Department of State by the June 30, 2026 deadline, you’re not alone! Only about 22% of nonprofit corporations filed as required. It’s not too late — you can (and should!) still late file in 2026 with no penalty — and be sure to put a reminder in your organization’s calendar to file by the deadline in 2027 because consequences of non-filing will go into effect next year. And, if your nonprofit organization is organized as an LLC, you still have time to file by the September 30th deadline –but why wait? You can file now.   

Pennsylvania’s annual report filing requirement is still relatively new, and we’re still in the grace period before consequences kick in for non-filing in 2027. Most nonprofits are still not filing (though more nonprofits, as compared to for-profits percentage-wise, are complying with the annual report filing requirement). Failure to file in 2027 can lead to administrative dissolution.  

See below for filing instructions and important reminders and considerations.   

What this form is

A simple form designed to collect basic corporate information about your organization that can be filled out online in a manner of minutes, that lets the PA Department of State’s Bureau of Corporations and Charitable Organizations know that your organization is still active and operating.  

What this form is not

This form is not Pennsylvania’s charitable solicitation registration or purely public charity filing requirement. This form is also not the CTA (Corporate Transparency Act) FINCEN/BOI reporting requirement, which is a separate federal filing (enforcement of which is for the most part currently suspended at the moment) and which does not impact most nonprofits. This form is also not a federal Internal Revenue Service (IRS) requirement, nor the glossy annual report that many nonprofits produce for their boards and funders. Nor is it the report that public libraries in Pennsylvania file to maintain state aid eligibility.   

Consequences of not filing PA’s annual report

Pennsylvania’s annual report requirements have been completely revamped and are similar to most other states’ annual filing requirements, such that if you fail to file annually, your organization can be administratively dissolved — and your organization will have to reinstate its corporate entity status with Pennsylvania before it can continue to carry on business. Administratively dissolved organizations will not be able to close on real estate and financial transactions, and their funding streams may be impacted; organizations also risk losing their entity names if they fail to file.    

Consequences for non-filing will take effect beginning with the 2027 annual report (due June 30, 2027 for nonprofit corporations). The soonest we are likely to see administrative dissolutions of nonprofit corporations will be March 2028, for organizations that fail to file their 2027 annual report after receiving warning notices from the Pennsylvania Department of State (PA DOS). Administrative dissolutions that take effect in 2028 will be based solely on failure to file the 2027 annual report; however, any reinstatement will require that annual reports be filed for any missing years going back to 2025. Although there is no filing fee for nonprofits that timely file annual reports, there will be a filing fee of $15 for any missing reports that must be filed in order for administratively dissolved organizations to be reinstated. The Bureau of Corporations and Charitable Organizations has not yet promulgated the forms or processes for administrative dissolution or reinstatement. Expect details to be made available by the Bureau in late 2026 or in 2027.   

Next steps and important considerations  

• If your nonprofit did not file its 2026 report, it should file now.   

• You should set up a system now (in your organization’s management playbook, calendar, etc.) so that you (and others at your organization, and your successors) will know to file this form each year and understand the implications of failing to file and failing to keep your organization’s registered address (and email contact) up to date with the PA-DOS.   

• You should also inventory all of your nonprofit’s affiliate entities (if any) to be sure reports get filed for each of those entities, too. Sometimes organizational structures encompass many different entities, and you’ll want to be sure that all entities in your nonprofit’s corporate family tree are staying in compliance.   

• If your organization is collaborating or contracting with another organizations, consider, too, whether there would be any implications for your organization if that other organization failed to file its annual report – does it make sense to give them a heads up and remind them about the requirement?   

How to file

Filing online is simple and best:   

1. Go to: https://hub.business.pa.gov/  
2. Login or Register (new users will need to register for a Business Filing Services (BFS) account; for account registration instructions, see the Customer Portal Overview). 
3. Once logged in: click on “Complete Annual Form” (it’s in a blue box), then scroll down and click on “Continue to BFS” (it’s in another blue box); or you can just click on the keystone icon. Once you’re logged in, go to the PA Department of State’s Business Filing Services (BFS), which should take you to an entity “Search” bar. 
4. Search for your organization by name (on the Pennsylvania Department of State database: https://file.dos.pa.gov/search/business).  
5. Review the search results and find your organization’s name.  
6. Click on your organization’s name (highlighted by a blue box) in the search results.  
7. A panel on the right will appear, click on the gray “File Annual Report” icon (which will only appear if you are logged in and the Annual Report has not already been filed).   
8. Follow the steps for filing the annual report.   

Need help filing online or want more details? See this helpful step-by-step guide from the Pennsylvania Department of State.

PA DOS Helpline: (717) 787-1057 (open 8:00 a.m. – 4:45 p.m., Mon.–Fri.)  

