Public Policy Update – June 24, 2026

Proposed Federal Grantmaking Rules Could Increase Strain on Charitable Sector

A proposed rewrite of federal grantmaking criteria has raised concerns across the charitable sector – including fears that its implementation could threaten the survival of nonprofits and put an increased burden on foundations to fill in resulting funding gaps.

On May 29, the Office of Management and Budget (OMB) proposed the new rule, which would also apply to dozens of federal agencies. The stated intention is to “improve transparency, accountability, and oversight,” but a closer reading suggests a desire to ensure federal grants align with the White House’s policy priorities.

“The proposed revisions related to improved oversight aim to ensure that every discretionary award program is designed by Federal agencies to effectively achieve its underlying statutory purpose, and to align, where applicable, with administration policies and priorities set by the President,” the proposal states.

The rule is also described as being consistent with executive orders issued in the earliest days of the second Trump administration that ultimately caused significant cuts in federal grantmaking to community nonprofits – cuts that drove many grantmakers to increase funding and help those organizations survive.

Since its release, many charitable organizations and associations have expressed strong opposition to the proposed rule.

“If implemented, the proposal would create significant financial risk and instability for federal grantees, including nonprofits, making it more difficult to provide vital services to communities,” the National Council of Nonprofits said in a statement. “This could lead to disruptions to essential services, including housing, community development, health, education, food, shelter, community services, disaster recovery, and more in communities and states nationwide.”

Organizations have also called on OMB to increase the 45-day public comment period on the proposed rule. “For a rule with these intended sweeping and comprehensive effects, a period of at least 90 days is needed in order for the comment period to be meaningful,” reads a letter signed by more than 300 organizations.

Currently, the public comment period is slated to end on July 13. Individuals and organizations can submit comments on the Federal Register’s website.

Redistricting Roundup: Maps Changing in Four Southeastern States Ahead of 2026 Elections

After the April 29 Supreme Court decision in Louisiana v. Callais that weakened Section 2 of the Voting Rights Act, lawmakers in several Southeastern states pushed to implement new congressional and state legislative maps that reduced the number of majority-Black districts.

The new maps would make the election of Black lawmakers less likely while also improving prospects for Republicans in a year where they face electoral headwinds. With new maps now in place, here’s where things stand in each state of the Philanthropy Southeast footprint:

• Alabama: The state adopted a new map that eliminated one of the state’s two majority-Black districts. In June, the U.S. Supreme Court allowed this map to go into effect immediately.
• Arkansas: No action taken.
• Florida: Republicans were already working on a new map when the Supreme Court announced its decision. The map, signed into law on May 4, could result in an additional four seats favoring the GOP.
• Georgia: With voting already underway, Georgia lawmakers did not attempt to implement a new map for the 2026 elections. Republicans also dropped plans to draw new maps for 2028 in a special session.
• Kentucky: No action taken.
• Louisiana: The Supreme Court’s decision immediately struck down Louisiana’s previous map, which included two majority-Black districts. On May 29, lawmakers passed a new map that shifts one of those districts toward Republicans.
• Mississippi: While the state legislature has organized committees to consider new maps, no formal action has been taken. If new maps are adopted, they would not apply to this year’s elections.
• North Carolina: No action taken.
• South Carolina: An effort to adopt new maps in a special session passed the state House, but failed to advance in the state Senate.
• Tennessee: Legislation signed into law on May 7 broke up a Memphis-based district, creating a map in which all of the state’s nine House districts favor Republicans.
• Virginia: Voters approved a constitutional amendment in April that would have installed a new map more favorable to Democrats. However, in May the Virginia Supreme Court struck down the amendment, finding that lawmakers did not follow the correct procedure for placing it on the ballot. 

As Congress Mulls Reconciliation 3.0, Plans to Tax Foundations Continue to Circulate

House Republicans are still weighing an attempt to pass a third party-line budget reconciliation package this year, though so far it appears unlikely to come together in time.

Politico reports that GOP leaders in the chamber are meeting this week to discuss options, but with lawmakers set to go on recess for the July 4 holiday, time is running out to craft legislation and pass it before a self-imposed deadline at the end of July.

This week, House Speaker Mike Johnson (R-LA), indicated he supports moving ahead with a bill. “I’m very bullish about it,” he told Punchbowl News. “We got some things that we really need to do, must do, everybody wants to do. So we put together the magic combination, I think we get it done.”

Reconciliation bills, which are not subject to a filibuster in the Senate, can open the door to significant changes in tax policy, including those that could affect philanthropy. However, a second reconciliation bill, which passed earlier this year and provided funding for immigration enforcement, contained no tax provisions.

While proposals to tap philanthropic resources for tax revenue are unlikely to become law this year, the idea still has supporters. For example, the Committee for a Responsible Federal Budget, a prominent think tank, recently called on Congress to resurrect the private foundation excise tax increase in a future reconciliation bill.

Community Foundations Join Other Stakeholders in Urging Withdrawal of Proposed DAF Regulations

More than 20 community foundation leaders – including several in the Southeast – were among those who signed a June 19 letter asking the Trump administration to withdraw proposed regulations on donor-advised funds.

The letter reiterates widespread concerns with the proposed regulations, including the expansive definition of a DAF encompassing other charitable funds and the definition of a personal investment advisor, which could sever an important pipeline for donors to find DAFs. 

The letter argues that the proposed regulations, if finalized, would reduce giving through DAFs, and that they continue to create uncertainty for stakeholders as they remain pending in proposed form.  

The regulations, originally proposed in 2023, have also drawn attention from Congress. Sen. James Lankford (R-OK), an ally of the charitable sector, urged Treasury Secretary Scott Bessant to review the regulations at a recent Senate Finance Committee hearing.