Legal experts gathered for an online panel about challenges being faced by Vermont's creative and nonprofit community amid an ever-evolving federal landscape. Specifically, the presentation focused on how organizations are faring under executive orders that aim to impact funding decisions.
"We want to make sure that the business community, whether you are for profit or nonprofit, is aware of current legal issues," said Nicole Killoran, attorney, professor of law, and director of the Vermont Small Business Law Center, which provides free access to legal services and legal information for Vermont's nonprofits and businesses. "That's part of why we're here today. We're trying to prepare everybody to look into the future."
Killoran noted that Vermont has one of the nation's highest concentrations of nonprofits, with roughly 6.3 public charities per 1,000 residents. Many of those organizations, she said, rely on federal funding through the National Endowment for the Humanities (NEH) or the National Endowment for the Arts (NEA).
Jared Carter, attorney, professor of law, and constitutional law expert, said executive orders issued by President Donald Trump earlier in the year have proven challenging for nonprofits to navigate. Specifically, he said, executive orders requiring grant applicants to demonstrate that they will not "advance gender ideology" or operate "illegal DEI programs" have proven problematic, in part because those terms are vague, and a lack of clarity around the meaning of those criteria hinders one's constitutional right to due process.
"When they use terms like illegal DEI or gender ideology, and there's no standard where they've explained what that means, you have no ability to use the process to protect your funding or rights," said Carter. "This idea of vagueness is similar. How do we know what we're supposed to do if they don't explain what these things mean?"
Carter said in his experience, the requirements tied to funding in the executive orders have led to difficult conversations within nonprofit boards.
"I'm a member of several boards here in Vermont and we're having real conversations about how we balance our organizational mission around, say, inclusivity, with federal eligibility requirements for grants," he said. "These are important and legitimate concerns, and they sap energy from organizations."
Carter said it is his opinion that requirements around gender ideology and DEI will not withstand the "rule of law."
"At first blush, as a First Amendment lawyer I would say, well wait a minute, they're telling people what they can and cannot say, or can and cannot promote," said Carter. "Isn't that a violation of their First Amendment rights? I think we'll see that the answer is a resounding, 'Yes it is.'"
Carter said multiple organizations across the United States have already seen success in challenging the executive orders with regard to how they impact funding through the NEH and NEA. Data shared by Carter showed that there are 230 active lawsuits nationally to challenge executive actions and that of those, 190 have resulted in injunctions.
"I wish I could bat that in my litigation practice," said Carter. "That's unbelievable. It just goes to show the power of the law."
Killoran said those who work for or are on the boards of nonprofit organizations should seek to inform themselves about the evolving legal landscape and should consider seeking legal counsel.
"If you feel like your funding is being threatened it may be necessary to contact counsel and speak with an attorney, and establish that relationship as early as possible," she said. She noted that the Vermont Small Business Law Center can make referrals and provide 10 free hours of legal counsel.
"Having an attorney, for a small nonprofit, is critical," she said. "They help you identify what you need to be aware of, they help you understand what you need to understand, and they can help you spot the things you may not see without legal training. That's part of why we do what we do. We can see into someone's circumstances and anticipate what they may need."
John Stockham, student clinician at the Vermont Small Business Law Center, said nonprofit organizations can mitigate their legal risk by ensuring that board members are clear on an organization's purpose and mission and ensuring that the board's work aligns with that purpose and mission.
"You wrote a purpose for your organization when you became a nonprofit," he said. "That is what the IRS is relying on to classify you. If that purpose is not broadly written, the scope of everything you're doing could be in question and you need to make sure that's not happening."
Keeping strong records, he said, is key, and those records should be clear, concise, and be in alignment with an organization's purpose and mission. For example, he said, the scope of a board's minutes should be limited to necessary details such as when and where a meeting occurred, who was there, what decisions are made, what action is taken, and how it relates to the business of the organization. Documenting a play-by-play of opinions and discussion, he said, is not advisable.
"You need to be very specific about the relevance of what you're including," said Stockham.
At the conclusion of the meeting, Carter said he hopes that attendees would leave with some optimism.
"While I 100% get that people feel concern and consternation about the landscape we're in, I believe, and I mean this genuinely, that the rule of law is alive and well," he said. "I think there's opportunity for creativity and energy and action even in a world that maybe doesn't feel like it's supporting us the way that we want to be right now."
This News item by Lauren Harkawik originally appeared in The Deerfield Valley News and was republished in The Commons with permission.