On April 23, 2026, the Treasury Department announced a Form 990 overhaul aimed at what it calls hidden funding in the nonprofit sector. The initiative names two focus areas for expanded disclosure: government grants and contracts, and fiscal sponsorship arrangements. If you sponsor projects, or run one, the annual return your sponsor files is about to get more curious about your setup.
Fiscal Sponsorship Is Named as a Target, Not a Footnote
Federal tax forms rarely single out fiscal sponsorship. The current Form 990 does not ask filers whether they sponsor projects at all: a comprehensive sponsor's projects report inside the sponsor's own program and financial lines, and nothing on the form requires naming them. Treasury now describes that arrangement as an accountability gap. Its release points to concerns that some sponsorship arrangements can obscure who operates a project, who controls its funds, and how those funds are used (concerns it says increased reporting can help address), and tax advisers read the announcement as flagging fiscal sponsorship as a higher-risk area for misuse of funds and reduced public accountability.
The department's framing is pointed. Secretary Scott Bessent said Treasury is "ending the days of hiding fraud, abuse, and extremist activity behind complicated nonprofit arrangements." You do not have to accept that characterization of the model — most sponsors run clean, well-documented programs, and fiscal sponsorship has been a recognized practice for decades — to see the operational direction: regulators want the relationships on paper and in public view.
What the New Form Is Likely to Ask
Treasury has not published draft language, so specifics are informed reading between the lines. Based on the release and advisers' readings of it, expect questions in three areas: identifying sponsored projects by name rather than folding them into program totals, disclosing who exercises control over each project's funds, and explaining how money moves between sponsor and project. On the government-funding side, expect clearer reporting of public dollars a sponsor receives on behalf of its projects.
Remember that the Form 990 is a public document. Whatever the final version asks about your projects will be visible to journalists, funders, and competitors, not just the IRS. Sponsors that treat their project roster as semi-private should plan for that to change.
Nothing Is Final Yet, and That Is the Useful Part
The announcement is a statement of intent, not a rule. Treasury and the IRS say they will publish proposed regulations and take public comment before any reporting changes are finalized, and the agency has indicated it expects to issue the proposed rulemaking later in 2026, though finalizing changes could take considerably longer. No comment deadline exists yet because there is nothing yet to comment on. That gives sponsors two things: time to prepare, and a future window to tell regulators where a draft requirement would be unworkable. Nonprofit groups weighed in heavily when the federal grant-rule overhaul went through comment; expect the same here.
What Sponsors and Project Leads Should Do Now
The preparation work is the same work that makes a sponsorship healthy anyway. First, make sure every project has a current written agreement that states the model, the sponsor's control over funds, and the exit terms: the things a good agreement covers before anyone signs. Second, confirm your books can produce per-project numbers on demand: restricted balances, receipts, disbursements, and administrative fees. If reconstructing a project's finances takes a week of spreadsheet archaeology, the new form will hurt.
Third, check that what you already tell the IRS matches what your documents say. Advisers recommend auditing current 990 disclosures around government funding and sponsorships now, so any gaps get fixed on your schedule rather than under a filing deadline. And if you are a project lead rather than a sponsor, ask your sponsor how they plan to report you. A sponsor that cannot answer is telling you something. It is the same signal you would read from a vague answer about how the sponsorship model works in the first place.
The takeaway
Treasury has said publicly that fiscal sponsorship reporting is changing; only the details and timing are open. The sponsors who will sail through are the ones whose agreements, ledgers, and filings already tell one consistent story. Get those three things aligned before the proposed regulations land, and the new Form 990 becomes paperwork instead of a problem.