Big Law Warns Clients as Trump Issues High-Stakes Domestic Terrorism Order

Heightened Concerns as New National Security Directive Targets Nonprofits

Law Firms Alert Clients: Prepare for Possible Investigations

Several leading U.S. law firms are advising their clients to brace for potential politically motivated investigations due to former President Donald Trump’s national security directive concerning domestic terrorism. These firms, including the global powerhouse Arnold & Porter, caution that the directive—although claimed to curb political violence—might be leveraged against nonprofit organizations that support progressive causes, challenging the scope of the First Amendment.

Understanding National Security Presidential Memorandum-7

Dubbed National Security Presidential Memorandum-7 (NSPM-7), this directive mandates federal agencies, including the Department of Justice (DOJ), to investigate networks perceived to promote political violence. President Trump, alongside notable figures like Vice President JD Vance, signed the memo amid accusations, without substantiation, that these organizations facilitate political unrest. Legal experts worry it could blur the distinction between free speech and criminal activity.

Potential Legal and Financial Repercussions for Nonprofits

The implications of NSPM-7 extend to the IRS, where the directive aims to scrutinize tax-exempt groups potentially involved in political violence. This could spur new audits and threaten the tax-exempt status of many organizations, a financial blow most might not withstand. Patterson Belknap, a notable New York-based law firm, anticipates legal challenges to NSPM-7 but warns of immediate IRS audits.

IRS Oversight and Strategic Leadership Changes

The Treasury Department, under Acting IRS Commissioner Scott Bessent, is poised to play a significant role. Following leadership changes initiated by Trump, including the removal of previous IRS Commissioner Billy Long, Bessent’s supportive stance towards Trump’s initiatives suggests increased scrutiny of left-leaning institutions, potentially leading to IRS audits and legal challenges.

Nonprofit Sector’s Unified Response

Amidst intensified scrutiny, over 100 left-leaning nonprofits, including prominent organizations like the Open Society Foundations and the Southern Poverty Law Center, are banding together in defense. Proposed plans for a strategic “NATO-like” alliance aim to offer mutual support and legal aid to targeted individuals and groups.

Impact on Democratic Principles and Free Speech

The National Council of Nonprofits, the largest such network in North America, has openly criticized Trump’s memo as an attack on democratic values, emphasizing the risk it imposes on nonprofit efforts. President and CEO Diane Yentel described the directive as a threat to freedom of speech and essential nonprofit works.

This developing narrative continues to unfold, with legal experts, nonprofits, and governmental entities bracing for potentially significant impact on the American nonprofit landscape.