U.S. Senators Ted Cruz (R-Texas) and Ted Budd (R-N.C.) have introduced the Stop Proxy Organizations Nurturing Subversive Operations and Riots (SPONSOR) Act in Congress. The proposed legislation seeks to address what its sponsors describe as gaps in the Internal Revenue Code that allow organizations to use tax-exempt funds for activities without sufficient transparency or accountability, including support for political violence.
Senator Cruz stated, “Loopholes in the Internal Revenue Code allow radical groups to use tax-exempt funds to bankroll violent, anti-American activity opaquely and therefore with impunity. The violence that has spread in recent years in our cities and on our college campuses is not organic. It is enabled by funding from well-resourced organizations that exploit such loopholes, including and especially through fiscal sponsorships. My legislation closes these loopholes, and I urge my colleagues to advance it with the necessary expediency.”
A companion bill was also introduced in the House of Representatives by Representative Nathaniel Moran (R-TX-1). Rep. Moran said, “Congress has a duty to safeguard the integrity of our nonprofit system and ensure our tax laws are not exploited by extremist or radical groups operating in the shadows. When fiscal sponsorship arrangements allow lawlessness to fester without accountability, we are failing the taxpayer and undermining the public’s trust in legitimate charities. I’m proud to stand with Senator Cruz on this bicameral legislation so sponsors are held responsible for the projects they fund and the rule of law is restored.”
The America First Policy Institute supports this legislation. Chad Wolf, chair of Homeland Security and Immigration at AFPI, commented: "Over the past several years, we have watched American communities increasingly fall victim to violent protests, fueled by financial networks that seek to undermine government institutions and incite lawlessness. The SPONSOR Act will help keep Americans safe by closing the legal loopholes that allow proxy organizations to finance violent activity and by cutting off resources to domestic extremist groups that continue to carry out destructive, anti-American campaigns.”
The SPONSOR Act would amend Section 501(c)(3) of the Internal Revenue Code so that tax-exempt sponsors could be held criminally or civilly liable for violations committed by their sponsored entities.
In related legislative efforts last year, Senator Cruz also introduced a separate measure—the Stop FUNDERs Act—which aimed at allowing federal authorities broader tools under RICO statutes against those who fund or coordinate violent interstate riots.
Ted Cruz has previously won several general elections for his Senate seat; most recently he defeated Colin Allred in 2024 with 53.1% of votes compared to Allred's 44.6%. In earlier races he prevailed over Beto O'Rourke in 2018 with 50.9% of votes versus O'Rourke's 48.3%, and Paul Sadler in 2012 with 56.5% against Sadler's 40.6%.
