The Safeguarding Charity Act: Sen. Lankford, Rep. Steube Protect Charities from Federal Control

Imagine you run a tax-exempt charity that houses, feeds, and cares for the poor and the homeless, or perhaps educates children from low-income families. You have the resources to operate your charity through the kindness of your donors. You also are grateful that your tax-exempt status helps you stretch those donor dollars for your social mission.

Then one day you begin to receive demands from the government to certify compliance with myriad federal regulations. The cost of painstakingly documenting compliance would make a huge dent in your budget. Worse, if you are found to be out of compliance with the bureaucracy’s elaborate standards, your tax-exempt status will be revoked.

This is the implied threat of the 2022 rulings by two federal district courts that held that the tax-exempt status of charities means that they should be considered recipients of federal financial assistance. One of these cases, Buettner-Hartsoe v. Baltimore Lutheran High School Association d/b/a Concordia Preparatory School, went to the Fourth Circuit Court of Appeals. Last year, the Fourth reversed the lower court’s ruling:

“Tax exemption is not ‘Federal financial assistance.’ This is not a novel concept. Indeed, since Title IX’s inception over fifty years ago, it has never been applied to organizations based solely on their tax-exempt status. And for good reason … Tax exemption, however, is the withholding of a tax burden, rather than the affirmative grant of funds. Thus, tax-exemption is not ‘Federal financial assistance.’”

You might brush your hands and say, ‘all well and good and that is that!’ But in American law these days, that is never that. The appetite for government control is as strong as ever. All it takes is the right case and the right judge to set this precedent on its ear and bind charities across the land to burdensome regulation.

We have certainly seen at the state level, from Wisconsin to Maine to California – a desire by regulators to treat charities, especially religious-based charities, in discriminatory ways. This impulse was occasionally on display during the previous administration in regulatory lurches toward increasing government control of charities.

To forestall this movement once and for all, Sen. James Lankford (R-OK) and Rep. Greg Steube (R-FL) have introduced the Safeguarding Charity Act to clarify that tax-exempt organizations should not be treated as recipients of federal financial assistance.

“Tax-exempt status is not the same as receiving federal funding, and it should be not used as political leverage against the nonprofits that feed, clothe, house, and counsel those in need in Oklahoma and across the nation,” Sen. Lankford said. “We should be focused on enabling the work of these organizations – not burdening them with unnecessary and costly federal requirements.”

“Radical judges should not have the authority to twist federal law and force religious institutions to choose between their convictions and their compliance,” Rep. Steube said. “This bill is about protecting churches, religious schools, and charities from federal overreach.”
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Though prior versions of this bill failed to pass, the stars may be lining up for the 119th Congress to pass this bill and to put this question to rest for all time.

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