SPONSOR Act

Summary

Creates civil liability rules for 501(c)(3) charities that act as fiscal sponsors: if a charity receives and administers funds for a non‑exempt project and allows or represents that donors can claim a charitable deduction, the charity can be held responsible for certain "covered activities" carried out in connection with that fiscal sponsorship. Covered activities include materially assisting a designated foreign terrorist organization, use of force or credible threats that injure or intimidate people exercising constitutional rights, and force or obstruction that prevents lawful movement of commerce. The bill establishes a presumption that fiscal sponsors are responsible for how funds are used but preserves defenses based on reasonable oversight and due diligence.

• Makes 501(c)(3) fiscal sponsors potentially civilly liable for certain unlawful acts carried out in connection with sponsored projects.
• Defines "fiscal sponsorship" as a charity receiving and controlling funds for a non‑exempt project to ensure funds meet exempt purposes.
• Specifies three categories of "covered activity": aiding a designated foreign terrorist organization, violent or threatening acts that interfere with constitutional rights, and force/obstruction that blocks commerce.
• Creates a presumption that fiscal sponsors are responsible for lawful use of funds but allows defenses if reasonable oversight and due diligence were exercised.
• Applies when the sponsor expends funds for the fiscal sponsorship and permits or represents that a donor may claim a charitable deduction for the contribution.
• Does not provide new federal funding or explicitly change criminal penalties; focuses on creating civil liability risk.
• Likely to increase compliance, monitoring, and legal costs for charities that act as fiscal sponsors.
• May chill fiscal sponsorship arrangements, especially for grassroots or higher‑risk projects, and could prompt constitutional and legal challenges over protest‑related provisions.