This bill, known as the SPONSOR Act, seeks to amend the Internal Revenue Code of 1986 by establishing new liabilities for 501(c)(3) organizations that engage in fiscal sponsorship. Specifically, if a 501(c)(3) organization expends funds for a fiscal sponsorship and donors receive tax deductions for contributions to that sponsorship, the organization will bear criminal and civil liability for certain sponsored activities. This measure aims to ensure greater accountability for how fiscally sponsored funds are utilized. The legislation defines covered activities that trigger this liability, including aiding international terrorism, intentionally injuring or intimidating individuals exercising constitutional rights, or obstructing interstate and intrastate commerce. A fiscal sponsorship is defined as a relationship where a 501(c)(3) receives and administers funds for a non-exempt project while retaining discretion and control over those funds. While the bill presumes the sponsoring organization is responsible for ensuring compliance, it allows for defenses based on the exercise of due diligence and reasonable oversight.