On July 22, 2026, the House Ways and Means Committee advanced four bills that would reshape what nonprofits disclose, who they can partner with, and how the IRS evaluates religious purpose.
Together they would add foreign-donor reporting to the Form 990, tax and ultimately suspend the exempt status of organizations that route foreign-linked money toward political committees or 501c4s, impose public project-level disclosure and leadership liability on fiscal sponsors, and bar the IRS from weighing beliefs about marriage, sexuality, or gender identity in religious-purpose determinations. Every vote was party-line, which makes enactment in this Congress unlikely – but that is the wrong reason to set the package aside. The thresholds are low enough to reach mid-size organizations, the compliance burdens land on donor intake and coalition membership rather than the tax return alone, and the Treasury is already moving to revise the Form 990 along similar lines administratively. The legislative odds are long; the direction of travel is not.
Outlook
All four bills cleared on strict party lines after nine Democratic amendments were defeated or ruled nongermane. That absence of bipartisan support signals major difficulty in the Senate’s 60-vote environment, and even House passage is uncertain given a short calendar, a crowded must-pass list, and a thin Republican majority.
The more likely near-term trajectory is administrative. The Treasury announced in April that the IRS would revise the Form 990 to require clearer reporting on government grants, contracts, and fiscal sponsorship arrangements – meaning parts of the disclosure agenda may arrive through the form itself even if the legislation stalls. Sector advocates are treating the package as a statement of oversight priorities worth preparing for regardless of this Congress’s outcome.
A summary of each bill:
H.R. 9772 – Foreign Funding Transparency Act
What it does: Requires tax-exempt organizations to collect and report to the IRS the aggregate amount of donations received from foreign nationals, plus a separate line for donations from nationals of “countries of concern,” including China, North Korea, Russia, and Iran. It applies to organizations with at least $200,000 in gross receipts or $500,000 in assets, lets organizations rely on donor representations about nationality absent reason to believe they are false, and takes effect for returns filed one year after enactment.
Prospective impact (Independent Sector analysis): The addition of two new Form 990 lines sounds minor, but the compliance mechanics are not – nonprofits would effectively need to ask every donor about citizenship. Sector groups argue that this could give donors pause and yield data of limited use to the IRS while handing critics a cudgel against organizations that report foreign funding. Because Form 990 data is public, the practical effect is reputational as much as regulatory: a searchable, year-over-year record of which organizations take foreign money. Rep. Steven Horsford also flagged the fact that unions would have to track and report member nationality, an administrative lift. Expect donor-intake system overhauls, new gift-acceptance policies, and some chilling of international giving to universities, global health groups, and diaspora-serving charities.
H.R. 9771 – Stopping Foreign Influence in Elections Act of 2026
What it does: Creates penalties on large tax-exempt organizations that receive foreign-national contributions and then donate to a political committee or a 501c4. It imposes an excise tax on such organizations if they have received a foreign gift within the prior two years, escalating with each prohibited contribution and ultimately allowing a two-year suspension of tax-exempt status. The taxes run at 100 percent, then 200 percent, before suspension.
Prospective impact (Independent Sector analysis): Because the prohibition reaches contributions to any 501c4 – not just political committees – a charity that receives a single foreign contribution could be barred from joining lobbying coalitions, which are commonly organized as c4s. Ordinary coalition dues and pooled advocacy memberships become a tax-exposure question. The rational response for many organizations would be over-compliance: refusing foreign gifts outright, or exiting coalitions, to keep a clean two-year window. That is a meaningful structural change to how sector-wide advocacy gets financed.
H.R. 9721 – Fiscal Sponsorship Transparency Act of 2026
What it does: Requires tax-exempt organizations to disclose information about certain fiscally sponsored projects – names of those involved, dates, funds made available, and activities related to those funds – and imposes excise taxes on organizations acting merely as a conduit for a non-exempt third party. It penalizes sponsors and their leaders for failing to exercise “discretion and control” over projects, and exempts private foundations and donor-advised funds. The committee cited the Alliance for Global Justice’s sponsorship of Samidoun, which the Treasury designated in October 2024 as a sham charity.
Prospective impact (Independent Sector analysis): Probably the most operationally disruptive of these four bills. Fiscal sponsorship is the way that a large share of new and small-scale civic projects get off the ground without incorporating, applying for their own exemption, or filing a Form 990 – and public project-level disclosure plus personal-liability exposure for sponsor leadership would push sponsors toward heavier vetting, higher fees, and narrower project acceptance. The definitional problem is real: There is no existing definition of “fiscal sponsorship” in the tax code, and the bill surfaced less than a week before the vote, so practitioners argue the definition needs work. A poorly drawn definition could sweep in routine grantmaking and regranting relationships.
H.R. 9722 – Fair Treatment of Religious Organizations Act of 2026
What it does: Requires that IRS determinations of religious purpose under section 501c3 be made without regard to an organization’s beliefs or practices concerning marriage, sexuality, or gender identity, even where inconsistent with current determinations of public policy. Backers point to IRS scrutiny of Tea Party groups and the denial of exempt status to Christians Engaged.
Prospective impact (Independent Sector analysis): This carves a defined exception into the judicially recognized “public policy doctrine,” the authority underlying Bob Jones University v. United States, where racially discriminatory policy cost an institution its exemption. Faith-based schools, hospitals, and social service providers would gain durable protection against revocation on these specific grounds regardless of who runs the IRS. Notably, this bill is moving through Congress while the administration signals possible rulemaking on the same doctrine, so the statutory and regulatory tracks could converge or conflict. Critics read it as insulating discrimination in taxpayer-subsidized services; supporters as removing bureaucratic discretion from religious-purpose determinations.
Why This Matters for Your Organization
These bills don’t only concern large national networks. These five points apply to organizations of ordinary size:
- The thresholds are low. H.R. 9772 reaches organizations with $200,000 in gross receipts or $500,000 in assets – a large share of anyone who files a full Form 990, not just national players. A modest endowment or a couple of substantial grants puts your organization in scope.
- Donor intake itself will change, not just the tax return. Compliance means asking every donor about citizenship, which touches your CRM, gift forms, event registration, online donation page, and development staff scripts. That is a real project for a two-person advancement shop, and it has to be done before the reporting year, not at filing time.
- Coalition membership becomes a tax question. Under H.R. 9771, dues paid to a 501c4 association or issue are the exposure – and those coalitions are the only way that most small and mid-size organizations participate in policy.
- Fiscal sponsorship risks. Public project-level disclosure and leadership liability will make sponsors pickier and more expensive, and will make it harder for new civic projects to find a home.
- Form 990 data is public and permanent. Whatever you report becomes a searchable line item. The concern is not primarily IRS enforcement – rather, it is the fact that Form 990 data can be used by anyone looking to attack an organization for taking foreign money, with no context to distinguish, for instance, whether the donation came from a green-card-holding board member or a foreign government.
Low-cost preparation now
Nothing here demands emergency action, but taking an afternoon to take these three steps will put your organization ahead of the curve:
- Determine whether you would clear the reporting threshold.
- Find out whether your donor database could produce a foreign-national figure if asked.
- Map which of your coalition memberships and dues payments run through 501c4s.
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