Summary

Makes certain 501(c)(3) organizations that serve as fiscal sponsors potentially liable under the Internal Revenue Code for specified violent, obstructive, or terrorism‑linked activities carried out in connection with projects they fiscally sponsor when the sponsor expends funds and a donor claims (or is told they can claim) a section 170 charitable deduction. "Covered activities" include substantial assistance to a U.S.-designated foreign terrorist organization, use of force or credible threats to interfere with constitutional rights, and blocking interstate or intrastate commerce. The provision defines fiscal sponsorship, creates a presumption that sponsors are responsible for lawful use of funds, and permits defenses based on due diligence and reasonable oversight.

• Treats 501(c)(3) fiscal sponsors as potentially liable for certain violent, obstructive, or terrorism‑linked acts connected to projects they fund.
• Applies only when the sponsor expends funds for a fiscal sponsorship and a donor is allowed (or represented as eligible for) a section 170 charitable deduction.
• Defines fiscal sponsorship as a relationship where a 501(c)(3) receives and administers funds for a non‑exempt project while keeping discretion and control over funds.
• Specifies three categories of "covered activity": assistance to a U.S.-designated foreign terrorist organization, force or threats interfering with constitutional rights, and force or obstruction preventing commerce.
• Creates a presumption that fiscal sponsors are responsible for lawful use of donated funds, but allows defenses based on due diligence and reasonable oversight.
• Targets donors and charitable deductions indirectly by tying potential sponsor liability to claimed section 170 deductions.
• Does not specify enforcement procedures, penalties, or administrative funding within the provided text.
• Likely to increase compliance costs and risk for charities and could reduce willingness to serve as fiscal sponsors, particularly for controversial projects.