Smucker Foreign Grant Reporting Act Receives Unanimous Support in Committee

Washington—Rep. Lloyd Smucker’s (PA-11) Foreign Grant Reporting Act was favorably reported from the Committee on Ways and Means by a unanimous vote.    

Rep. Smucker’s legislation would address a loophole in current law. Currently, certain U.S.-based nonprofits must disclose information regarding grants they make to other domestic organizations, but not grants made to foreign entities. The Foreign Grant Reporting Act would require any tax-exempt organization to include in their annual filing certain information regarding any grants they provide to foreign entities.

Information required to be reported would include: the name and address of the foreign entity, the aggregate amount of such grants, and whether the foreign entity is a charity.

Watch Rep. Smucker’s comments regarding H.R. 8290, the Foreign Grant Reporting Act.

Rep. Smucker’s remarks as prepared for delivery:

“The tax-exempt sector has grown exponentially.

According to the IRS, in 2022, there were 1.48 million 501(c)(3) tax-exempt organizations, 271 percent higher than three decades prior, in 1992, when there were 546,100.

According to the Census Bureau, nonprofit employment has increased by 33 percent compared to private sector job growth of 9 percent over the past 15 years.

The legislation I introduced, the Foreign Grant Reporting Act, can be summarized in two words. transparency and parity.

Let’s start with transparency.

When this Committee met late last year to discuss how foreign money can influence U.S. elections and domestic policy, we discovered the lack of transparency when it comes to how tax-exempt organizations receive money from foreign entities, and how they send money out to foreign entities.

We learned that U.S. tax-exempt organizations are not required to disclose any grants they send to foreign entities.

Why does this matter?

Since the horrific October 7 terrorist attacks in Israel, we have seen a surge of anti-Semitic and anti-American protests in cities and on college campuses.

Tax-exempt organizations such as National Students for Justice in Palestine and American Muslims for Peace are currently under investigation for possibly providing material support to Hamas, which is a designated Foreign Terrorist Organization.

These tax-exempt entities can take advantage of a loophole in the tax code which doesn’t require 501c’s to disclose any grants they provide to foreign entities.

Since these tax-exempt entities aren’t required to disclose information about grants they provide to foreign entities, we have little transparency into if these grants may end up supporting terrorism or other malicious actions, intentionally or indirectly.

When tax-exempt sector provides grants to domestic entities, they are already required to disclose information about the recipients in their annual tax filings.

My legislation will bring parity to this situation.

The Foreign Grant Reporting Act will require 501(c) organizations to include basic information about the grants they provide to foreign entities in their annual tax filings.

This includes the name and address of a foreign entity, the aggregate amount provided to a foreign entity during the tax year, and if a foreign entity receiving the grants are charities.

This is the same information 501(c) organizations already must provide about grants they give to domestic entities.

By bringing parity to reporting requirements between foreign and domestic grants, this legislation will bring greater transparency into money leaving the U.S. and hold tax-exempt organizations accountable to their donors and to the country.

Thank you Mr. Chairman and I yield back.”  

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