The House Ways and Means Committee on July 22, 2026, voted to advance the Foreign Funding Transparency Act (H.R. 9772) and the Stopping Foreign Influence in Elections Act of 2026 (H.R. 9771); these proposals would significantly expand oversight of foreign funding received by tax-exempt organizations and impose new penalties on certain organizations that make contributions to a political committee or any IRC Section 501(c)(4) organization within two years of accepting contributions from a foreign national.

The Committee also advanced the Fiscal Sponsorship Transparency Act of 2026 (H.R. 9721) and the Fair Treatment of Religious Organizations Act of 2026 (H.R. 9722); these bills would establish new reporting and excise tax rules for certain fiscal sponsorship arrangements and amend standards applicable to religious organizations under IRC Section 501.

Background

Tax-exempt organizations generally must file annual information returns under IRC Section 6033 unless an exception applies. Existing law also includes various restrictions on political activity by exempt organizations, information reporting requirements, and excise taxes applicable to certain prohibited transactions and activities. In addition, federal election laws generally prohibit foreign nationals from making contributions or expenditures in connection with U.S. elections. The four bills would build on these existing frameworks through new reporting rules, excise taxes, and statutory standards applicable to organizations described in IRC Section 501(c).

The bills would also address two areas that have been recent subjects of congressional hearings and scrutiny. Specifically, the legislation would establish a comprehensive reporting and penalty regime for fiscal sponsorship arrangements and would add new rules protecting the tax-exempt status of organizations that hold certain religious beliefs.

Foreign funding transparency requirements

The Foreign Funding Transparency Act (H.R. 9772) would add new IRC Section 6033(p) and require certain tax-exempt organizations to disclose foreign-source funding on their annual information returns. Specifically, organizations described in IRC Section 501(c) with either gross receipts of at least $200,000 or assets of at least $500,000 would be required to report their aggregate contributions from foreign nationals during the tax year on their annual Form 990-series information returns for that tax year.

In addition to reporting total foreign contributions, affected organizations would be required to separately disclose contributions attributable to each foreign country of concern. For individual donors, a contribution would be attributed to each foreign country of which the donor is a citizen. For entity donors, the contribution would be attributed to the foreign jurisdiction under the laws of which the entity was organized.

The proposal includes a reliance rule permitting organizations to rely on donor representations concerning nationality unless the organization knows or should know those representations are false. Treasury would also be authorized to require organizations to collect information from foreign donors in a manner prescribed by regulation. The reporting requirements would apply to returns filed for tax years beginning after the date that is one year following enactment.

If enacted, the proposal would represent a significant expansion of current reporting obligations by requiring organizations to identify and track foreign-source contributions and maintain sufficient information to support annual disclosures.

Political contribution penalties involving foreign-funded organizations

The Stopping Foreign Influence in Elections Act of 2026 (H.R. 9771) would establish a new penalty regime applicable to certain tax-exempt organizations that make political contributions after receiving funding from foreign sources. The proposal would create IRC Section 6720D and add an additional provision to IRC Section 501.

Under the legislation, a "disqualified political committee contribution" generally would include a contribution made by an organization described in IRC Section 501(c) to a political entity if the organization received a contribution or gift from a foreign national during the preceding two-year testing period. Political entities would include political committees and organizations described in IRC Section 501(c)(4) that are exempt from tax under IRC Section 501(a).

A penalty would also be imposed equal to twice the amount of a disqualified political committee contribution. In addition, organizations making such contributions would be subject to escalating tax consequences as follows:

• First disqualified contribution: 100% tax
• Second disqualified contribution: 200% tax
• Subsequent disqualified contributions: 200% tax and loss of tax-exempt status for two years

Like H.R. 9772, the bill would apply to IRC Section 501(c) organizations with gross receipts of at least $200,000 or assets of at least $500,000. The bill also contains a donor-representation rule permitting organizations to rely on a donor's representation regarding nationality unless the organization knows or should know the representation is false. The proposal generally would apply to contributions made after the date that is one year following enactment.

