Below is an update prepared before the shutdown of the federal government. At this point we have nothing useful to say about that so we will focus only on last week’s news…

Countering “Domestic Terrorism”: What the White House’s New Memo Could Mean for Nonprofits prepared by Haley Swanson, Scholz Nonprofit Law

On September 25, 2025, the White House released a National Security Presidential Memorandum entitled “Countering Domestic Terrorism and Organized Political Violence” (the Memo). The Memo outlines a new national strategy to combat violence and “terroristic activities,” which it links to an “anti-fascist” movement. According to the Memo, that movement is responsible for the killings of political activist Charlie Kirk and the former CEO of UnitedHealthcare Brian Thompson, the attempted assassinations of Brett Kavanaugh and Donald Trump, and violent protests targeting U.S. Immigration and Customs Enforcement (ICE) and other law enforcement operations.

Nonprofits and their networks, including many of you, have strongly reacted to the Memo and are seeking to understand the risks posed to tax-exempt entities and their funders. For most organizations receiving our updates, there is no direct connection between the Memo and your activities or operations but given the heightened awareness and concern about this recent development, we wanted you to be informed.  Below, we break down the key provisions of the Memo, its potential legal consequences, and the practical steps organizations should consider now.

Before digging into the details, here are a few takeaways.

  • For most organizations, the risk of a federal investigation is low. We expect the focus of this initiative to be on national groups and major funders.
  • As we’ve been saying for the past year, we recommend staying the course with your important work, while making sure it reflects current legal standards, particularly related to illegal discrimination. Keep in mind there may be daylight between a federal pronouncement and the standards applied in the courts.
  • Review your work with your funders, grantees, and partner organizations to document programmatic purposes clearly and to articulate the ways your activities meet specific needs of the community. Avoid using “shorthand” language that could be misinterpreted as discrimination.
  • Support your team to validate their work and deepen their understanding about what you do, while avoiding unnecessary broadcasting of an agenda that may cause unwelcomed attention or misunderstanding. Remind your team of the organization’s social media policy and best practices in this current contentious environment.

We will stay plugged in on resulting guidance, enforcement mechanisms, and investigations and update you all as things progress. For now, keep your head up, seek understanding and try to move forward.

The Memo: Summary of the New Enforcement Framework

At its core, the Memo directs federal agencies, including the U.S. Department of the Treasury, Internal Revenue Service (IRS), U.S. Department of Justice (DOJ), and Federal Bureau of Investigation (FBI), to intensify investigations into individuals and organizations promoting “anti-fascist” views. These views are defined broadly in the Memo, encompassing:

  • “Anti-Americanism”, “anti-capitalism”, and “anti-Christianity”
  • Support for overthrowing the U.S. government
  • “Extremism” on issues of migration, race, and gender
  • Hostility toward “traditional” views of family, religion, and morality

These investigations could lead to groups being categorized as domestic terrorist organization under Section 2331(5) of Title 18 of the U.S. Code. That designation could allow the IRS to suspend or revoke tax-exempt status under Section 501(p) of the Internal Revenue Code.

Potential Criminal Exposure

In addition to revocation of tax-exempt status, investigations could lead to criminal charges. While there is currently no criminal charge for “domestic terrorism,” organizations and individuals could face prosecution under a range of federal statutes, including the following provisions referenced in the Memo:

  • Assaulting federal officers or employees (18 U.S.C. § 111)
  • Conspiracy against rights (18 U.S.C. § 241) or general conspiracy (18 U.S.C. § 371)
  • Solicitation to commit a violent crime (18 U.S.C. § 373)
  • Material support for terrorism (18 U.S.C. §§ 2339–2339D)
  • Money laundering (18 U.S.C. § 1956)
  • Arson (18 U.S.C. § 844)
  • Racketeer Influenced and Corrupt Organizations Act (RICO) violations (18 U.S.C. §§ 1961 et seq.)
  • Major fraud against the United States (18 U.S.C. § 1031)

While many of these laws are not new, the Memo signals a shift in how they might be applied, particularly to some advocacy groups and their networks.

How the Government Plans to Investigate

The Memo outlines several mechanisms to operationalize this new enforcement priority:

  • Treasury Guidance to Financial Institutions: The Treasury Department will issue new instructions on when financial institutions should file Suspicious Activity Reports (“SARs”), potentially expanding the types of nonprofit-related transactions flagged for review.
  • IRS Oversight of Tax-Exempt Financing: The IRS is directed to ensure that no tax-exempt organizations are “directly or indirectly financing political violence or domestic terrorism.” This could translate into heightened scrutiny of grantmaking practices, closer examination of relationships with fiscally sponsored groups, or more aggressive use of audit authority.
  • DOJ Risk Profiles: The DOJ will develop guidance identifying behaviors, motivations, and other indicators common to organizations that engage in political violence, which could shape future enforcement priorities.
  • Broad Federal Investigations: Federal law enforcement agencies are tasked with investigating and interrogating individuals involved in “political violence” or “lawlessness,” a power they already have.

Key Takeaways for Nonprofits and Funders

The most “at-risk” organizations are those with a significant national footprint and large funding sources, likely from high profile donors, or that have national recognition for their efforts related to politically sensitive topics such as pro-immigration work, advocacy for Palestinian causes, and criticism of the current administration’s policies.

Let us know if you have specific questions. We will let you know of meaningful updates.