Smucker Fiscal Sponsorship Transparency Act Advances Through Ways and Means Committee

WASHINGTON- Legislation introduced by Rep. Lloyd Smucker (PA-11), a senior member of the Committee on Ways and Means, was approved during today's committee markup.

The Fiscal Sponsorship Transparency Act was approved by a vote of 23-15.

Rep. Smucker's legislation cracks down on bad actors who exploit charitable organizations to collect tax-deductible donations without public accountability.

Fiscal sponsorship is a longstanding practice that allows established charities to accept tax-deductible donations on behalf of projects or organizations that have not yet obtained their own tax-exempt status. While most fiscal sponsorship arrangements serve legitimate charitable purposes, there are currently no uniform public reporting requirements for these arrangements, making it difficult to identify abuse.

That lack of transparency has already been exploited. One recent example involved Samidoun, an organization sanctioned by the U.S. Department of the Treasury for supporting the Popular Front for the Liberation of Palestine (PFLP), a designated foreign terrorist organization. Samidoun was able to receive charitable donations through a fiscal sponsorship arrangement while operating under the umbrella of a U.S. tax-exempt organization.

The Fiscal Transparency Act would shine a light on these agreements by requiring public disclosure of fiscal sponsorship arrangements, preventing abusive conduit arrangements, and establishing penalties for organizations that improperly funnel charitable donations to non-exempt entities.

"Fiscal sponsorship arrangements play an important role in America's charitable sector, and the vast majority are operated responsibly and in good faith. Congress should strengthen public confidence in these arrangements by ensuring greater transparency and accountability whenever taxpayers provide generous tax benefits for charitable giving. Tax-exempt status is a public trust, and taxpayers deserve confidence that charitable dollars are being administered consistent with charitable purposes," said Rep. Lloyd Smucker.

"This bill protects legitimate charities by promoting transparency, reinforcing responsible stewardship, and ensuring that bad actors cannot undermine public confidence in the non-profit sector," Smucker continued.

"The fact that tax-exempt organizations can funnel massive sums of money to an untold number of other entities, without disclosing the recipients, creates significant blind spots in our oversight efforts," said Ways and Means Committee Chairman Jason Smith (MO-08). "Thanks to Representative Smucker's leadership, we have an opportunity to inject much-needed accountability and transparency into the financial relationships that exist between sponsoring organizations and their projects. I appreciate his advocacy on behalf of American taxpayers as we work to go after bad actors that are hiding behind tax-exempt status."

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