SPONSOR Act

This bill would require 501(c)(3) tax-exempt organizations that act as fiscal sponsors to accept legal liability for how the funds they manage are used. Under the proposed law, these organizations would be responsible for criminal and civil liability if the sponsored funds are used for activities such as aiding international terrorism, intimidating people exercising constitutional rights, or obstructing commerce. The bill defines fiscal sponsorship as a relationship where a nonprofit receives and controls funds for a project or group that does not have its own tax-exempt status. While the legislation establishes this presumption of responsibility, it allows organizations to avoid liability if they can prove they exercised due diligence and provided reasonable oversight.