Congressional Investigations Are Coming. Is Your Nonprofit Ready? 

In the wake of President Trump’s threats to revoke the nonprofit status of some organizations and demands for an investigation of the Open Society Foundations, many nonprofit leaders and organizations representing the sector are concerned that the government is singling out the sector for attack. Worry is so prevalent that the issue was the subject of discussion and a session at the Independent Sector National Summit late last month.

Now the pressure is ramping up, not just from the White House but from congressional committees that have been sending letters to nonprofits at a high rate, said Christopher Armstrong, a partner at the law firm Holland & Knight. 

“In this politically charged moment, it is important that we hold the line against government weaponization,” said Akilah Watkins, Independent Sector CEO, in the opening plenary session at the conference. “Independent Sector has joined those speaking out against the White House’s targeting of philanthropic foundations, and we will not hesitate to take further action to defend our sector if these attacks continue to escalate.”

To help nonprofits understand the attacks that could be on the horizon, the conference offered sessions explaining where things stand and how organizations can prepare.

A Letter a Day

While attacks from the Trump administration on foundations and nonprofits are getting the headlines, several conference speakers indicated that a faster growing risk is now coming from members of congress threatening to investigate organizations.    

Congress had been too preoccupied with getting the tax bill passed to focus on investigations, said Armstrong. But that’s about to change.

Congressional hearings are public and typically involve Congress members asking about a specific topic their jurisdiction covers, Armstrong said. The House Ways and Means, House Oversight, House Judiciary, and the Senate Finance committees are among those most likely to investigate nonprofits. Hearings can end up being fairly innocuous or touch off a firestorm at an organization. Highly publicized and confrontational hearings involving then-presidents of Harvard University and University of Pennsylvania led to their resignations.

The ramp-up in investigations can take many forms, Armstrong said. Groups could receive formal requests for depositions and subpoenas for information and testimony. These are cause for immediate concern, Armstrong notes. However, a more seemingly innocuous path — letters seeking voluntary information — are more likely and have the power to kick off those more serious investigations, depending on the response.

“Organizations that have never gotten requests before have the impulse of, Hey I’m just going to turn over the stuff and they’ll be more educated and it’ll go away,” Armstrong said. But this often mistakenly feels to nonprofits like private correspondence, when in reality, whatever is turned over will likely become public, Armstrong said. So if a committee seeks information on donors or other sensitive information, it’s best to consult legal counsel.

Any committee can issue letters requesting information, said Marissa Serafino, an associate at Holland & Knight, but the House Oversight Committee has been “pumping out at least a letter a day. That is just a lot of voluntary requests going out to industry, the nonprofit space.”

Most letters do not lead to hearings, Armstrong and Serafino said. When thinking about the types of requests that can cause issues, Armstrong said “emails are always the most dangerous things for organizations.”

Review Policies Before a Letter Arrives

Now, before any requests are made, is a good time to think through email retention policies for the organization and decide if emails should be routinely deleted after a set amount of time, such as six months or a year.  

“Just having an organizational culture that is careful about the creation of records” is important, Armstrong said. “That might sound paranoid, but it’s a good practice over all. The big no-no is you get a request for an audit or an investigation and then you actually change the policy. Changing it to a reasonable period pre-investigation is totally safe.”

If organizations do get a request, it’s a good idea to have counsel review what’s being sent and work as a liaison with the committee requesting information to avoid nonprofits handing over unnecessary information, Serafino added.

“It’s not in your interest, generally, to respond and give them the maximum — especially narrative responses,” she said. Sometimes there are several rounds of requests, Serafino said, and when organizations are working on their own, a minor error can turn into a big deal if a committee tries to make it seem as if the organization is contradicting itself.

If voluntary requests advance to the point of a hearing, which is something that will be publicly broadcast, groups need to prepare ahead of time. It is important to focus on how to discuss potentially controversial issues that are likely to arise so as not to cause unnecessary conflict.  “I often say you can’t win a hearing, but you can easily lose it,” Armstrong said, noting that snippets taken out of context often get replayed in the media and can make an organization look bad.

“Then it becomes a real PR struggle,” Serafino added.

Plan a Response

To be prepared, it’s important for leaders to think through how they would respond to a letter from a committee.  He suggests doing some scenario planning about what would happen if you got a letter. Questions to consider asking: Who are the people you should contact right away within the organization? Do you need outside help from an attorney or public relations consultant? Who will be responsible for evaluating the letter?”

The good news is that, historically, these committees have short attention spans. Congress doesn’t typically say, All is good, you’re cleared, Serafino said. But legislators move on if they don’t think it’s worth their time. “If it’s not going to give them a big political win, if they don’t see the value in it, they’re going to move on to the shinier object,” she said.

Correction: A previous version of this article referred to the resignation of the president of Pennsylvania State University after a highly publicized and confrontational hearing. It should have said the University of Pennsylvania’s president.