SPONSOR Act

This bill would require 501(c)(3) nonprofit organizations that act as fiscal sponsors to take legal responsibility for how donated funds are used by the projects they support. Under the proposed law, these organizations would face criminal and civil liability if the sponsored activities involve international terrorism, intimidation of people exercising constitutional rights, or obstruction of commerce. The legislation defines fiscal sponsorship as a relationship where a tax-exempt organization receives and controls funds on behalf of another group that does not have its own tax-exempt status. While the bill establishes this liability, it allows organizations to defend themselves by proving they exercised due diligence and provided reasonable oversight.