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Pro-Israel Legislators Have Concocted a Dangerous Ruse to Shut Down Nonprofits

Bipartisan legislation threatens the tax-exempt status of nonprofits that incur the disapproval of government officials.

Protesters hold a Palestinian flag while joining a demonstration near the Capitol building in Washington, D.C., on October 21, 2023.

While campus demonstrators nationwide face police violence and repression for engaging in constitutionally protected speech and protest, nonprofit organizations that oppose Israel’s attack on Gaza are under a different kind of assault — a legislative one.

In April, the House of Representatives passed HR 6408 by a vote of 382-11. This legislation would grant the secretary of the treasury broad power to designate any charity as a “terrorist supporting organization” and remove its tax-exempt status within 90 days. The Senate introduced its companion measure, S 4136, shortly after.

This legislation is ominous given recent charges of terrorism disingenuously and inaccurately slapped on U.S.-based Palestinian organizations and student groups. In October 2023, for example, Jason Miyares, the Republican attorney general of Virginia, called for investigation of American Muslims for Palestine, and the Anti-Defamation League and the Louis D. Brandeis Center for Human Rights Under Law wrote a letter to presidents of nearly 200 universities, requesting that all chapters of Students for Justice in Palestine be investigated for potentially providing material support to a foreign terrorist organization.

In response, the Charity & Security Network, a resource and advocacy center for nonprofit organizations that work in conflict zones, warned that without proper evidence such allegations constituted “a dangerous precedent for not only the U.S. legal system and the state of free speech but also for charitable giving and operations in crisis contexts like Gaza.”

Despite those fundamental concerns, HR 6408 and S 4136 have received nearly no news coverage to date. The notable exceptions to this pattern of omission come from independent sources, including substantive reports from Reason magazine and the financial blog Naked Capitalism. An article from The Hill briefly referenced the legislation, which it misleadingly characterized as “largely noncontroversial” and “aimed at squeezing Tehran.”

Except for a single editorial published by the Wall Street Journal in March 2024, none of the nation’s most prominent newspapers, including The New York Times, The Washington Post, Chicago Tribune or Los Angeles Times, appear to have covered the legislation.

Dispensing With Due Process

Nonprofits, like other organizations, are already restricted from providing funding to foreign terrorist organizations under numerous anti-terrorism laws, including the Antiterrorism Effective Death Penalty Act, the International Emergency Economic Powers Act and provisions of the Anti-Terrorism Act. The Internal Revenue Service (IRS) further restricts nonprofits, whose tax-exempt status can be revoked for supporting or engaging in terrorist activities.

What’s new in the proposed legislation is the authorization of the secretary of the treasury to identify and punish any nonprofit deemed to fall under a new category as a “terrorist-supporting organization.” In other words, as Matthew Petti reported for Reason in April 2024, “The new bill would allow the feds to shut down a charity without an official terrorism designation.” On that basis, the treasury secretary could revoke the organization’s tax-exempt status, and only they “could cancel that designation,” Petti reported.

“Although the label is supposed to apply to supporters of designated terrorist groups,” Petti warned, “nothing in the law prevents the Department of the Treasury from shutting down any 501(c)(3) nonprofit, from the Red Cross to the Reason Foundation.”

As Seth Stern, director of advocacy at Freedom of the Press Foundation, told Truthout, “Under current law, the government would have to actually prove material support for terrorism if it wanted to pursue those arguments for anything besides political stunts. But this bill would allow nonprofits to be harassed and even shut down without due process.” He added that “it’s especially dangerous to give officials this kind of unchecked authority to shut down news outlets now, considering the very realistic prospect of a second Trump term.”

What’s new in the proposed legislation is the authorization of the secretary of the treasury to identify and punish any nonprofit deemed to fall under a new category as a “terrorist-supporting organization.”

“If it sounds like a stretch that officials would accuse a U.S. news outlet of terrorism,” Stern told Truthout, “consider that in recent months, numerous legislators have done exactly that. They’ve called for investigations of major news outlets for buying pictures from freelance photographers from Gaza or even merely reporting critically about Israel.”

A “Parade of Horribles” Targeting Pro-Palestinian Groups and Other NGOs

When HR 6408 was introduced on November 14, 2023, the Charity & Security Network was among the first and only organizations to sound the alarm, citing three bases for Congress to reject the bill. The Charity & Security Network characterized the legislation as “redundant and unnecessary” due to existing restrictions on providing material support to foreign terrorist organizations; as based on unsupported claims, including its sponsors’ assertion that “U.S. based, tax-exempt nonprofits may be providing funding and support to Hamas”; and as “a tool that may be manipulated against NPOs [nonprofit organizations] by bad actors with political motives.”

