On April 23, 2026, the U.S. Department of the Treasury (Treasury) announced a Form 990 transparency initiative, signaling potential future changes to annual reporting requirements for certain tax‑exempt organizations under Section 501(c)(3). While no immediate filing changes apply, the initiative points to increased regulatory focus on transparency, accountability, and oversight for nonprofits receiving public or tax‑advantaged funding.
What Treasury and the IRS Are Evaluating
Treasury has directed the Internal Revenue Service (IRS) to consider revisions to Form 990 that would require clearer and more consistent disclosures in areas where transparency concerns have been identified, including:
- Government grants and government contracts
- Fiscal sponsorship arrangements
- Complex funding and pass‑through structures
Treasury officials noted that these funding sources often involve taxpayer dollars or tax‑deductible contributions, and enhanced reporting could help strengthen compliance, deter misuse of funds and improve public confidence in the nonprofit sector.
Increased Focus on Accountability and Control
In announcing the initiative, Treasury leadership emphasized that tax‑exempt status carries heightened responsibility, particularly when organizations receive public funding or charitable contributions. Proposed reporting updates are intended to clarify who controls nonprofit resources, how funds are used, and how financial activity aligns with an organization’s exempt purpose.
Fiscal sponsorship arrangements were highlighted as a particular area of interest. While these structures are lawful and widely used, Treasury indicated that current reporting may not always clearly identify roles, responsibilities and operational accountability. Recent congressional oversight has added momentum to call for greater clarity in this area.
Form 990 Timing and Next Steps
No changes to Form 990 requirements are currently in effect. Treasury and the IRS expect to issue proposed regulations later, followed by a public comment period. Administrative burden and reporting feasibility will be considered as part of the rulemaking process.
What This Means for Your Organization
Although action is not required today, organizations may benefit from proactive preparation, especially if they:
- Receive federal, state or local government funding
- Participate in fiscal sponsorships as a sponsor or sponsored project
- Utilize multi‑layered or intermediary funding structures
Boards, executive leadership, and finance teams may want to evaluate whether current Form 990 disclosures accurately reflect how funds are sourced, controlled and deployed, and whether governance documentation aligns with actual operations.
How Cherry Bekaert Can Help
Cherry Bekaert’s nonprofit professionals actively monitor regulatory developments affecting tax‑exempt organizations. If you would like to assess your current Form 990 disclosures for clarity and potential risk exposure, evaluate fiscal sponsorship and funding structures, and prepare for potential reporting changes before new requirements take effect, reach out to our Not-for-Profit tax team today.
