How Nonprofits Can Navigate the Legislative Landscape

By Kalie VanDewater

This year has been a challenging one for nonprofits navigating the legislative landscape, but the challenges didn’t start this year.

“We are facing some headwinds unlike those that we have seen coming from our political leaders, certainly in the 30 years in my career,” Shannon McCracken, founding president and CEO of The Nonprofit Alliance, said in her closing keynote at NonProfit POWER yesterday.

McCracken likened the impact this long-term stress has had on nonprofits to nature: A tree grows stress wood that makes it strong when facing the elements; without wind, it becomes weak and collapses. Nonprofits, she said, have already developed their own stress wood.

“Your organizations are already accustomed to doing the hard work to adapt and to innovate and to adjust to the environmental challenges around you,” McCracken said. “And that stress wood shows up for you right now in things like your strong governance policies, your partnerships, your cash reserves, your loyal donors, your loyal staff — people who get up every day and come to work and do the hard things because they believe so strongly in the mission.”

One of the greatest challenges on the legislative front in 2025 has been the threat to 501(c)(3) status.

“Many of you will remember last year in Congress, they had H.R. 9495, sometimes called the ‘nonprofit killer bill,’” McCracken said. “This was the bill that would have given unprecedented authority to the Treasury secretary to identify organizations that are terrorist-supporting and, with very minimal process, freeze their 501(c)(3) tax-exempt status. It wasn't clearly defined exactly what would count as terrorist-supporting organizations.”

However, as McCracken noted, there are already regulations in place to identify terrorist-supporting organizations, and also processes to eliminate the 501(c)(3) status of an organization.

And while H.R. 9495, or the Stop Terror-Financing and Tax Penalties on American Hostages Act, didn’t pass the Senate, the concept and wording cropped up in the One Big Beautiful Bill Act, though it was dropped from the final version. McCracken said she expects that language to return in the future.

“I think a lot of us look at it and say it's about limiting free speech, and it's about controlling which organizations or which types of organizations continue to receive public support,” she said.

Here are four ways nonprofits can stay strong as they face continued challenges.

Be Visionary and Passionate

When thinking of a successful nonprofit executive director, what traits come to mind? According to an AI assessment that Greg Harrell-Edge, founder of Proimpact Project, conducted, the top characteristic was being passionate.

Conversely, the top trait for corporate CEOs was being visionary. McCracken reasoned that nonprofit leaders should be both passionate and visionary, not one or the other.

“You need to hear that you are visionary, and you need help to do and be more of that,” she said. “And that starts with the way that we talk about ourselves, talk about staff and our colleagues, talk about our partners and our clients. … People think that we're nice and we're good and we're passionate, and we are those things on most days. We show up that way, and we are also visionary. It's not an either/or. So take that, lean into it, be bold, do the things that are hard, even when you might fail, because that's how we find success.”

Own Your Value

Being visionary is crucial to weathering the challenges presented by the legislative landscape, and so is owning your value as a nonprofit. As McCracken pointed out, embracing and sharing how much of an impact you have on society serves as a reminder to everyone.

McCracken shared a framework to help nonprofits do just that. That framework includes:

Clear impact statements.
Scale of service.
Beneficiary stories.
Organizational history.
Economic contribution.
Gap analysis.
Community validation.
Donor engagement.
Accountability measures.
Partnership highlights.

“Please understand that the Own Your Value framework was not created simply to be reactive,” McCracken said. “It really is, how do we say, ‘You're looking at us, you're examining us, you're taking a moment to question our validity and our value to society, so let us show you all the ways.’”

Build Trust

Closely tied to owning your value is building trust. While you want to share things like beneficiary stories and how you fill societal gaps, continued legislative efforts that threaten nonprofit status make regulatory compliance more critical than ever.

“I'm spending a lot of time thinking about the threat to 501(c)(3) tax-exempt status,” McCracken said. “The reality is that it is much easier for regulators or media to look at an organization and give it negative press or cause problems with its (c)(3) status or with its assets because of basic compliance faults, right?”

So, ensure you have everything in order — everything being governance and authorization controls; financial oversight; tax and filing obligations; registration and reporting; and board compliance.

Of course, making your financial information, program outcomes and decision-making processes more transparent and accessible can help build trust in your communities. Other ways to build trust include:

Engaging your community — familiarity strengthens trust.
Diversifying funding sources to reduce vulnerability.
Building coalitions to amplify your collective voice.
Collecting and sharing compelling data about your outcomes.

Create Your Resilience Strategy for the Legislative Landscape for Nonprofits

McCracken acknowledged that many nonprofits may already be embracing a visionary outlook, owning their value and building trust with their community. But what ties it all together is having a resilience strategy to ensure your organization’s continued success.

“We were built to do hard things,” she said. “We have before endured social upheavals, political swings, economic downturns, and we come through those, and we survive. And we will do that again, and when we emerge — because we will emerge from this particular moment — we will be stronger, we can be more trusted, and we can be better and stronger communicators about our value, not despite the headwinds that we face, but because of them.”

To see more coverage of this year's event, subscribe to our enewsletter and follow us on LinkedIn, Facebook and Instagram!

Save the Date for NonProfit POWER 2026

Next year's NonProfit POWER will take place Dec. 1-3, 2026, at the Hyatt Regency Baltimore Inner Harbor hotel. If you're interested in attending, fill out the NonProfit POWER inquiry form.