Who Funds That? EP6: Can Treasury Fix Nonprofit Tax Returns

Nonprofit tax return transparency requires significant reform, particularly regarding government grants and fiscal sponsorship. Currently, Form 990 filings provide only aggregate data on government funding, failing to disaggregate sources or program-specific expenditures. Fiscal sponsorship, a mechanism where projects operate under a parent organization’s tax-exempt status, creates a significant gap in financial reporting, often obscuring the true scale and funding of political advocacy groups. Expert Robert Stilson advocates for a dedicated "Schedule S" to disclose fiscal sponsorship details and suggests mandating the inclusion of audit-level data on government awards directly on the 990. These measures would enhance public oversight, clarify the financial relationships between large foundations and smaller projects, and reduce the ability of organizations to mask political activities behind opaque, multi-entity structures.