Together, H.R. 9772 and H.R. 9771 would create a new compliance framework linking foreign-source funding, donor information collection, annual reporting obligations, and political activity restrictions for many exempt organizations. If passed, H.R. 9771 and H.R. 9772 would be effective for tax years beginning more than one year after the date(s) of enactment.

Fiscal sponsorship transparency requirements

The Fiscal Sponsorship Transparency Act of 2026 (H.R. 9721) would amend IRC Section 6033 to require annual reporting of certain fiscal sponsorship arrangements. The bill defines a fiscal sponsorship arrangement as an arrangement between an applicable tax-exempt organization and a nonexempt person under which the organization receives and administers funds on behalf of that person or for a specifically identified project while retaining discretion and control over the use of those funds.

Organizations would be required to disclose information concerning each fiscal sponsorship arrangement, including:

• The parties to the arrangement
• Amounts transferred or made available during the tax year
• A description of funded activities
• The principal officer responsible for the arrangement
• The dates the arrangement began and ended

The draft legislation would also create IRC Section 4960A, which would impose excise taxes on "improper conduit arrangements." An improper conduit arrangement generally would exist when contributions are solicited or received for transfer to a specifically identified nonexempt person, and the sponsoring organization fails to exercise discretion and control over the funds.

The legislation would:

• Deny charitable contribution deductions for certain contributions made through improper conduit arrangements
• Impose a 20% tax on transferred amounts
• Impose a 5% manager-level tax for knowing participation
• Impose additional taxes of up to 100% if violations are not corrected

Treasury would be directed to issue regulations clarifying both the scope of covered fiscal sponsorship arrangements and the meaning of "discretion and control." If passed, H.R. 9721 would be effective for tax years beginning after December 31, 2027.

Treatment of religious organizations

The Fair Treatment of Religious Organizations Act of 2026 (H.R. 9722) would add IRC Section 501(s). The proposal would preclude a religious belief or practice concerning marriage, sexuality, or gender identity from being treated as inconsistent with law or public policy for purposes of determining exempt status. The legislation would also provide that a belief does not fail to qualify as a religious belief merely because it is not compelled by or central to a particular religion.

If passed, H.R. 9722 would be effective for tax years beginning after December 31, 2025.

Implications

If enacted, these bills would introduce significant compliance, reporting, and governance obligations for many tax-exempt organizations. Although the bills remain in the early stages of the legislative process, organizations that receive contributions from foreign donors, engage in fiscal sponsorship activities, or maintain advocacy programs should consider evaluating the potential operational impact of these proposals.

The foreign funding provisions would require many exempt organizations to establish or enhance procedures for identifying foreign-source contributions, collecting donor nationality information, maintaining supporting documentation, and tracking amounts received by country. Organizations that currently do not distinguish foreign contributions within their donor systems may need to modify fundraising, contribution tracking and annual return preparation processes to accommodate these new reporting requirements. In addition, organizations that engage in political or advocacy-related activities may need to assess whether foreign-source contributions could affect future participation in activities covered by the proposed penalty regime.

Organizations operating fiscal sponsorship programs may face increased reporting and documentation requirements. Sponsors may need to review existing arrangements to ensure they can demonstrate sufficient discretion and control over sponsored funds, maintain appropriate internal records, and support required annual disclosures. The proposed excise taxes for improper conduit arrangements could place greater emphasis on documenting governance procedures, approval processes and oversight activities related to fiscal sponsorship programs.

This legislation would also increase the amount of information required to be gathered and reported on annual Forms 990 and related filings. Organizations may need to evaluate whether existing accounting systems, donor databases, and internal controls can capture the additional information that the legislation would require to be reported on Forms 990. Finance and tax departments may also need to coordinate more closely with development, government relations, and program management personnel to ensure required information is collected throughout the year rather than just during the annual return preparation process.

Because all four bills remain subject to further congressional consideration, exempt organizations may wish to monitor legislative developments while assessing whether future investments in donor tracking, governance procedures and information reporting systems could be necessary if the legislation ultimately is enacted.