Lara Friedman’s November 17, 2023, legislative roundup for the Foundation for Middle East Peace also sounded an early warning, reporting that the legislation would potentially provide “a powerful weapon of NGO mass harassment, enabling politically motivated actors from across the political spectrum, and focused on any issue, to launch harassment lawsuits (aka SLAPP suits) against NGOs whose mission/work they want to undermine, discredit, or otherwise obstruct.” In particular, Friedman noted that this “new category of lawfare” appeared to focus “in the first instance on those that engage with Palestinians or on Palestinian issues.”

In April 2024, after the House passed HR 6408, the Charity & Security Network updated its statement in opposition to the legislation, warning that policy makers must “take into account the parade of horribles that could cascade from this broad legislation that uses the targeting of charities as a vehicle for larger political motives.” In particular, the network’s update noted that the bill “was clearly crafted with the intent to target pro-Palestinian groups and student groups.”

Following the Lobby Money

Pro-Israel lobbying groups — including AIPAC, the American Israel Public Affairs Committee — have significantly backed seven of the eight representatives who sponsored or cosponsored HR 6408. During the 2024 election cycle, no representatives received more money from pro-Israel lobbying groups than two of the bill’s cosponsors, New York Democrat Ritchie Torres, who has received $1,229,070, and New Jersey Democrat Josh Gottheimer, a recipient of $827,224, according to OpenSecrets.

Additionally, the bill was sponsored by Tennessee Republican David Kustoff (who has received $96,728 in pro-Israel lobbying donations thus far in 2023-2024), and cosponsored by Illinois Democrat Brad Schneider ($379,693), Florida Republican Mario Diaz-Balart ($280,456), Pennsylvania Republican Mike Kelly ($62,000) and New York Republican Claudia Tenney, who has received $17,000 from AIPAC. Just one of the bill’s cosponsors, Georgia Republican Drew Ferguson, does not count on AIPAC or other pro-Israel lobbying groups as one of their top five campaign funding sources.

Bipartisan support for HR 6408 may reflect the influence of lobbying money as much as the House’s desire to restrict financial support for terrorism. Overall, according to OpenSecrets, 355 members of the House have received lobbying funds from pro-Israel groups during the 2024 election cycle.

The Senate version of the bill is sponsored by Texas Republican John Cornyn, who has not received significant lobbying money from pro-Israel groups, and cosponsored by Maine independent Angus King, who has received $78,863 from pro-Israel groups from 2019-2024, according to OpenSecrets. Overall, 39 Senators received lobbying funds from pro-Israel groups during the 2024 election cycle, ranging from $1.1 million for New Jersey Democrat Robert Menendez to $5 received by Massachusetts Democrat Elizabeth Warren.

How Likely Is This Legislation to Become Law?

Although the legislation passed by the House and now under consideration in the Senate may seem like political grandstanding, since the passage of the PATRIOT Act it is a matter of record that the Treasury Department has already shut down or frozen the assets of nonprofit organizations based on unfounded claims about alleged links to terrorism. As the Charity & Security Network noted in November 2023, “This is not the first time that charitable organizations have been targeted under the U.S. material support statutes, especially in regard to Palestine.”

It is further cause for concern that the bill’s Senate sponsor, John Cornyn, is widely known as a moderate Republican with an impressive track record of enacting legislation that benefits from bipartisan sponsorship. Beyond the Senate, the past may be prologue. Just as the House version of the bill almost certainly benefited from significant pro-Israel lobbying funds, President Biden’s consideration of the legislation could well be shaped by his own financial interests: Biden has received more than $4.26 million from pro-Israel lobbying groups since 1990, according to OpenSecrets.

Nonprofits and their supporters must also be alert to other non-legislative attempts to strip 501(c)(3) organizations of their tax-exempt status. On April 24, 2024, the House Ways and Means Committee — which includes five of HR 6048’s sponsors — sent a letter to IRS Commissioner Daniel Werfel, effectively proposing that the agency should take measures to revoke the tax-exempt status of nonprofits that “promote conduct that is counter to public policy.”

The lack of specificity about what sort of conduct IRS officials might deem to be “counter to public policy” is cause for concern. However, the representatives’ letter made reference to Hamas, the Chinese Communist Party and The People’s Forum, a New York-based movement incubator.

Nonprofits are now under attack from within the federal government on multiple fronts. It’s daunting, for instance, to consider that the existence of nonprofit organizations may hinge on whether progressives succeed in efforts to pressure Biden and the Democratic Party to reject AIPAC lobbying money.

The brutal truth is that under the guise of fighting funding for terrorism, politicians with their own political agendas and vested financial interests are ready — if not eager — to muzzle nonprofits that provide vital aid and services around the world.

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