On Jan. 23, President Barack Obama issued a memorandum withdrawing the Mexico City Policy. The Mexico City Policy prohibited organizations funded by the U.S. Agency for International Development (USAID) from using private, non-USAID funds to engage in activities including "providing advice, counseling, or information regarding abortion, or lobbying a foreign government to legalize or make abortion available." Foreign nonprofits, referred to as nongovernmental organizations (NGOs), were already barred from using U.S. funds to pay for abortions as a method of family planning. However, the Mexico City Policy went further and ultimately restricted the free speech rights of government grantees.

President Clinton overturned the Mexico City Policy, also known as the Global Gag Rule, following its imposition by the first President Bush. President George W. Bush reinstated the policy in 2001, further distorting the distinction between the government-funded and privately funded work of nonprofits. Bush implemented the policy through conditions in USAID grant awards and extended the policy to "voluntary population planning" assistance provided by the State Department.

The Obama memo states, "These excessively broad conditions on grants and assistance awards are unwarranted. Moreover, they have undermined efforts to promote safe and effective voluntary family planning programs in foreign nations." With regard to conditions in voluntary population planning assistance and USAID grants, under Obama's memo, the Secretary of State and the administrator of USAID must waive conditions in any current grants and advise grantees that they have been waived.

In a statement released after the memorandum was issued, Obama said; "For too long, international family planning assistance has been used as a political wedge issue, the subject of a back and forth debate that has served only to divide us. [. . .] It is time that we end the politicization of this issue." The statement also noted the president will work with Congress to restore U.S. funding for the United Nations Population Fund "to reduce poverty, improve the health of women and children, prevent HIV/AIDS and provide family planning assistance to women in 154 countries." Notably, Obama's action on the global gag rule does not mean that U.S. funds can be used for abortions.

In 2003, OMB Watch highlighted a report, Access Denied: U.S. Restrictions on International Family Planning, which found that the global gag rule "led to closed clinics, cuts in healthcare staff and dwindling medical supplies, leaving women, children and families without access to vital healthcare services." In October 2004, OMB Watch released Continuing Attacks on Nonprofit Speech: Death By a Thousand Cuts II, which documented attempts to limit the policy voice of nonprofits, including the global gag rule.

The very controversial issues of abortion and family planning services notwithstanding, the danger in the global gag rule lies in the restrictions on organizations' private funds. Nonprofits have criticized the program because if they received U.S. funds, they could not use private funds (including money from other countries) to provide counseling about or perform abortions, even in countries where abortion is legal. The federal government was able to control speech, conditioned on receipt of government money, and impact the mission of many organizations through these restrictions.

In the past, courts have ruled that restrictions on the privately funded speech of nonprofit government grantees are a violation of the First Amendment.

The chairman of the House Foreign Affairs Committee, Howard Berman (D-CA), issued a statement along similar lines. He said, "This policy — which would violate the constitutional right to freedom of speech if placed on U.S.-based non-governmental organizations — applied even if abortion-related services were funded only with non-U.S. funds, and even if abortion was legal in the country in which services were provided."

Opposition to the policy has existed because of the implications for family planning and abortion, but the fundamental free speech issues and implications for the mission of nonprofit organizations are also of vital importance. Federal restrictions on private funds, conditioned on receipt of government grants, amount to an unconstitutional coercion of speech and appropriately should be curtailed.