WASHINGTON, D.C. – Ways and Means Committee Chairman Jason Smith (MO-08) delivered the following opening statement at a Committee markup of legislation to increase transparency in America’s tax-exempt sector, hold bad actors accountable, prevent foreign influence in American politics and public discourse, and protect religious freedom.

As prepared for delivery.

“Good morning and welcome to today’s markup of legislation to increase transparency in America’s tax-exempt sector, hold bad actors accountable, prevent foreign influence in our politics and public discourse, and protect religious freedom.

“During the last few decades, tax-exempt organizations have experienced rapid growth in the United States. In 1985, 335,000 charities held $665 billion in net assets. Today, there are 1.6 million charities that have $4.8 trillion in net assets. The tax-exempt sector is about 15 percent of the economy, the same size as the state of California, and has grown to account for nearly $3.5 trillion in annual revenues. As more money flowed into this sector, it has become a prime target for misuse and abuse by foreign nationals and agents acting on behalf of foreign countries like China. 

“Too much of the tax-exempt sector operates in darkness, deliberately hiding in the shadows to avoid scrutiny. This Committee has uncovered incidents of organizations abusing their generous tax benefits while seeking to divide Americans, sow chaos in our communities, and manipulate American politics and public life.  

“For example, in 2024 the Committee found that Alliance for Global Justice, a 501(c)(3) organization, fiscally sponsored Samidoun, which the Biden Treasury Department then designated as a sham charity and fundraiser for the Popular Front for the Liberation of Palestine, a designated terrorist organization. However, Alliance for Global Justice was never required to disclose Samidoun as a project on their Form 990, despite giving them the benefit of tax-exempt status. 

“Other foreign nationals choose to donate directly to American nonprofits and can do so with the comfort of knowing that their donation will never be made public. Foreign nationals are welcome to contribute resources for the betterment of the American people, but we must draw the line at using U.S.-based nonprofits as Trojan horses for foreign interests. 

“Another example of foreign influence in the American nonprofit sector is the Swiss billionaire Hansjörg Wyss. He has given over $280 million to a large politically progressive hub that sponsors other nonprofit organizations and, in turn, support liberal campaigns and other political causes. American elections should not be subject to foreign influence, let alone major foreign funding laundered through our tax-exempt sector. It is illegal for Members of Congress to accept foreign donations. The same standard should apply to our nonprofit sector.

“More recently, this Committee’s oversight efforts in the investigation of Neville Roy Singham have uncovered how the American nonprofit system can be weaponized at scale. Shanghai Singham and his wife, with close ties to China, channel millions of dollars through nonprofits that, by design, obscure the true source of contributions. As I have said before, this is not a movement; it’s not grassroots activism; it’s a machine being subsidized by American taxpayer dollars. 

“That is why more transparency and today’s legislation is vital. These bills will rein in the rogue actors in the tax-exempt space and redirect the sector’s focus on its primary charitable purpose.

“Our first bill from Oversight Subcommittee Chairman Schweikert shines further light on the tax-exempt sector by requiring all tax-exempt organizations to publicly disclose foreign donations. This legislation specifically highlights contributions from foreign nationals from countries of concern, like China, North Korea, Russia, and Iran.

“Representative Malliotakis has a bill before us today that penalizes tax-exempt organizations that receive donations from foreign nationals and in turn donate to political committees, like Super PACs. This bill is aimed directly at stopping efforts to funnel foreign money into our political process and influence our elections. 

“Our next bill from Representative Smucker specifically addresses fiscal sponsorship. Tax-exempt organizations will be required to disclose certain information about the groups they are fiscally sponsoring. While most of these arrangements are legitimate and carry out the sponsoring organization’s charitable purpose, the Committee has found that some organizations are taking advantage of the lack of transparency these arrangements provide to skirt rules and fund bad and dangerous groups. 

“Lastly, we will consider legislation by Representative Moore of Utah that defends our nation’s sacred Constitutional right to freedom of religion. Faith-based organizations should be able to carry out their tremendous work in our communities, without the threat of removal of tax-exempt status. Moreover, the IRS should not be in the business of making determinations regarding an organization’s tax-exempt status based on specific religious beliefs or practices such organizations might hold.

“I appreciate each of our colleagues in bringing forward these policies that will go a long way to strengthening the oversight that is desperately needed in America’s tax-exempt sector.”