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A proposed change to the Form 990 would require 501(c)3s to disclose whether their top officials have been convicted of financial or terrorism-related crimes.
The U.S. Treasury is mulling dramatic changes to our nonprofit system. It announced in April that it plans to revise the Form 990, which nonprofits file annually with the IRS, “to improve transparency, strengthen tax administration, and provide clearer reporting on certain activities . . . to detect misconduct and hold wrongdoers accountable.” The main condition for nonprofits’ favorable tax status is scrupulous adherence to the law. Without some transparency, Treasury Secretary Scott Bessent pointed out, bad actors can hide “fraud, abuse, and extremist activity behind complicated nonprofit arrangements.”
One potential measure for increased transparency has raised eyebrows. CBS News has reported that “the Trump administration is weighing a proposal to require nonprofits to disclose in their annual tax filings whether their top officials have been convicted of certain financial or terrorism-related crimes.” Though there is nothing inherently illegal about employing ex-convicts, the government wants to know if nonprofits are being run by people who have engaged in “material support to terrorists, fraud, money laundering, securities fraud, tax evasion” or similar unlawful acts.
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Tal Fortgang is a legal policy fellow at the Manhattan Institute. His interests include law, political theory, religion, ideology, and culture, and his popular writings have appeared in City Journal, Commentary, National Affairs, National Review, and other publications.