On May 15, 2024, the House Committee on Ways and Means approved four bills that could impact tax-exempt organizations if enacted. In his opening statement, Chairman Jason Smith (R-MO) cited antisemitic activities occurring on college campuses, the nexus between tax-exempt organizations and terrorism, and the undue influence of foreign money in U.S. elections as motivations for the bills.
A summary of each of the four bills can be found below.
Foreign Grant Reporting Act (H.R. 8290)
The Foreign Grant Reporting Act, if enacted, would require Section 501(c) organizations to report information regarding any grant or other assistance provided by the organization to a foreign entity. This information would need to be reported on the organization’s annual return and would include the name and address of the foreign entity receiving the support, as well as the aggregate amount of the support. Indirect, as well as direct, contributions would need to be reported.
This bill would serve to broaden the current Form 990, Schedule F reporting requirements for grants to foreign entities and bring the requirements more in line with the reporting that is already required for the grants tax-exempt organizations provide to domestic entities. Critics of the bill have expressed concerns that the additional disclosure requirements could create risk for grant recipients in sensitive, or life-threatening, situations. Additionally, critics feel the definition of “indirect contributions” is very broad, and therefore may have a high reporting burden.
American Donor Privacy and Foreign Funding Transparency Act (H.R. 8293)
If enacted, the American Donor Privacy and Foreign Funding Transparency Act would require tax-exempt organizations to report on their annual Form 990 information regarding contributions received from foreign sources, including the aggregate amount of foreign-sourced contributions received, grouped by source country. Under the bill, this information would be required to be made available for public inspection.
Some organizations have expressed concerns that the requirement to verify the nationality of donors may be burdensome, and it may result in losing the trust of the donors and the communities they serve. However, Chairman Smith noted that this “will help shine a light on the influx of foreign funding into tax-exempt organizations,” which could potentially be used to influence U.S. elections.
No Foreign Election Interference Act (H.R. 8314)
The No Foreign Election Interference Act could have serious consequences for any tax-exempt organization that continues to violate the prohibitions that it would put into place if enacted. Under this bill, any tax-exempt organization that makes a disqualified political committee contribution will be required to pay a penalty equal to twice the amount of the contribution. A “disqualified political committee contribution” is defined as any contribution made by a tax-exempt organization to a political committee if the tax-exempt organization received, during the previous eight-year period, any contribution or gift from a foreign national. Tax-exempt organizations will lose their tax-exempt status after three disqualified political committee contributions are made.
End Zuckerbucks Act (H.R. 8291)
The End Zuckerbucks Act, named after Mark Zuckerburg, who donated hundreds of millions of dollars to charitable organizations that funded state and local election organizations, amends Section 501(c)(3) to prohibit tax-exempt organizations from funding the administration of elections (except the donation of space to serve as a polling place).
If you have any questions about the potential impact of this legislation on your organization, please reach out to Sarah Piot or Erin Wood.
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