IMPORTANT ALERT FOR APPALACHIA: Protect Our Region’s Philanthropy, Recovery, and Future
Wednesday, May 14, 2025
At the Appalachia Funders Network, we rarely send out communications focused solely on advocacy. However, earlier today, the House Ways and Means Committee advanced measures that could directly impact not only our member organizations but the very infrastructure of civil society in our region—perhaps more than anywhere else in the country.
Right now, decisions are being made in Washington that threaten the very resources Appalachia depends on—from the foundations that support our communities to the federal commissions and programs that have long filled gaps where private markets and public systems fall short.
We promised to keep you informed so you can effectively share the stories from your community as congress weighs these massive changes.
Note: While national organizations are encouraging people to focus primarily on the excise tax (endowment tax) provisions and the bill that would allow the executive branch to remove tax status, in Appalachia, we know other programs are also incredibly important to our communities.
Our Regional Commissions Are Under Attack
In the fine print of the White House’s proposed budget, six of the seven regional commissions serving distressed areas across the U.S. are marked for elimination.
Only the Appalachian Regional Commission (ARC) would remain—spared not by accident, but because it serves key swing states and the Vice President’s purported home region and is also organized across multiple state agencies and partners.
For FY2024, total congressional appropriations for ARC was $400 million. The current proposal drops ARC’s budget from $12 million.
What’s Happening
On May 14, House Republicans introduced a new tax package that would dramatically reduce the ability of foundations to support communities like ours. This afternoon, it was approved by the House Ways and Means Committee with no changes on a party line vote of 26-19. Now, the bill goes to the full House and then on to the Senate. The goal is for this package to pass in its entirety by July 4th. That is our deadline.
The Trump Administration’s new budget proposal would gut funding for critical services and eliminate every federal regional commission but one. Ours.
We will have more information in next week’s AFN newsletter, but for now check this resource list from the Council on Foundations for more information on how philanthropy will be impacted by the One, Big, Beautiful Bill. Here is an overview:
Threats to Appalachian Philanthropy
The proposed legislation includes a tiered increase on private foundation excise taxes:
Foundations under $50M in assets: 1.39% (unchanged)
$50M–$250M: increases to 2.78% (double the current tax)
$250M–$5B: increases to 5%
$5B+: jumps to 10%
As we’ll discuss in greater detail in next week’s release of the “State of Funding in Appalachia Report”, nearly ¾ of the philanthropic funding in Appalachia comes from outside of the region, particularly in rural areas. According to the United Philanthropy Forum, these tax hikes would represent a net 600% increase and mean fewer grants, less local investment, and a reduced ability to respond to our region’s challenges.
Other damaging provisions include:
A cap on corporate charitable giving deductions, likely dramatically reducing corporate philanthropy
New taxes on income from name licensing and public research
Federal Cuts Will Hit Appalachia First and Hardest
The President’s proposed budget would cut $163 billion from non-defense programs—gutting:
Public health and addiction services
Affordable housing and rental assistance
K–12 education
Climate and clean energy programs
Chronic disease prevention and research
These are the very systems our communities depend on—and cuts like these will leave Appalachia with even fewer safety nets and more to carry on our own shoulders.
Creative economies are also under threat. Arts funders are now grappling with how to navigate the proposed elimination of the National Endowment for the Arts—an institution that has long supported cultural work, local storytelling, and regional resilience in Central Appalachia. Read more here
Rural Investment Tools Like NMTC Left Out—Appalachia at Risk
The House Ways and Means Committee advanced tax legislation does not include an extension of the New Markets Tax Credit (NMTC)—a program that is essential to driving economic investment in rural communities, including many in Central Appalachia. Without congressional action, the NMTC will expire at the end of 2025. The NMTC is a proven, flexible tool that empowers local communities to attract investment where it's needed most. In Appalachia, it's been used to revitalize coal-impacted economies, build community facilities, and spur job creation in areas left behind by traditional capital markets.
Over 30% of NMTC financing in 2024 supported rural communities
NMTC helped deliver over $3 billion in project financing to American manufacturing businesses
It supports locally-driven solutions for business expansions, health care, child care, and more—not one-size-fits-all federal mandates
If your foundation or organization has benefited from the NMTC, or works in communities that have, now is the time to speak up. Congress needs to hear that Appalachia can’t afford to lose this tool.
Executive Power to Revoke Nonprofit Status Without Due Process
A provision in the House tax package would expand Section 501(p) of the Internal Revenue Code, allowing the Treasury Secretary to revoke a nonprofit’s tax-exempt status if the organization is designated as supporting terrorism. While providing material support to terrorist organizations is already a criminal offense under existing law, this proposal would change how nonprofit tax status is handled in such cases.
Key changes include:
Expanded authority for the Treasury Secretary to designate organizations without prior court proceedings
Limited exemptions for certain humanitarian aid approved by the Office of Foreign Assets Control
New disclosure requirements from the Treasury Department
Minimal due process protections for affected organizations
Although the Joint Committee on Taxation estimates the revenue impact would be negligible, the proposed expansion raises concerns about how it might affect nonprofits operating in complex or international environments.
In Appalachia, many nonprofits (or those with regional counterparts) work across borders, support immigrant or refugee communities, or provide humanitarian aid following a climate event. This change could introduce uncertainty or risk for organizations operating in these contexts. Ensuring due process and clear standards is essential to maintaining trust in the regulatory process and avoiding unintended consequences for community-based organizations.
These policies weaken the very institutions that step in when systems fail—especially in rural and under-resourced areas like Central Appalachia
FEMA Administrator Fired After Speaking Out
Acting FEMA Administrator Cameron Hamilton was terminated just one day after testifying to Congress that FEMA should not be eliminated—directly contradicting the Trump administration’s position.
This move underscores a broader trend: elimination of disaster response infrastructure and the dismantling of community-serving agencies. After Appalachia has weathered multiple 1000-year floods in less than 1000 days, including Helene, this would be a stark loss to the communities impacted by and most vulnerable to intenifying climate events. It removed the lone federal agency charged with supporting and coordinating with states when a disaster goes above their capacity to manage.
What Appalachia Must Do Now
Contact Congress Today
AFN will send out new guidance and suggested talking points in next week’s newsletter. And, we’ll continue to share access to the Forum’s Advocacy Action Center where our members can contact your members of Congress. Tell them to oppose the excise tax increase and support preserving and expanding the universal charitable deduction.
NOTE for private foundations: you can communicate on this issue under the “self-defense” exception. Please follow your organization’s policies on advocacy activity. Read more about this exception on the Council of Foundation website here.
When speaking to your congress representative, tell them:
Oppose the private foundation tax hike
Protect and expand the universal charitable deduction
Keep regional commissions funded
Resist efforts to defund disaster recovery and rural development
Most importantly, tell specific stories from your community about projects and programs that these moves could harm. Don’t assume folks in congress understand our sector.
This isn’t just about policy—it’s about place. About people. About whether Appalachian communities will have the tools we need to survive and thrive.
Let’s make sure Washington hears our voices loud and clear.