2026-05-09, Simply Saturday.

We’re “Ending The Days Of Hiding Fraud”: Bessent Goes After Dark Money In Nonprofits

On April 23, the US Treasury Department announced that the IRS plans to revise Form 990—the annual information return filed by tax-exempt organizations—to improve transparency and strengthen oversight, specifically targeting reporting on government contracts, government grants, and fiscal sponsorship arrangements. The stated goals are to detect misconduct and hold wrongdoers accountable.

Treasury Secretary Scott Bessent put the matter bluntly: “We are ending the days of hiding fraud, abuse, and extremist activity behind complicated nonprofit arrangements. When bad actors misuse charitable structures, directors and officers should understand that transparency can lead to scrutiny, accountability, and liability under the law.”

The acting IRS chief counsel added: “If an organization receives public funds or tax-deductible donations, it should be prepared to show who controls the money and where it goes.”

Why is this seemingly innocuous regulatory requirement a really big deal, as most Americans have no idea what Form 990 is used for?

Let us answer that in some detail.

Bottom Line Up Front

Right now, enormous sums of money flow through nonprofit “umbrella” organizations to dozens or hundreds of sub-groups, and the paper trail essentially disappears. The IRS currently has no mechanism on the Form 990 to require disclosure of fiscal sponsorship arrangements. The new rules would force these pass-through organizations to reveal who is getting the money and what it’s being used for.

Think of this in the context of the Southern Poverty Legal Center indictments, which are only the tip of the iceberg of fiscal sponsorship arrangements and transactions.

The Problem: What Is Fiscal Sponsorship and How Is It Exploited?

Fiscal sponsorship is a legitimate and longstanding practice. In a typical fiscal sponsorship relationship, a nonprofit organization’s 501(c)(3) tax-exempt status is extended to groups engaged in activities that serve the fiscal sponsor’s mission, typically for a fee. Donations to the project are directed to the fiscal sponsor and are restricted to supporting activities of the charitable venture. The fiscal sponsor is responsible for assuring the activities of the project fulfill their charitable purpose.

This is a long article that goes on to talk about Arabella Advisors, The Tides Foundation, and more.

…Concluding Thoughts

Several converging factors explain the timing of the Treasury Department’s April announcement:

1.Congressional pressure has been building. Multiple House hearings over the past year—the DOGE Subcommittee hearing “Public Funds, Private Agendas: NGOs Gone Wild” and the Judiciary Subcommittee hearing “How Leftist Nonprofit Networks Exploit Federal Tax Dollars”—have built an extensive public record and created political momentum for regulatory action.

2.The rebrand attempt flagged the problem. Arabella’s restructuring into Sunflower Services and Vital Impact in late 2025 was widely seen as an attempt to launder its reputation and escape scrutiny. The Treasury announcement signals that rebranding won’t be sufficient.

3.Form 990 has a structural blind spot. As noted in the Treasury Department’s press release, Form 990 has no mechanism for disclosing fiscal sponsorship activities. This isn’t a bug in enforcement—it’s a gap in the regulatory framework itself, one that has been known and exploited for decades. Treasury is finally moving to close it through regulatory action rather than waiting for Congress to act legislatively.

4.The SPLC indictment and related scrutiny. The indictment of the SPLC, combined with sustained focus on the Tides Foundation’s role in funding anti-Israel groups, has elevated the broader question of nonprofit accountability in the current political moment.

5.The “revolving door” has been documented. The Biden years produced extensive documentation of personnel moving between the dark money network and government agencies, with the explicit effect of directing public funds toward aligned organizations. The Trump administration is using every available tool—executive, regulatory, and prosecutorial—to dismantle these arrangements.

The bottom line is pretty straightforward: for decades, a small number of sophisticated nonprofit aggregators have used fiscal sponsorship to create a system in which billions of dollars—from private megadonors, foreign nationals, and American taxpayers—flow to politically aligned left-wing activist organizations with direct ties to the Democrat Party with essentially no public accountability. The sponsored groups don’t file their own 990s.

The pass-through organizations don’t have to disclose which projects their money supports. And the whole system is perfectly legal under current IRS rules. The Treasury announcement is the first significant regulatory step toward forcing disclosure of these arrangements, and its timing reflects both the political will of the current administration and the groundwork laid by over a year of congressional investigation.

“Sunlight is the best disinfectant” for the body politic!