PA DOS email: RA******@**.gov  

May 2026 

On April 23, 2026, as part of the Trump administration’s continuing scrutiny of nonprofit organization programs and finances, the Treasury Department announced plans to revise IRS Form 990, with a focus on new reporting requirements related to government contracts, government grants, and fiscal sponsorship arrangements.   

As a publicly available document, the IRS Form 990 is a critical tool relied upon by regulators, lawmakers, donors, watchdog organizations, citizen whistleblowers, and journalists, and provides insights into an organization’s governance, finances, program activities, and corporate compliance. An organization’s latest filings, and prior filings dating back to 2012, can be easily accessed on Pro Publica’s free database. The IRS also publishes more recent filings and tracks exemption revocation histories on its website.  

The IRS Form 990 must be filed with the IRS annually by tax-exempt organizations with gross receipts of $200,000 or more, or total assets of $500,000 or more, although some organizations are exempt from filing, or eligible, or required, to file another form in the IRS Form 990 series (e.g., IRS Form 990-N, 990EZ, or 990-PF). Copies of this filing must also generally be filed, along with financial statements and other disclosures, with state regulators.  

According to the Trump administration, the coming revisions are intended to improve transparency, strengthen tax administration, and provide clearer reporting on certain activities of tax-exempt organizations. Treasury Secretary Scott Bessent stated in the press release announcing the proposed revisions that public funds and tax-exempt status require public accountability, and: “[w]e are ending the days of hiding fraud, abuse, and extremist activity behind complicated nonprofit arrangements. When bad actors misuse charitable structures, directors and officers should understand that transparency can lead to scrutiny, accountability, and liability under the law.” 

Why additional scrutiny of fiscal sponsorship arrangements? 

There is increasing concern by the Trump administration that fiscal sponsorships are being used to funnel funds into causes and activities that are counter to the administration’s priorities. Although the Treasury Department acknowledges in its press release that fiscal sponsorship is an umbrella term for “several longstanding and lawful structures” that allow tax-exempt organizations to support charitable projects and initiatives aligned with their missions, the release further states that recent congressional and administration focus has raised concerns that some fiscal sponsorship arrangements “may be used to obscure who is operating a project, who controls project funds, and how those funds are being used,” leading to a call for increased reporting to help address those concerns and “make it harder for rogue organizations to hide behind opaque arrangements.”   

*For further information on Congressional scrutiny of fiscal sponsorship arrangements, see our HOT TOPIC: U.S. Congressmen push for increased fiscal sponsor liability, introduced in both the House and the Senate, designed to increase civil and criminal liability for fiscal sponsors.  

Steps nonprofits can take to mitigate risk and shore up compliance 

1. Have legal counsel review your nonprofit’s IRS Form 990 and its internal paperwork before the form is filed each year, with specific attention paid to governance and to the issues targeted by the revisions.  
2. Self-assess using the IRS Good Governance Checklist (IRS Form 14114), as a tool for reviewing your organization’s IRS Form 990 before filing. In 2009, under the Obama administration, the IRS revised the IRS Form 990 to incorporate questions in Part VI about governance and also released this checklist. These changes were highly controversial at the time and received a significant amount of pushback, with critics citing IRS overreach and noting that the Internal Revenue Code does not empower the IRS to regulate governance. The IRS countered, explaining that good corporate governance is critical for meeting the requirements for tax-exemption. Part VI’s questions survived the backlash, and IRS Form 14114 remains a helpful (though not widely known) compliance tool for the sector addressing these evergreen concerns, which were widely publicized in the wake of the Enron scandal and the Sarbanes Oxley Act that followed the scandal.    
3. In addition, from our friends at the Pennsylvania Association of Nonprofit Organizations (PANO), given the IRS’s stated focus on “who controls the money and where it goes,” unclear or under-documented arrangements will draw scrutiny. Core areas to review now are: 

• • All fiscal sponsorship agreements — roles, responsibilities, and financial controls should be explicitly documented. 
  • Government grants and contracts — ensure proper classification and reporting. 
  • Decision-making authority and financial oversight — ensure there is clear documentation of board-level approvals. 
  • If your organization uses fiscal sponsorship in any form, consult legal counsel before proposed regulations are published. 

What comes next and how nonprofit organizations can help shape the proposed revisions  

Treasury and the IRS have indicated they intend to issue proposed regulations with an opportunity for public comment before finalizing revisions to IRS Form 990.  They have pledged to consider feasibility, proportionality, and reporting burden in crafting the changes.  

Submitting a comment during the public comment period is one of the most effective ways to shape the final rule, so keep abreast of current developments and the opportunity to submit comments by following PANO and the National Council of Nonprofits (NCN).  If your organization has joined other membership associations in addition to PANO, ask what they are doing to provide constituent feedback and comments and how your organization can help.  

It’s not clear whether other forms in the IRS Form 990 series (IRS Form 990-EZ, IRS Form 990-N, and IRS Form 990-PF) will also be revised.  

