In light of the aggressive use of executive orders by the Trump administration – many of which directly affect nonprofits and the sector as a whole – this is an important time to review how these orders work and how they can impact nonprofit organizations.
Executive orders have been a part of U.S. governance since George Washington, though they are not explicitly mentioned in the Constitution. These are formal directives issued by the President to manage the Executive Branch and are binding on Executive Branch agencies. Executive orders can be used to implement or clarify existing federal laws or policies, or determine how federal agencies engage with private organizations, including nonprofits. However, they are not a substitute for legislation or formal regulations.
The current process for implementing executive orders was outlined in a 1962 executive order which requires that all such orders be published in the Federal Register, the same publication where federal agencies publish proposed and final rules. Once published, an executive order can be revoked or amended by issuing a new one, and Congress can choose to ratify or challenge the order when there is ambiguity over its authority.
While the President holds significant powers under Article II of the Constitution, those powers are not unlimited. Federal courts evaluate executive orders based on three key questions:
- Has Congress delegated any authority to the President to act via an executive order?
- If so, what is the scope of that delegation?
- Did the President stay within that scope?
One landmark case that explored these limits was Youngstown Sheet & Tube Co. v. Sawyer (1952), where the Supreme Court struck down President Truman’s executive order to seize control of the nation’s steel mills during the Korean War. The Court ruled that the order was neither authorized by the Constitution nor any statute, and that the President did not have implied authority under his military powers to intervene in labor disputes.
In more recent times, executive orders have been used to address urgent matters like the COVID-19 pandemic. For example, the Defense Production Act was invoked to manage national defense and food supply disruptions. However, even in times of crisis, deference to executive orders is not automatic. In Kentucky v. Biden (2022), the Sixth Circuit ruled that the President lacked authority to mandate COVID vaccinations for federal contractors under the Federal Property and Administrative Services Act of 1949 (FPASA). The court concluded that FPASA’s focus on improving efficiency in federal procurement did not extend to setting policies that affected contractors’ operations, such as vaccination mandates.
Similarly, President Biden’s executive order directing the Department of Labor to set a $15 minimum wage for federal contractors under FPASA faced legal challenges. While the Tenth Circuit upheld the order in Bradford v. U.S. Department of Labor (2024), the Ninth Circuit struck it down in State of Nebraska v. Su (2024). The Ninth Circuit found that FPASA’s intent was to ensure value in federal contracts, not to regulate the wages of contractor employees. Despite the conflicting rulings, the Supreme Court declined to resolve the matter, leaving the issue unresolved at the federal level.
For nonprofits, particularly those that contract with federal agencies or receive federal funding, these legal battles are significant. Executive orders can have direct and profound effects on their operations, especially in areas like funding continuation, labor standards and procurement rules for example. Nonprofit leaders must carefully examine the scope and legality of executive orders that may impact their work.
As the nonprofit sector continues to navigate these complexities, organizations should stay informed about relevant executive orders and the legal challenges that may arise. GCN is committed to monitoring these developments and providing timely updates on how they may affect nonprofit organizations and the broader sector.
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