Moran, Cruz Introduce Legislation to Deter Non-Profit Sponsorships of Left-Wing Radicals

U.S. Rep. Nathaniel Moran (TX-01) and Sen. Ted Cruz (TX) introduced the Stop Proxy Organizations Nurturing Subversive Operations and Riots (SPONSOR) Act, bicameral legislation that will prevent nonprofit organizations from funneling money to progressive, left-wing organizations that intentionally agitate or seek to cause harm and destruction in our country.

This legislation will penalize large 501(c)(3) organizations by holding them liable for the conduct of the projects they sponsor for actions such as burning down cities, rioting outside government facilities, college campuses, or even in places of worship. The bill amends Section 501 of the Internal Revenue Code of 1986 to close loopholes by establishing legal accountability between sponsoring organizations and their sponsored projects.

"Taxpayers deserve to know their hard-earned dollars aren't subsidizing chaos under the cover of charity," said Congressman Moran. "This legislation closes loopholes bad actors have exploited for too long, ensuring fiscal sponsors can't simply look te other way while funded projects undermine the law. Accountability is the foundation of public trust."

"Loopholes in the Internal Revenue Code allow radical groups to use tax-exempt funds to bankroll violent, anti-American activity opaquely and therefore with impunity," said Senator Cruz. "The violence that has spread in recent years in our cities and on our college campuses is not organic. It is enabled by funding from well-resourced organizations that exploit such loopholes, including and especially through fiscal sponsorships. My legislation closes these loopholes, and I urge my colleagues to advance it with the necessary expediency."

Background:

Fiscal sponsorship allows new organizations to operate under the umbrella of an established nonprofit while receiving tax-deductible donations. However, under current practice, these arrangements can continue indefinitely and often allow sponsored projects to avoid filing their own public disclosure forms, limiting transparency and accountability.

In recent years, some radical activist groups have used these structures to raise funds while engaging in activities such as blocking highways, occupying buildings, vandalizing property, and disrupting interstate commerce. In some cases, organizations operating under fiscal sponsorship have even been linked to networks accused of raising money for designated terrorist organizations.

The SPONSOR Act would ensure that nonprofit sponsors bear civil and criminal liability when funds they administer are used to support illegal activities, including aiding international terrorism, intimidating individuals exercising constitutional rights, or obstructing commerce. The bill also establishes a presumption that sponsoring organizations are responsible for ensuring proper oversight of funds distributed through fiscal sponsorship.

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