The U.S. Department of the Treasury said Friday it plans to overhaul disclosure requirements for tax-exempt organizations, aiming to shed more light on how nonprofits receive and spend public money.
Treasury announced that the Internal Revenue Service intends to revise Form 990, the annual information return filed by many nonprofits, to require clearer reporting on government grants, government contracts and fiscal sponsorship arrangements.
Officials said the initiative is designed to improve transparency, strengthen tax enforcement and make it easier to identify fraud, abuse and misuse of taxpayer funds.
Treasury Secretary Scott Bessent said organizations benefiting from tax-exempt status and public funding should face greater public accountability. He said the administration intends to curb the use of complex nonprofit structures that can obscure improper activity.
The proposed changes would focus in part on fiscal sponsorships, a common arrangement in which an established nonprofit provides legal and administrative backing for charitable projects. While such structures are widely used and often lawful, lawmakers and regulators have raised concerns that some arrangements can mask who controls projects and how money is spent.
Treasury said clearer reporting requirements could help regulators and the public better track the flow of funds, classify revenue properly and reduce the risk that charitable entities are used to hide misconduct.
Ken Kies said tax-exempt organizations that receive public funds or tax-deductible donations should be prepared to disclose who controls those resources and where the money goes.
The department said proposed regulations will be published for public comment before any final rules are adopted. Officials added they would weigh administrative feasibility and compliance burdens as the proposal moves forward.
The effort marks one of the most significant recent pushes to increase scrutiny of the nonprofit sector, which collectively handles hundreds of billions of dollars annually through donations, grants and government partnerships.
By DNU Staff