Treasury Signals a More Transparent Form 990: A Watch Item for 501(c)(3) Organizations
On April 23, 2026, the U.S. Department of the Treasury announced that the IRS intends to revise Form 990 to require clearer reporting from 501(c)(3) organizations in three areas: government contracts, government grants, and fiscal sponsorship arrangements. Treasury framed the effort as a transparency initiative meant to help the IRS and the public better understand the sources and uses of public funding that moves through the nonprofit sector.
Three target areas
Government grants and contracts can route substantial public dollars through tax-exempt entities, and Treasury wants the return to show those flows more plainly. Fiscal sponsorship, a lawful and longstanding structure in which one exempt organization houses and supports a charitable project, drew specific attention after congressional oversight raised concerns that some arrangements can obscure who actually operates a project and who controls its funds.
Why this is a watch item, not an action item
Nothing has changed on the current Form 990. Treasury and the IRS have said they expect to publish proposed regulations and open a public comment period before any reporting changes are finalized, and that they will weigh administrative feasibility, proportionality, and reporting burden as the proposal develops. In practice, that means a notice-and-comment window in which organizations and their advisors can respond before anything takes effect.
How to prepare
Organizations that receive government grants or contracts, or that operate or rely on fiscal sponsorship, can start mapping those relationships now, so they are ready to describe them clearly, if and when reporting expands. We are tracking the rulemaking and will flag the proposed regulations and the comment deadline as soon as they post. For the current filing season, no changes are required.
About the author. Lauren Koster is Managing Partner of Commonlight Legal, where she counsels 501(c)(3) public charities, private foundations, and 501(c)(4) organizations on formation, exemption strategy, and ongoing compliance and reporting obligations.
This article is for general informational purposes only and does not constitute legal advice. Reading this article does not create an attorney-client relationship. For advice specific to your organization's situation, contact your attorney or schedule a consultation with us.
