House set to vote on bill targeting nonprofits accused of supporting terrorism

(JTA) — U.S. law prohibits nonprofits from providing support to terrorist organizations, but enforcing that prohibition requires the government to furnish proof of a violation, triggering a judicial process that can be lengthy and arduous.

In the more than two decades since the current law was enacted, following the Sept. 11, 2001 attacks, the law has rarely led to penalties: nine charities have lost their tax-exempt status under its terms.

A bipartisan bill slated for a major vote on Capitol Hill Tuesday aims to create a new way to achieve that goal without the existing legal hurdles. The bill would give the treasury secretary new powers to independently classify any nonprofit as a terrorist-supporting organization and revoke its tax-exempt status almost immediately.

A version of the bill was introduced following the Oct. 7, 2023, Hamas invasion of Israel and passed the House in April, amid a wave of pro-Palestinian protests on college campuses, which many pro-Israel groups labeled as “pro-Hamas.” The bill advanced with broad bipartisan support, 382-11, but stalled in the Senate.

Now, the new version of the bill is dividing Jewish groups. Centrist and conservative groups support the bill as an urgent measure to curb support for terrorism. Progressive organizations oppose it as a threat to political dissent — and worry that the powers it affords will be abused by the incoming Trump administration to go after groups that oppose its policies.

At a September hearing, Robert Harvey, an expert at Congress’s nonpartisan Joint Committee on Taxation, explained that the government would not be required to disclose how it reached its determination or to provide any evidence of wrongdoing.

“As I understand it, all the Treasurer has to do to deny tax exemption is to mail a notice to the organization involved saying: ‘You’re a terrorist supporting organization, we have found you are providing material support, and you’re denied your exemption?’” Democratic Rep. Lloyd Doggett asked Harvey, according to The Intercept.

“That’s correct, Mr. Doggett,” Harvey replied.

Lawmakers sponsoring the bill say the government needs a better tool to prevent terrorist organizations from being subsidized by American taxpayers. Their position is endorsed by the Anti-Defamation League, the American Israel Public Affairs Committee, and the Republican Jewish Coalition.

The bill would allow the Treasury Department to act against the U.S.-registered charities that it determines have provided support to groups designated as terrorist organizations by the United States — including, for example, Hamas and Islamic Jihad, both based in Gaza, and the Lebanese Hezbollah.

After making the determination, the Treasury would notify the charity, giving it 90 days to file a court challenge before losing its tax-exempt status. Republican Rep. David Kustoff of Tennessee, one of the bill’s two Jewish cosponsors along with Democratic Rep. Brad Schneider of Illinois, says the problem isn’t theoretical: He claims tax-exempt donations are currently flowing to terrorist organizations, though neither he nor any other proponents of the bill have named specific examples.

“To put it plainly, domestic financiers of terrorism are currently being subsidized by U.S. taxpayer dollars,” Kustoff said earlier this year.  “Let me be clear: No American should receive a tax benefit for funding terrorism.”

The RJC said the bill should be used to ensure that Hamas and other terrorist organizations are not receiving any funds from U.S. nonprofits, and framed it as a tool against groups that attack American Jews and Israel.

“Congress is right to address the threat of organizations using tax-exempt funds to support Hamas and other terrorist groups,” RJC said in a statement. “In case last week’s election results didn’t make it clear: The days of impunity for antisemitic extremists who target the Jewish state and Jewish Americans are over.”

Critics of the bill say it grants too much power to the government and that it could be used to silence political dissent — particularly from pro-Palestinian organizations that don’t have ties to terror groups but may nonetheless be branded as supporters of Hamas. The language of the bill prohibits providing “material support or resources,” a category defined in law that, opponents say, could still be interpreted broadly. They also worry that the incoming Trump administration could use the bill to penalize groups focusing on signature progressive issues such as reproductive justice, the environment, and promoting immigration.

The American Civil Liberties Union has been spearheading opposition to the bill with support from voices on both sides of the political spectrum. The libertarian Cato Institute and Reason magazine, for example, have come out against the bill. So have several progressive American Jewish groups such as Bend the Arc and the New Israel Fund.

“This bill is as dangerous as it is extraneous,” the New Israel Fund, which donates to civil society groups in Israel, many of them left-leaning, said in a statement. “The United States already has a meticulous process in place to determine whether a group is providing material support for terrorism. What this would do is strip that system of due process and enable willy-nilly terrorist designations.”

The bill is scheduled for a full vote in the House of Representatives Tuesday, after which it would have to be approved by the Senate and signed by the president.

The current version of the bill is identical to the one that passed in April, except that it’s been combined with another bill that aims to give American hostages and political prisoners held abroad relief from tax deadlines and penalties. The ACLU believes the pairing with an unobjectionable bill is a ploy to weaken the likelihood of opposition.

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