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Congress·In Committee·S. 3942

Sen. Cruz Introduces SPONSOR Act to Hold Nonprofits Liable for Actions of Sponsored Groups

SPONSOR Act

19 days ago·View on Congress.gov

Legislative Progress

Senate
House
President
Law

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."

    From policy text

    “the organization shall bear any criminal liability related to or arising from such fiscal sponsorship, and any civil liability concerning a covered activity related to or arising from such fiscal sponsorship.”
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  • 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).

    From policy text

    “by using force or a specified credible threat of force or by physically blocking the movement of any article or commodity in commerce to intentionally prevent the lawful movement of interstate and intrastate commerce.”
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  • 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."

    From policy text

    “The liability established by this subsection does not bar the organization described in subsection (c)(3) from defenses based on exercise of due diligence and reasonable oversight.”
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  • 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.
Criminal JusticeTaxesCivil Rights

Impact Analysis

Personal Impact

Scores: 1 = low, 5 = highSentiment: -5 to +5 (net benefit)

Milestones

2 milestones2 actions
Feb 26, 2026Senate

Read twice and referred to the Committee on Finance.

Feb 26, 2026

Introduced in Senate

Source Information

Document Type

Congressional Bill

Official Title

SPONSOR Act

Bill NumberS 3942
Congress119th Congress
ChamberSenate
Latest ActionRead twice and referred to the Committee on Finance.

Sponsor

Cosponsors

(1)
R: 1

Analysis generated by AI. Always verify with official sources.