Today, I received an email blast from The National Network of Fiscal Sponsors (NNFS), indicating that on July 16, the Fiscal Sponsorship Transparency Act of 2026 was introduced in the House (H.R. 9721), with it scheduled for markup by the Ways & Means Committee on Wednesday. July 22 at 10 a.m. (that’s tomorrow as I write this and probably today as you read this!)
Given the timing on this, I’ve only given it a quick perusal but it appears to amend Code Section 6033 to add a fiscal sponsorship disclosure requirement. It then provides a definition of a “fiscal sponsorship arrangement” as an arrangement—
(A) between the organization and another person that is not exempt from tax under section 501(a),
(B) under which—
(i) the [applicable] organization agrees for consideration to receive and administer amounts on behalf of such other person, or
(ii) (I) the organization publicly solicits amounts for carrying on a specifically identified project that is represented as a means to further an exempt purpose of the organization,
(II) the organization agrees to receive and administer amounts directed to such project and make such amounts available for the organization to carry out the project (less an amount specified in the arrangement to be used by the organization for other purposes), and
(III) either the organization or such other person may terminate the arrangement, and
(C) under which the organization retains discretion and control over such amounts to ensure such amounts are used to further an exempt purpose of the organization.
The legislation states that applicable organizations do not include private foundations or DAFs.
The bill goes on to impose an excise tax on “improper conduit arrangements” under a new Code Section 4960A. An improper conduit arrangement is “with respect to a specified tax-exempt organization, an arrangement (express or implied) with another person under which (A) contributions are solicited or received to be transferred to a specifically identified person not exempt from tax under section 501(a), and (B) the organization fails to exercise discretion and control over the use of the funds.” Specified tax-exempt organizations include all current Section 501(c)(3) orgs, with a five year look back.
Some random thoughts late on this Tuesday:
- The first thing I note is that “improper conduit arrangements” are not the opposite of “fiscal sponsorship arrangements,” so I’m trying to visualize the Venn diagram for that.
- I think they are trying to distinguish between fiscal sponsorship and fiscal agency, but that is going to need to be spelled out in much greater detail.
- I also note that the legislation focuses on the fiscal sponsor, and not the sponsored organization or any other organization relying on the designation. Specifically, can a private foundation give to a fiscal sponsor without having Code Section 4942 or 4945 problems? Can donors safely take a Section 170 deduction for them?
- Lastly, I’m curious how this would interface with state solicitation and registration laws.
Would love others observations as this goes forward!
Quickly, eww
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