March 2026

In March 2026, with no public notice, U.S. Immigration and Customs Enforcement (ICE) updated its Form I-9 Inspection fact sheet, reclassifying several common I-9 errors from “technical” errors to “substantive” violations, upending guidance in place for nearly thirty years. The result of these reclassifications is that simple mistakes and omissions on Form I-9 that an employer was previously allowed to correct are now considered substantive and are subject to automatic penalties. 

Some of these newly substantive errors include, but are not limited to: 

• Use of the Spanish-language I-9 form outside of Puerto Rico. 

• Missing employee date of birth in Section 1. 

• Missing employee USCIS/alien registration number (when applicable) in Section 1. 

• Missing date next to employee’s signature in Section 1. 

• Missing date of hire in Section 2. 

• Missing name/title of the employer representative or authorized representative in Section 2. 

• Incomplete List A, B, or C data in Section 2, even when document copies were retained. 

• Incomplete preparer/translator data in Supplement A. 

• Missing rehire date in Supplement B. 

• Deficiencies associated with electronic I-9 software including audit trails, electronic signature protocols, etc. 

• Failure to check alternative procedure box/not enrolled in E-Verify when using remote verification.  

Form I-9 compliance  

The Form I-9 compliance regime is not new.  Since November 7, 1986, under the Reagan administration, employers have been required to use Form I-9 (Employment Eligibility Verification) to verify that new employees are authorized to work in the United States.   

The purpose of Form I-9 is to verify the identity and employment eligibility of individuals hired for employment in the United States. Form I-9 requires an employee to indicate the basis for their employment eligibility and provide supporting documentation as evidence of identity and employment eligibility for inspection and confirmation by their employer.  Both employees and employers must complete the form. 

Forms I-9 must be completed for all individuals working in the United States, both immigrants and those born in the US. Employers must retain Forms I-9 for all current employees and for former employees for a certain period of time as required by law.  

Form I-9 audits on the rise

ICE enforces the Form I-9 requirements through workplace inspections, known as Form I-9 audits.  Audits are initiated by issuance of a Notice of Inspection (“NOI”), which requires employers to provide all Forms I-9 on file, as well as related employment records. Form I-9 violations are classified as either technical or procedural errors or as substantive violations. Technical/procedural errors may be corrected within ten days without imposition of a penalty, while substantive violations result in automatic fines/penalties imposed on the employer. See below for a list of current penalty amounts, which can be significant.  

Under the Trump administration, along with other increased enforcement actions against immigrants, ICE has dramatically increased worksite enforcement, including Form I-9 audits and worksite raids.  Signed into law on July 4, 2025, the One Big Beautiful Bill Act (OB3) allocated over $170 billion for immigration and border enforcement and ICE’s workforce grew by 120% over a four-month recruitment campaign, with more than 12,000 new officers added by the end of 2025.  

In the first half of 2025, the rate of ICE Form I-9 audits was at least ten times the rate of 2024, and even more chilling, a memorandum of understanding signed in April 2025 allows ICE to access IRS employer records, and the Department of Homeland Security (DHS) has requested access (not yet granted) to another federal database containing employment records on virtually every worker in the United States.    

If your organization receives an NOI, contact legal counsel immediately, as the deadline for providing all required documents can be as short as three business days.  Do not, under any circumstances, change, revise, or otherwise attempt to “clean-up” a Form I-9 before providing it to ICE. In the meantime, prior to receiving an NOI, there are steps your organization can take to shore up compliance.  

Mitigate risk by completing a Form I-9 self-audit  

Given this massive increase in Form I-9 audits, ensuring that your organization is in compliance with Form I-9 requirements is crucial.  Self-audits are a voluntary process in which an employer conducts its own internal audit of its Form I-9 compliance. These audits can help reduce the risk of an organization incurring penalties during a formal ICE Form I-9 audit and should be performed by a trained employee or outside consultant.  Audits must not be retaliatory or discriminatory (for example, employers may not solely audit employees of certain national origins, or employees who reported a workplace violation).   

During a self-audit, the organization should:   

• Verify that it has Forms I-9 on file for all current employees.  

• Verify that it has all required Forms I-9 on file for former employees (must be retained until the later of (a) three years from the date of hire, or (b) one year from the date of employee’s last day of employment).  

• Verify that Forms I-9 on file are properly completed.  

• Correct all Forms I-9 that can be corrected (do not conceal corrections or backdate the form).  Only employees may correct Section 1 errors. 

• If the self-audit discloses substantive compliance issues, the organization should immediately work with immigration counsel to take corrective action.  

For more information on conducting a self-audit, see the following: 

• U.S. Citizenship and Immigration Services, Self-Audits and Correcting Mistakes: https://www.uscis.gov/i-9-central/completing-form-i-9/self-audits-and-correcting-mistakes 

• i9 Intelligence, I-9 Audit Checklist: Every Item to Check Before an ICE Inspection: https://www.i-9intelligence.com/articles/i-9-audit-checklist