Sponsor
Nathaniel Moran
Representative · R-TX
Representative · R-TX
The bill increases oversight and donor confidence in fiscal sponsorships to reduce misuse of funds, but it also raises legal and compliance burdens that could reduce sponsorship availability and chill support for controversial or high-risk causes.
Nonprofits that serve as fiscal sponsors (including 501(c)(3) organizations) are pushed to adopt stronger oversight and due diligence, increasing accountability and lawful use of donated funds.
Taxpayers and donors gain greater confidence that tax-deductible contributions routed through fiscal sponsors are less likely to be used to support terrorism or violent interference with rights or commerce.
Donors and sponsored projects—particularly those engaged in controversial advocacy, protest-related activity, or immigrant-focused work—may lose access to fiscal sponsorships or face a chilling effect because sponsors decline 'risky' projects or avoid broadly defined covered activities.
501(c)(3) organizations acting as fiscal sponsors face increased legal risk and potential liability for projects they fund, which could deter organizations from offering sponsorships and shrink available charitable infrastructure.
Smaller charities may incur higher compliance and monitoring costs to establish legal defenses and oversight, diverting limited resources away from programs and services that benefit low-income individuals.
Based on analysis of 4 sections of legislative text.
Creates tax-law liability for 501(c)(3) fiscal sponsors when sponsored projects engage in specified violent acts or provide substantial assistance to designated foreign terrorist organizations, unless sponsors show reasonable oversight.
Official title: To amend the Internal Revenue Code of 1986 to provide that 501(c)(3) organizations are liable for the use of funding provided as a fiscal sponsor.
Introduced March 4, 2026 by Nathaniel Moran · Last progress March 4, 2026
Makes certain 501(c)(3) charities that act as fiscal sponsors legally accountable when funds they receive and control are used to support specified violent or terror-linked activities by sponsored projects. The bill defines covered activities (including providing substantial assistance to designated foreign terrorist organizations, using force or credible threats to interfere with constitutional rights, or blocking commerce), creates a presumption of sponsor responsibility when a donor claims a charitable deduction, and permits defenses based on due diligence and reasonable oversight.