The results of the presidential election came as a surprise or even as a shock to many Americans, but for those working in the nonprofit world, the election of Donald Trump to the presidency has provoked considerable fear and anxiety.
After all, Mr. Trump has promised to make a U-turn from established policies in health care, taxes, immigration, trade, education, foreign aid, and other areas of great interest to foundations and charities. Many of these fears are undoubtedly overblown and detached from real possibilities.
Nevertheless, Mr. Trump and his advisers and allies have signaled an interest in making changes in the way all foundations and charities operate and has specific ideas that will affect the missions of those that work in education, the arts, and elsewhere.
The incoming president has philanthropy pondering the big changes that lie ahead in the new administration and what they mean for fundraising, tax policy, spending, immigration, regulation, advocacy efforts, and more.
Among these may be counted some or all of the following:
Protecting dissenters on campus. The Office for Civil Rights in the Department of Education in the Obama administration sent several “Dear Colleague” letters to college and university administrators advising them of new guidelines in the enforcement of laws and regulations dealing with sexual harassment, transgender rights, and other subjects. Many critics warned that the administration had gone beyond the law and common sense in these interpretations, but those letters stood as warnings the schools could lose access to federal funds if they were found to run afoul of the new guidelines.
The Trump administration is likely to send out its own “Dear Colleague” letters unwinding the Obama guidelines and possibly setting forth some new ones with regard to the protection of First Amendment rights on college and university campuses. These “Dear Colleague” letters will caution administrators that their institutions may lose access to federal research, loan, and scholarship funds if they do not stand up to protect faculty and outside speakers from harassment and dismissal for views that are quite acceptable across the nation but increasingly unacceptable on today’s college campuses.
Endowment hoarding. Mr. Trump has spoken critically during the campaign about wealthy colleges and universities that hoard endowment funds while raising tuition every year and then turning to the federal government for scholarship, loan, and research funds. There are bills circulating through Congress to address this issue — bills that may pass next year and that the new president is very likely to sign. These bills are likely to require these wealthy institutions to cap tuition or tap their endowments to a greater degree or risk losing access to federal funds.
Sunset rules for foundation operations. During the 1960s, Sen. Albert Gore of Tennessee pressed repeatedly for a sunset provision on private foundations that would require those institutions to spend all their assets over 25 years. At the time, there was much support for this proposal. In 1969, this provision found its way into a preliminary draft of the Tax Reform Act, though the provision was extended from 25 to 40 years. In a spirited debate on the Senate floor, this provision was defeated and thus taken out of the bill that eventually passed into law.
That issue appears to be coming back into the discussion of private foundations that have built up considerable assets as a consequence of the stock-market boom of the last 35 years. Should foundations be forced to sunset? Does it make sense in a fluid and democratic society to have perpetually endowed foundations? Should foundations be required to spend a greater share of assets beyond the current requirement to distribute at least 5 percent, on average, a year? Should administrative expenses be taken out of that 5 percent as a means to force foundations to allocate more funds to charitable purposes? These once urgent discussions, largely dormant for five decades, are likely to arise again in the new Congress.
School choice. In the field of elementary education, Mr. Trump supports charter schools, parental choice, and other reforms to encourage competition, innovation, and greater local control over schools. We should not be surprised to see proposals coming up in Congress to provide block grants as a share of the Department of Education’s budget to the states to encourage reform in K-12 education. President Obama’s emphasis on federal supervision of education is likely to be replaced in a Trump administration with an emphasis on experimentation and federalism.
Arts and culture. It is said that “personnel is policy,” and a Trump administration is likely to pay a great deal of attention to appointments to lead various educational and cultural agencies, such as the Department of Education, the National Endowment for the Arts, the National Endowment for the Humanities, and the U.S. Information Agency chiefly among them, with an eye to turning them away from current preoccupations with diversity, multiculturalism, and representation of vocal constituent groups and toward programs that unite Americans and remind us of what has made America great.
President-elect Trump has an ambitious agenda, much of it working against the grain of views that generally prevail in the nonprofit world. There is much that he can and probably will do very quickly that will pose challenges to many charities — for example, ending federal funding for so called sanctuary cities, stepping up enforcement of federal immigration laws, revising the regulations governing insurance policies under the Affordable Care Act, withdrawing the United States from the Paris climate-change agreement, and reversing President Obama’s executive orders on the environment, not to mention appointing a new justice to change the balance of power on the Supreme Court.
Much of this he can do through executive order without waiting for Congress to act on his legislative agenda. This was a highly unusual and surprising election campaign in many ways, but it appears that it will turn out to be a very consequential one as well, for charities and foundations and the nation at large.
James Piereson is president of the William E. Simon Foundation.
