WASHINGTON, D.C. – Tax-exempt organizations that abuse the generous benefits afforded to them courtesy of the U.S. taxpayer will face more scrutiny and accountability under legislation approved by the Ways and Means Committee. Having conducted an extensive investigation into the tax-exempt sector, the Committee has advanced solutions that will require such organizations to publicly disclose the foreign donations they receive and information regarding their fiscally-sponsored projects. Any tax-exempt organization that accepts foreign donations and then funnels money to political committees will face penalties as well. Members of Congress are not allowed to accept foreign donations; the solution advanced by the committee ensures the same standard applies to other political tax-exempt entities who engage in political activity. Tax-exempt status is a privilege, and the Committee will continue to investigate bad actors in this space to shed light on the rampant abuse of these benefits.
The Committee’s oversight of the tax-exempt sector has exposed networks of U.S.-based organizations that are funded by foreign nationals or operating at the behest of foreign governments to spread propaganda, influence American politics, and manipulate public discourse. A single individual, a Swiss billionaire named Hansjörg Wyss, has funneled over $280 million to tax-exempt organizations that in turn fund and sponsor other nonprofits who use the money to support liberal campaigns and causes in the United States. Another individual, Neville Roy Singham – a wealthy American tech mogul with close ties to the Chinese Communist Party (CCP) – has weaponized America’s nonprofit sector by funding nonprofits that are engaged in sowing chaos and division in communities across the U.S.
As part of its oversight of the rules and regulations governing the U.S. tax-exempt sector, the Committee also approved legislation to protect the right to freedom of religion for faith-based organizations. Currently, such organizations could have their tax-exempt status revoked by a future Internal Revenue Service (IRS) bureaucracy that happens to disapprove of specific religious beliefs or practices.
Ways and Means Committee Chairman Jason Smith (MO-08) issued the following statement:
“For far too long, foreign influence and interference have plagued our tax-exempt sector. Foreign donations have no place in American politics, particularly when the sole goal is to manipulate our public discourse, promote propaganda, and support violence. As the Ways and Means Committee conducted its investigation into the nation’s tax-exempt sector, it became clear that shadowy networks of well-funded organizations have been enjoying lucrative tax benefits for decades, while simultaneously accepting donations and direction from foreign nationals. From the outside, it looks like a movement, but once you see how the money flows, it becomes clear that this is a machine. That is why the Committee passed key reforms to shine a brighter spotlight on the way foreign funding is circulating among these organizations and hold them accountable. When a Swiss billionaire can singlehandedly inject nearly $300 million into American politics or a Chinese Communist Party ally can promote violence in our communities, Congress must act, and the Ways and Means Committee is leading the charge.
“At the same time, faith-based organizations should not have to fear the potential revocation of their tax-exempt status simply because an IRS bureaucrat does not approve of your religious beliefs or practices. As we pursue the bad actors that seek to take advantage of our tax code, we must also be sure to protect the rights of nonprofits that are simply exercising the freedoms guaranteed under our Constitution.”
Foreign Funding Transparency Act (H.R. 9772)
- Under the Federal Election and Campaign Act (FECA), foreign nationals are prohibited from donating money to political committees.
- However, due to current laws and regulations, there is no way to tell if a foreign national contributed to a tax-exempt organization that subsequently donated to a political action committee.
- This lack of transparency presents issues in the enforceability of FECA – potentially allowing foreign donations to enter the U.S. political landscape.
- This bill requires tax-exempt organizations to collect and report to the IRS the aggregate amount of donations received from foreign nationals.
- It also requires a separate line of reporting on the aggregate amount of donations received specifically from foreign nationals who are from a country of concern like China, North Korea, Russia, and Iran.
Read a fact sheet on the bill here.
The bill passed the Committee 23-18.
Stopping Foreign Influence in Elections Act of 2026 (H.R. 9771)
- While foreign nationals are prohibited from donating money to U.S. campaigns, there are no laws or regulations that prevent foreign nationals from contributing to tax-exempt organizations which may influence elections.
- An organization could obtain foreign national contributions in their general account that would free up other funding for political activities.
- The most prominent example of a foreign national donating money to a tax-exempt organization is Swiss billionaire Hansjörg Wyss.
- Wyss’s tax-exempt organizations donated money to other tax-exempt organizations that then sent tens of millions of dollars to Super PACs.
- During the 2024 election cycle alone, Wyss’s 501(c)(4), the Sixteen Thirty Fund, sent nearly $31 million to PACs.
- This bill creates a penalty on large tax-exempt organizations who receive contributions from foreign nationals and then donate to a political committee or a 501(c)(4).
- Establishes a secondary excise tax on such organizations who contribute to a political committee or 501(c)(4) organization if they have received a contribution or gift from a foreign national within the last two years.
- Excise taxes escalate with each instance of a prohibited contribution to a PAC and can ultimately result in atwo-year suspension of an organization’s tax-exempt status.
Read a fact sheet on the bill here.
The bill passed the Committee 23-16.
Fiscal Sponsorship Transparency Act (H.R. 9721)
- Fiscal sponsorship is a formal arrangement in which an established 501(c) tax-exempt organization, the “fiscal sponsor,” extends its legal and tax-exempt status to an unincorporated project or group.
- This allows that project to solicit tax-deductible donations without having to incorporate, apply for its own tax-exempt status, or fill out Form 990.
- While most 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.
- In 2024 – without having to disclose the relationship – the Alliance for Global Justice, a 501(c)(3) organization, fiscally sponsored Samidoun, which Treasury designated in October 2024 as asham charity and fundraiser for the PFLP, a designated terrorist organization.
- This bill requires tax-exempt organizations to disclose information regarding certain fiscally sponsored projects – including names of those involved, dates, amount of funds made available, and activities related to the funds provided.
- It alsoimposes excise taxes on organizations acting merely as a conduit for a third party that is not tax-exempt.
Read a fact sheet on the bill here.
The bill passed the Committee 23-15.
Fair Treatment of Religious Organizations Act of 2026 (H.R. 9722)
- The IRS determines whether an organization qualifies for tax-exempt status under IRC §501(c)(3) – including whether its purpose is religious – and may revoke that status if an organization violates fundamental public policy.
- In the past, the IRS has weaponized this revocation authority against conservative organizations.
- The Obama Administration’s IRS singled out conservative and Tea Party groupswith extra scrutiny, delays, and intrusive questioning.
- The Biden Administration’s IRS denied tax-exempt status to Christians Engaged, a Texas nonprofit, stating its Bible teachings were “typically affiliated with” the Republican Party.
- To prevent future administrations from declaring traditional religious values to be against public policy, this bill requires that determinations of religious purpose be made without regard to an organization’s beliefs or practices concerning marriage, sexuality, or gender identity—even if inconsistent with the current determination of public policy.
Read a fact sheet on the bill here.
The bill passed the Committee 23-16.