After Harvard, liberal donors and groups fear new scrutiny from Trump

WASHINGTON -- The close-knit world of liberal donors and the nonprofit groups they support has spent the past week in a state of fear and anxiety, worried that any day now, President Donald Trump could go after their assets or their tax-exempt status.

But it all seemed purely speculative -- until Wednesday.

That is when The New York Times and other news outlets reported that the Trump administration was potentially seeking to pull Harvard University's tax-exempt status, in an apparent act of retaliation for the university's refusal to bow to a long list of demands.

For left-leaning megadonors, philanthropists, nonprofit groups and foundations, the threat suddenly became far more real.

Ever since Trump won back power in November, these donors have been sweating that a president dead-set on retribution would go after them in personal ways. And so while some of these donors and their allied groups have cozied up to the Trump administration, more of them have worked diligently to lie low, de-emphasizing viewpoints that could attract scrutiny, such as on diversity, equity and inclusion.

"The fear is real," said Tim Lim, a progressive fundraiser who said he had held several conversations in the past 24 hours with worried leaders of such groups. "If the Trump administration is successful in removing Harvard's tax-exempt status, then they could use this same blueprint against every progressive nonprofit."

The White House did not respond to a request for comment Thursday on whether a broader list of progressive groups might soon be targeted. Railing against Harvard on social media, Trump has said that "Tax Exempt Status is totally contingent on acting in the PUBLIC INTEREST!" -- language that could presage broader action.

Trump's ability to have the IRS remove individual groups' tax-exempt status is legally doubtful, at best, and any actions he takes -- including against Harvard -- would prompt challenges. Philip Hackney, a former lawyer for the IRS who said he had had several conversations with liberal groups, said "revoking statuses immediately or the president directing an audit of someone are both outside the law."

But Trump and his administration have shown their willingness to defy the legal system, and the fear persists.

Many groups that are taking steps to avoid being targeted are doing so quietly, concerned about provoking the administration. Liberal groups that could be singled out include ActBlue, a leading Democratic fundraising platform, which has already faced pressure from House Republicans and is working with lawyers to prepare for more investigations.

Groups that work on climate change and reducing the production of fossil fuels, such as the Sierra Club, are especially worried about coming under attack.

Leaders of climate groups have spent the past few days on conference calls and texting in group chats, desperately seeking hints of what the Trump administration might have in store.

"Last week, rumors started, and they've just spread like wildfire," said Brett Hartl, government affairs director at the Center for Biological Diversity.

One fear is that the administration might use powers under the International Emergency Economic Powers Act -- a law that gives the president authority to freeze assets in response to extraordinary threats to national security -- to designate environmental groups as terrorist organizations.

Such an extreme move could potentially rest on Trump's declaration that the United States faces an energy emergency, a claim energy experts have said is dubious. The administration has aggressively promoted the increased production of coal, oil and gas, and Trump has argued that efforts to restrict fossil fuels run counter to America's interests.

Some liberal nonprofit groups have reached out to lawyers who specialize in defending against investigations, or have even commissioned polling to determine how to land the most convincing arguments in defense of civil society.

Still, some are taking a wait-and-see approach. Hartl noted that environmental groups had long faced investigations from Republicans in Congress, and he said they were prepared to challenge any new effort to restrict their work.

"We haven't taken any special steps," he said of his group. And although he did read up on the IRS tax codes last weekend, he added, "We are not panicking."

Trump's allies have argued that officially apolitical nonprofit groups sometimes cross the line into partisan activity, carrying out thinly disguised work meant to help Democrats or liberal causes. Trump has made it his mission in particular to root out DEI programs, and an executive order he signed on his second day in office called for his Cabinet to identify foundations by mid-May with more than $500 million in assets that carried out DEI work that could be investigated.

Trump has also objected to "environmental justice," the idea that all communities should be protected from environmental harms. Lee Zeldin, the administrator of the Environmental Protection Agency, canceled more than $1.5 billion in grants focused on improving the environment in communities of color, calling them "DEI and environmental justice grants."

Sen. Edward Markey, D-Mass., said he believed the Trump administration's targeting of Harvard was a likely precursor to an attack on environmental nonprofit groups.

"Ultimately, it is a tool to create a chilling effect across all of the nonprofits who stand in ideological opposition to the Trump revolution," he said. But he noted that with Republicans in control of the House and the Senate, there was probably little legislative action that Democrats could take to block the administration.

"I think this will ultimately be a decision made by the Supreme Court of the United States with regard to the legal protections that nonprofit entities have," Markey said.

Some left-leaning groups are taking other steps to prepare.

Last week, three prominent liberal philanthropic foundations announced what they called the "Unite in Advance" solidarity campaign, an effort to rouse the charitable sector before any action is taken.

"We in the philanthropic community must not wait like sitting ducks," wrote the leaders of the foundations. "We must get our house in order -- legal teams on speed dial, crisis plans dusted off, reserves lined up -- and most importantly, a plan to speak up loudly and together." As of Thursday, 319 foundations had signed a statement supporting the effort.

One signer, Aaron Dorfman, president of the National Committee for Responsive Philanthropy, said nonprofit leaders had been "making sure their organizations' activities are in alignment with the law." For example, he said, groups with both 501(c)(3) nonpolitical entities and affiliated 501(c)(4) "dark-money" political entities -- a common arrangement -- are making sure they have documentation showing there has been no improper commingling of nonpolitical and political funds.

Sen. Sheldon Whitehouse, D-R.I., who has sought to shed light on the ways that tax-exempt charities and foundations funded by fossil fuel companies spread disinformation about climate change, called the possibility of government action against environmental nonprofit groups "majestically ironic."

He said groups and lawmakers were watching and waiting. But, Whitehouse added, the anticipation of action by the IRS is already taking a toll.

"Part of the battle here is they don't have to win in order to do damage," he said, adding, "You do economic damage, requiring people to hire lawyers and fight, while you fight with free taxpayer dollars."