The U.S. Department of the Treasury announced Thursday that the Internal Revenue Service will revise Form 990 to increase transparency and curb misconduct within tax-exempt organizations. The changes target fiscal sponsorship arrangements, government grants, and contracts—mechanisms critics argue have been exploited by dark money networks to operate without public scrutiny.
Treasury Secretary Scott Bessent said the administration is ending the days of hiding fraud, abuse, and extremist activity behind complicated nonprofit arrangements. He warned that directors and officers of organizations misusing charitable structures would face increased scrutiny, accountability, and liability under the law.
The announcement follows intensifying investigations into prominent progressive networks including Tides and Arabella Advisors. The Washington Free Beacon reported in November 2025 that Arabella had rebranded its fiscal sponsorship arm as Sunflower Services amid high-profile investigations into its finances and billionaire Bill Gates's decision to end a longstanding partnership with the organization.
What the Right Is Saying
Conservative lawmakers and accountability advocates welcome the Treasury's announcement as a necessary step toward restoring integrity to the nonprofit sector. They argue that dark money networks have long exploited loopholes in campaign finance law to influence elections while avoiding disclosure requirements.
House Oversight Committee Chairman James Comer (R-KY) has led investigations into the Sixteen Thirty Fund, Arabella Advisors (now operating as Sunflower Services), and other groups. Comer said the Committee is investigating reports that these organizations have worked to circumvent federal campaign finance disclosure requirements enforced by the Federal Election Commission and the Department of Justice.
The American Accountability Foundation filed a formal IRS complaint in November 2025 alleging that the New Venture Fund, an Arabella-managed entity, engaged in improper excess benefit transactions. AAF alleged that NVF paid Arabella Advisors more than $200 million since 2006 through an administrative services agreement that potentially diverted funds to the organization's founder and senior officers.
What the Left Is Saying
Progressives and nonprofit advocates argue the Treasury's announcement represents politically motivated targeting of legitimate charitable organizations. They contend that fiscal sponsorship arrangements serve important functions for small nonprofits and social ventures that lack the resources to obtain their own tax-exempt status.
Democratic lawmakers have raised concerns about what they describe as Republican overreach into the nonprofit sector. Critics note that similar transparency requirements could be applied to conservative-aligned organizations and warn that expanded IRS oversight could chill protected speech and advocacy activities.
Progressive watchdogs argue the real motivation behind the IRS overhaul is to silence organizations that advocate for social justice, environmental protection, and other causes opposed by the current administration. They point to the long history of IRS scrutiny targeting liberal-leaning organizations during previous administrations.
What the Numbers Show
NGO Monitor reported in March 2025 that since 1976, Tides has scaled more than 1,400 social ventures across 120 countries and mobilized over $3 billion for impact. The organization has faced scrutiny for funding groups that have promoted antisemitic rhetoric and led BDS campaigns against Israel.
According to the House Oversight Committee's investigation, online influencers invited to join certain progressive messaging programs reportedly receive up to $8,000 per month to amplify Democratic messaging online. Participants must sign contracts enforcing strict secrecy and imposing limitations on the types of political content they can produce.
The Treasury's new reporting requirements would require organizations receiving public funds to disclose who controls the money and where it goes. Acting IRS Chief Counsel Ken Kies said organizations receiving public funds should be prepared to show who controls the money and where it goes.
The Bottom Line
The IRS overhaul represents a significant expansion of disclosure requirements for tax-exempt organizations. The changes will require fiscal sponsorships to provide more detailed reporting on downstream recipients of both charitable donations and government grants.
The administration has framed the changes as a fraud prevention measure, while critics argue it represents an expansion of government power over the nonprofit sector. Both sides agree the changes could reshape how hundreds of millions of dollars in charitable and government funds flow through fiscal sponsorship arrangements.
Organizations affected by the new requirements will have to adapt their reporting practices in the coming months. The IRS is expected to release draft forms for public comment before implementation.