Bills Affecting Nonprofits in the House Ways and Means Committee
Last week, the House Ways and Means Committee advanced four bills that could alter federal reporting, enforcement, and exemption rules for nonprofits. At its July 22, 2026, markup, committee Republicans approved the measures over Democratic opposition, reflecting a widening divide over nonprofit transparency and the federal government’s treatment of tax-exempt organizations.
The Foreign Funding Transparency Act, H.R. 9772, would require many § 501(c) organizations filing Form 990 (with at least $200K in annual gross receipts or $500K in assets) to disclose the aggregate amount of contributions received from foreign nationals. Organizations would separately report contributions from nationals of designated “countries of concern.” These requirements may prove especially difficult for organizations receiving large numbers of small online donations or contributions through intermediaries, because it could mean that affected nonprofits need to determine donors’ nationality, document donor representations, and identify contributions associated with particular countries.
The Committee also approved the Stopping Foreign Influence in Elections Act of 2026, H.R. 9771. The bill would impose excise taxes on a § 501(c) organization that contributes to a political committee or § 501(c)(4) organization after receiving a contribution from a foreign national during a two-year testing period. Repeated violations could result in increased penalties and a temporary suspension of the organization’s federal tax exemption. Interestingly, Democrats supported an earlier version of the legislation in the prior Congress but opposed the updated bill, arguing that its broader language could be used against charities, labor organizations, and other exempt entities. Because the bill could apply even when an organization uses domestic funds for a later transfer, affected nonprofits might need to screen all donors for foreign-national status or avoid foreign contributions entirely.
The Fiscal Sponsorship Transparency Act of 2026, H.R. 9721, would establish new reporting requirements for charitable organizations engaged in fiscal sponsorship. A sponsoring charity would be required to identify sponsored entities, report amounts transferred or made available, describe the sponsored activities, and disclose the principal officer responsible for administering each arrangement. The bill also would codify penalties for “improper conduit arrangements”—in which a charity accepts funds for transfer to a nonexempt person but fails to exercise sufficient discretion and control. This proposal could have substantial practical consequences for charities engaged in sponsorship.
Finally, the Fair Treatment of Religious Organizations Act of 2026, H.R. 9722, would prohibit the IRS from treating certain religious beliefs or practices concerning marriage, sexuality, or gender identity as inconsistent with law or public policy when applying § 501. The proposal implicates the public-policy limitation recognized in Bob Jones University v. United States, under which an organization may be denied § 501(c)(3) status. The bill would seem to provide greater protection from adverse federal tax treatment for religious organizations, but would not, by itself, exempt them from otherwise applicable civil-rights laws.
As of today, the four bills had been ordered favorably reported by the Committee but had not passed the House. And even if they do not become law, the proposals illustrate Congress’s growing interest in regulating nonprofits.