In September 2025, President Trump issued National Security Presidential Memorandum 7 (NSPM-7), “Countering Domestic Terrorism and Organized Political Violence.” Framed as a counterterrorism measure, the memorandum directs the Department of Justice, the Department of the Treasury, the IRS, and the FBI’s Joint Terrorism Task Forces (JTTFs) to investigate and disrupt organisations, funders, and individuals it directly or indirectly links to political violence.

The ACLU notes that the rhetoric in the Memorandum is seen by many in civil society “as a threat to human rights, civil liberties, and democracy-building work,” and calls the federal action “a deliberate attempt to sow fear and intimidate and silence opposition to the president’s abuses.”

For US foundations and the nonprofits and donors they work with, NSPM-7 has major implications for grant-making, donor relationships, and third-party funding chains. Rather than typical domestic civil society oversight, the Memorandum uses tools built for foreign terrorism and financial crime. Compliance, legal, and research teams at foundations are now being asked to know exactly who their funds reach, and to be able to defend their process of finding this information.

From counterterrorism to civil society oversight

NSPM-7 directs JTTFs to investigate not only the organisations it considers linked to political violence, but also the people and entities around them. Section 2 of the memorandum specifically tasks JTTFs with investigating:

  • “institutional and individual funders, and officers and employees of organizations, that are responsible for, sponsor, or otherwise aid and abet” the conduct in question; and
  • non-governmental organisations and individuals with ties to foreign governments, agents, or foundations who may be violating the Foreign Agents Registration Act (FARA) or engaged in money laundering that supports domestic terrorism.

As legal commentary from Arnold & Porter notes, this Memorandum puts individual funders, officers, and employees in the same investigative frame as the organisations they support. This choice is a critical expansion of who can be scrutinised, and on what basis. The Brennan Center has separately observed that this creates pressure on major grant-making organisations, both on the entities providing funding, and on the individual officers and employees who authorise it.

The memorandum also reaches into two new areas that are often considered separate from grant compliance:

Treasury and financial institutions. The Treasury Secretary is directed to trace illicit funding streams and to issue new guidance to financial institutions on filing Suspicious Activity Reports tied to domestic terrorism. This widens the population of transactions banks may flag and could potentially include ordinary grant disbursements to organisations adjacent to activity deemed problematic.

IRS oversight of tax-exempt status. The IRS is instructed to ensure no tax-exempt entity is directly or indirectly financing political violence, and to refer organisations and their employees to the DOJ. The IRS has historically used its authority to revoke exempt status sparingly, but NSPM-7 signals an intent to apply it more assertively to an organisation’s funding relationships.

Why “indirect” funding is the operative phrase

Funders are being held accountable for indirect financial links, through grantees, fiscal sponsors, subgrantees, or partner organisations. That materially changes the due diligence perimeter for a foundation: it is no longer enough to know a direct grantee is in good standing. Foundations may also need visibility into who that grantee funds, partners with, or is otherwise financially connected to, and whether any of those downstream relationships could be characterised by the Trump administration as supporting the broadly worded categories of activity the memorandum describes.

Despite widespread criticism, the due diligence realities still stand: a partner organisation can look compliant in isolation, but it could carry funding ties, board overlaps, or programme relationships that a regulator or JTTF could characterise as a connection worth investigating.

What this means for foundations’ due diligence

For research, compliance, and legal teams at foundations, NSPM-7 raises the due diligence bar in a few ways:

  • Pre-award due diligence on prospective grantees, fiscal sponsors, and partner organisations, including understanding leadership, funding sources, and affiliated entities.
  • Post-award monitoring, since a grantee’s activities and associations can change after funds are disbursed. Arnold & Porter’s guidance to affected organisations specifically recommends both pre- and post-award due diligence on grantees, funders, fiscal sponsors, and partners.
  • Donor and funder screening, given that NSPM-7 explicitly puts “institutional and individual funders” in its investigative scope, a foundation’s own donor base may itself now warrant closer screening for problematic ties.
  • Network mapping, to surface indirect links such as shared board members, co-funders, downstream subgrantees. These would not appear in a traditional compliance check but could be exactly what a JTTF or IRS referral looks for.
  • Ongoing monitoring of agency guidance, as DOJ, Treasury, and IRS implementation details are still developing and will likely refine what “indirect” support and “aiding and abetting” mean in practice.

Most foundations are not resourced to do this kind of continuous, network-level due diligence manually, particularly across large or international grant portfolios, and particularly when the risk arises not from a single bad actor but a web of second- and third-degree connections.

Calling in reinforcements: Built-for-purpose AI

Xapien is built to fill in these gaps that traditional due diligence checks miss. Rather than a static database check or a single-name search, Xapien’s platform generates a real-time, comprehensive due diligence report on an individual or organisation. It reveals related entities, officers, donors, and partners, and flags affiliations, adverse media, sanctions and watchlist hits, and other risk indicators across languages and jurisdictions.

For foundations, that means a prospective grantee, donor, or partner can be assessed on its own record alongside the connections around it, which is exactly the kind of indirect relationship NSPM-7 calls out. Reports can be refreshed and re-run as relationships evolve, supporting the ongoing, post-award monitoring that enables foundations to comply with NSPM-7. And because reports are generated in minutes rather than days, research teams can screen at the scale their grant-making actually requires, rather than triaging only the highest-profile relationships.

As federal scrutiny of civil society funding expands, foundations that can demonstrate rigorous, defensible, and consistent due diligence will be best placed to protect their grantees, their donors, and their own tax-exempt status.

About Xapien

Xapien is an AI-powered due diligence platform that generates comprehensive background reports on individuals and organisations in minutes. It covers global web and media, corporate registry data, and sanctions, watchlist, and PEP lists.

Foundations and nonprofit organisations rely on Xapien for due diligence on grantees, donors, and other third parties.

Book a demo today to find out how Xapien can support your foundation’s donor and grantee due diligence processes.

References and further reading