SPONSOR Act

Key Points

• The SPONSOR Act would make large tax-exempt nonprofits (501(c)(3) organizations) legally responsible — both criminally and civilly — for the actions of smaller groups or projects they financially sponsor through "fiscal sponsorships."
• The bill targets three specific types of illegal activity: aiding international terrorism, using force or threats to stop people from exercising constitutional rights, and physically blocking the movement of commerce (like blocking highways or ports).
• A "fiscal sponsorship" is defined as when a tax-exempt charity agrees to receive and manage money on behalf of a project or group that doesn't have its own tax-exempt status — a common arrangement for new grassroots organizations and community projects.
• Under the bill, sponsoring nonprofits would be automatically presumed responsible for making sure all sponsored money is used legally. However, they could defend themselves by proving they exercised "due diligence and reasonable oversight."
• If enacted, this could significantly discourage established charities from serving as fiscal sponsors for newer or smaller organizations, since they'd face potential criminal charges and lawsuits for actions they may not have controlled. This would make it harder for emerging advocacy and community groups to raise tax-deductible donations.