The Government shuts down

Legislation Restricting Nonprofit Boards: On Sept. 17, Senator Cotton (R-AR) introduced the Nonprofit Governance Integrity Act. The bill would amend the Internal Revenue Code of 1986 to prohibit 501(c)(3), 501(c)(4), or 501(c)(6) organizations from having board members who are citizens or nationals from a Foreign Entity of Concern. It includes an exemption for churches and conventions or associations of churches.

President Trump issued a memo to the Attorney General directing the U.S. Department of Justice (DOJ) and heads of federal departments and agencies “to investigate whether Federal grant funds are being used to illegally support lobbying activities (See, 31 U.S.C. 1352) and to take appropriate enforcement action.” This statement misinterprets federal law, however, which does not prohibit nonprofits or for profit businesses that receive federal grants, contracts, or cooperative agreements from lobbying.

A New York district court judge issued a preliminary injunction halting the $175 million worth of National Endowment for the Humanities (NEH) grants on First Amendment violations.

The Senate Appropriations Committee approved $207 million for FY26 while the House Appropriations Committee approved $135 million (35 percent cut) for the NEA and NEH. Advocates are encouraged to urge their Members of Congress to support the Senate’s number in the final FY26 appropriations bill.

House Interior Appropriations Committee has released its fiscal year 2026 budget proposal for the National Endowment for the Arts (NEA). The legislation recommends funding the NEA at $135 million—a 35% cut from its current appropriation and a reduction of $75 million.

While this move counters the administration’s proposal to eliminate the agency, it nonetheless represents a serious threat to public support for the arts nationwide.

Arts Education Funding at Risk

The Trump Administration notified State Education Agencies that they are withholding $6 billion in public school funding, including programs that support in-school and after-school arts education.

The National Endowment for the Arts (NEA) rescinded or suspended grants awards from fiscal years 2023-2026 for organizations nationwide due to programming that does not align with the NEA’s current requirements.

The White House released President Trump’s FY2026 budget proposal, which calls for the elimination of the National Endowment for the Arts (NEA), the National Endowment for the Humanities (NEH), and the Institute of Museum and Library Services (IMLS).

The Indiana General Assembly approved a budget of $3.43M in state funding for the arts through the Indiana Arts Commission—a 33% reduction in its current funding level.

The National Endowment for the Humanities (NEH) terminated congressionally approved funding that provides annual support to many local arts and cultural organizations.

Residents in cities, towns, and rural areas will lose access to exhibitions and programs that support the self-expressed needs of Hoosier communities. 

Local artists and arts organizations will have decreased access to the programming, services, and grants they rely on to generate income and serve their communities.

Loss of federal funding affects more than just programs—it means less money for salaries, artist fees, rent, utilities, and general operations. This translates to a broader decline in local economic activity.

New federal restrictions tied to grant contracts may limit artistic expression and force organizations to self-censor. Many are unsure what’s allowed:

• Could a play by a trans playwright be considered a violation?
• Is including pronouns in email signatures now off limits?
• Will hiring BIPOC staff be considered DEI?  

These rules are creating a chilling effect—organizations may steer away from meaningful, inclusive programming out of fear of violating unclear policies.