Nonprofit Governance Integrity Act
Summary
The Nonprofit Governance Integrity Act aims to amend the Internal Revenue Code of 1986 by prohibiting citizens or nationals of 'covered nations' from serving on the board of directors of certain tax-exempt organizations. This includes organizations described in subsections 501(c)(3) (excluding churches), 501(c)(4), and 501(c)(6). The bill was introduced in the Senate and referred to the Committee on Finance.
The Act seeks to ensure the integrity and accountability of nonprofit organizations by restricting foreign influence from specific nations. The amendment would apply to taxable years beginning after the enactment of the Act.
This legislation is designed to address concerns about potential undue influence or control over US-based non-profit entities by foreign nationals from nations deemed a risk.
Expected Effects
If enacted, the Nonprofit Governance Integrity Act would prevent individuals who are citizens or nationals of 'covered nations' from serving on the boards of specific tax-exempt organizations. This could lead to changes in the composition of boards of directors for affected organizations.
Organizations may need to revise their governance structures to comply with the new regulations. It may also affect the ability of these organizations to attract and retain board members.
The law would likely lead to increased scrutiny of the backgrounds and nationalities of individuals serving on the boards of covered non-profits.
Potential Benefits
- May enhance national security by limiting potential foreign influence in sensitive organizations.
- Could increase public trust in the governance of non-profit organizations.
- Might encourage greater participation of U.S. citizens on non-profit boards.
- Could reduce the risk of foreign entities using non-profits for illicit purposes.
- Potentially strengthens the integrity of the U.S. tax system by ensuring compliance and accountability.
Potential Disadvantages
- May limit the diversity of perspectives on non-profit boards.
- Could be perceived as discriminatory against certain foreign nationals.
- Might create administrative burdens for non-profit organizations to verify the citizenship of board members.
- Could strain diplomatic relations with 'covered nations'.
- May hinder the ability of non-profits to address global issues effectively by excluding certain expertise.
Constitutional Alignment
The bill's constitutionality could be debated under the First Amendment, particularly regarding freedom of association and expression, as it restricts who can serve on the boards of certain organizations. However, the government may argue that the restriction is necessary for national security, which is a legitimate government interest.
The Fifth Amendment's due process clause could also be invoked if the criteria for designating 'covered nations' are deemed arbitrary or discriminatory. The equal protection clause may also be relevant if the law is seen as unfairly targeting specific nationalities.
Ultimately, the constitutionality would depend on whether the restrictions are narrowly tailored to serve a compelling government interest and do not unduly infringe on constitutional rights.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).