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501(c)(3) organization

A type of non-profit organization recognized by the IRS as tax-exempt because it is organized and operated exclusively for charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, or preventing cruelty to children or animals purposes. Donations to these organizations are generally tax-deductible.

Fiscal sponsorship

An arrangement where an established 501(c)(3) organization agrees to manage the funds for a project or group that does not have its own tax-exempt status. This allows the project to receive tax-deductible donations through the sponsor.

Internal Revenue Code of 1986

The main body of U.S. federal tax law, which governs income, excise, gift, and estate taxes, and includes rules for tax-exempt organizations.

Section 170 deduction

A provision in the Internal Revenue Code that allows individuals and corporations to deduct contributions made to qualified charitable organizations from their taxable income.

Covered activity

Specific actions defined in this bill that, if engaged in by a fiscally sponsored project, would trigger criminal or civil liability for the sponsoring 501(c)(3) organization.

Due diligence

The reasonable steps taken by a person or organization to avoid harm to other persons or their property, or to comply with laws or regulations. In this context, it refers to the efforts a fiscal sponsor makes to ensure its sponsored projects comply with legal requirements.