Transparency in Non-Profit Donations: A New Era of Accountability

As the charitable deduction season approaches, the U.S. Treasury has taken a significant step towards ensuring transparency in non-profit donations. In a move aimed at closing the ‘fiscal sponsorship’ loophole, Treasury Secretary Scott Bessent has thrown his weight behind a package of nonprofit disclosure bills.

The bills, which include the Fiscal Sponsorship Transparency Act, the Foreign Funding Transparency Act, the Stopping Foreign Influence in Elections Act, and the Fair Treatment of Religious Organizations Act, are designed to address the gaps in current regulations that allow for the concealment of fraudulent activities and the abuse of tax-exempt status.

According to a report by Giving USA, Americans extended $617.20 billion in giving in 2025, with individuals accounting for $394.20 billion of the total, or 64 cents of every charitable dollar in the country. However, the sector has grown to a size where it is funded heavily by ordinary households, and the current tax-code blind spot known as fiscal sponsorship has created a massive black hole for accountability.

The Fiscal Sponsorship Transparency Act, for instance, would require charities to publicly disclose details about the projects operating under their tax-exempt umbrella. This move is aimed at ensuring that donors have access to accurate information about the organizations they support.

The Treasury has also announced plans to revise the Form 990 to require clearer reporting on government grants, government contracts, and fiscal sponsorship arrangements. This change is expected to improve transparency and accountability within the non-profit sector.

While the legislation may face long odds in the Senate, the Form 990 rewrite at the Treasury does not need Congress’s approval. This means that the information reaching donors is about to improve regardless of what happens on the floor.

So, how can donors ensure that their contributions are being used effectively? Here are three habits to help you stay ahead of the curve:

• Verify exempt status before you give, not after, using the IRS Tax Exempt Organization Search tool.
• Ask fiscal sponsors who runs the project. Under current rules, sponsored groups file nothing of their own, so the question has to come from you.
• Keep the paperwork. The 2026 write-off for standard-deduction filers still requires a record showing the date, the amount, and the recipient.

Charitable giving is heading into its most closely watched stretch in decades, and the donors who benefit will be the ones who treated a receipt as the start of the question rather than the end of it.