Sponsors (11)
Conditions federal funding and tax-exempt status for nonprofits on certifications of compliance with human trafficking, smuggling, fraud, bribery, and gratuity laws and removes an exemption limiting verification duties.
The bill centralizes verification and screening to reduce improper payments and prevent federal support for trafficking/smuggling, but it raises compliance costs, risks service disruptions for vulnerable people, and concentrates enforcement power that can lead to reputational harm and uneven implementation.
State and federal benefit programs, taxpayers, and providers will gain centralized verification and oversight (OMB/DHS guidance and uniform authority), which should reduce improper benefit payments and make enforcement more consistent across agencies and providers.
Nonprofits contracting with the federal government will be more effectively screened for human trafficking and alien-smuggling convictions, lowering the chance federal funds support illegal activity.
Nonprofits and taxpayers will face stronger penalties (repayment, denial of tax-exempt status) for certain offenses, creating deterrence against fraud, bribery, and gratuity violations among organizations receiving federal funds.
Nonprofits (especially small charities) risk losing tax-exempt status and federal funding if they fail to file required certifications, which could disrupt services for the low-income people who rely on them.
Nonprofits will face increased administrative burdens and costs to meet new reporting, verification, and tight certification deadlines, straining small organizations' capacity to deliver services.
People who rely on charitable providers—low-income individuals and immigrants—may face reduced access to services or longer delays if nonprofits stop offering benefits or implement unfamiliar verification processes.
Based on analysis of 3 sections of legislative text.
Official title: To direct the Director of the Office of Management and Budget to require the disclosure of violations of Federal law with respect to human trafficking or alien smuggling, and for other purposes.
Introduced February 10, 2025 by Lance Gooden · Last progress February 10, 2025
Requires nonprofit organizations that have or seek federal agreements, contracts, grants, or awards to certify they comply with federal laws prohibiting human trafficking, alien smuggling, fraud, bribery, and gratuities and that they have not been convicted under the alien-smuggling statute. Failure to certify or an OMB finding of violation can trigger repayment/withholding of federal funds and denial or revocation of federal tax-exempt status; the bill also removes an existing statutory exemption that currently limits documentation requirements by nonprofits when providing public benefits and orders DHS guidance and GAO reporting.