Policy Alert: Fiscal Sponsorship Transparency Act of 2026 Could Undermine Longstanding Nonprofit Infrastructure

Background

On July 16, 2026, Representative Lloyd Smucker (R-PA) introduced H.R.9721, the Fiscal Sponsorship Transparency Act of 2026. The bill has been referred to the House Ways and Means Committee and is not currently law.

If enacted, H.R. 9721 would require covered public charities to report information annually about each fiscal sponsorship arrangement. It would create significant tax liabilities for nonprofits and nonprofit leaders when an organization is determined to have improperly transferred charitable funds, and it could put donors’ charitable deductions at risk.

Although some provisions appear directed toward arrangements similar to Model C or regranting, the bill does not use established fiscal sponsorship model definitions. Its language is broad enough to reach multiple forms of fiscal sponsorship, as well as other arrangements in which a public charity receives and manages funds for a project or non-tax-exempt group.

Why This Matters 

H.R. 9721 takes an overly broad and punitive approach that could cause significant harm to nonprofits and the communities they serve. The bill would require project-level reporting without any minimum size or dollar threshold. Because nonprofit annual tax filings are generally public, it could make sensitive information about sponsored projects and organizational parties publicly available, including financial amounts, descriptions of activities, the designated officer responsible for an arrangement, and the dates the arrangement began and ended. 

If passed, these provisions could affect more than established fiscal sponsors. The bill could reach a wide range of public charities that receive and manage funds for non-tax-exempt projects or groups—from a church that launches a food bank to a Rotary Club hosting an afterschool program. The uncertainty, administrative burden, and potential liability could cause nonprofits to step away from fiscal sponsorship or limit the projects they are willing to support. 

That impact would fall most heavily on smaller, emerging, community-rooted, and movement-based projects that depend on fiscal sponsorship to access funding, employ staff, build organizational capacity, and carry out critical work. These projects need strong, values-aligned infrastructure, and this bill could make that infrastructure harder to access. 

TSNE’s Position

TSNE opposes H.R. 9721, the Fiscal Sponsorship Transparency Act of 2026, as currently written. 

TSNE supports transparency, strong financial stewardship, and meaningful accountability for charitable resources. Fiscal sponsors have a responsibility to maintain appropriate oversight and ensure that funds entrusted to them advance charitable purposes. These commitments are central to responsible fiscal sponsorship and to TSNE’s own practice. 

Fiscal sponsorship is not a loophole. It is a longstanding and lawful form of nonprofit infrastructure. When practiced responsibly, fiscal sponsorship helps communities respond to emerging needs, develop new solutions, and advance charitable work without requiring every project to establish and independently operate its own tax-exempt organization. 

We urge the House Ways and Means Committee and Congress not to advance H.R. 9721 as written. Instead, Congress should engage fiscal sponsors, sponsored projects, donors, nonprofit associations, and legal and financial experts in developing a more thoughtful approach.  

Any proposal should include clear definitions, reasonable reporting thresholds, appropriate privacy protections, safeguards for good-faith donors and nonprofit leaders, and a fair opportunity to identify and correct concerns before severe penalties apply. 

TSNE is committed to working with our partners and national networks to advance transparency and accountability while protecting the fiscal sponsorship infrastructure on which so many organizations and communities depend.