Treasury Department Goes After Dark Money

On April 23, the US Treasury Department announced that the IRS plans to revise Form 990—the annual information return filed by tax-exempt organizations—to improve transparency and strengthen oversight, specifically targeting reporting on government contracts, government grants, and fiscal sponsorship arrangements. The stated goals are to detect misconduct and hold wrongdoers accountable.

Treasury Secretary Scott Bessent put the matter bluntly: “We are ending the days of hiding fraud, abuse, and extremist activity behind complicated nonprofit arrangements. When bad actors misuse charitable structures, directors and officers should understand that transparency can lead to scrutiny, accountability, and liability under the law.”

The acting IRS chief counsel added: “If an organization receives public funds or tax-deductible donations, it should be prepared to show who controls the money and where it goes.”

Why is this seemingly innocuous regulatory requirement a really big deal, as most Americans have no idea what Form 990 is used for?

Right now, enormous sums of money flow through nonprofit “umbrella” organizations to dozens or hundreds of sub-groups, and the paper trail essentially disappears. The IRS currently has no mechanism on the Form 990 to require disclosure of fiscal sponsorship arrangements. The new rules would force these pass-through organizations to reveal who is getting the money and what it’s being used for.

Think of this in the context of the Southern Poverty Legal Center indictments, which are only the tip of the iceberg of fiscal sponsorship arrangements and transactions.

Fiscal sponsorship is a legitimate and longstanding practice. In a typical fiscal sponsorship relationship, a nonprofit organization’s 501(c)(3) tax-exempt status is extended to groups engaged in activities that serve the fiscal sponsor’s mission, typically for a fee. Donations to the project are directed to the fiscal sponsor and are restricted to supporting activities of the charitable venture. The fiscal sponsor is responsible for assuring the activities of the project fulfill their charitable purpose. Here is how the left-wing Tides Foundation advertises fiscal sponsorships on their website.

The legitimate use case: a new charity that hasn’t yet received IRS 501(c)(3) status can operate under an established nonprofit’s umbrella while it goes through the process. The problem is what happens at scale when the model is weaponized.

Arabella Advisors (see below) and its affiliated entities utilized tax regulations in which groups who use a fiscal sponsorship arrangement do not have to file a Form 990 with the Internal Revenue Service. Using “pass-through” arrangements, funding is passed from one organization to another, making it difficult to trace where a donor’s money ends up.

As noted in the Treasury Department’s press release, recent congressional oversight has raised concerns that some fiscal sponsorship arrangements may be used to obscure who is operating a project, who controls project funds, and how those funds are being used.

The key loophole: because the sponsored “project” is not a standalone legal entity, it files no independent 990. Millions of dollars can be directed to a group that, on paper, barely exists—perhaps just a website—with no public accountability whatsoever.

Arabella Advisors, founded in 2005 by Clinton administration alumnus Eric Kessler, became the most sophisticated example of this model on the American Left. Arabella Advisors is a philanthropic consulting company that oversaw a handful of nonprofits, all of which oversaw a multitude of left-leaning projects and organizations. When accounting for the seven nonprofits in the Arabella Network, they provided nearly $1 billion in grants in 2023 alone. That buys a lot of elections and left-wing activism.

The scale is staggering. In the 2020 election cycle, Arabella’s nonprofits took in $2.4 billion, more than the fundraising of the Democratic and Republican National Committees combined. In the 2022 cycle, Arabella’s fundraising rose to $3 billion.

The Arabella-managed nonprofits collectively paid Arabella over $200 million in consulting fees while creating hundreds of left-wing policy and advocacy organizations through “fiscal sponsorship” agreements that generate “pop-up groups” that operate under the umbrella of an Arabella-managed nonprofit, are not required to file independent financial disclosure forms, and often exist as little more than a website.

The core technique—the “pop-up group”—is essential to understanding how the opacity works. Since the Arabella network’s inception, it sponsored at least 340 such groups. These groups rarely disclose their relationship to Arabella Advisors or its in-house nonprofits; nevertheless, many of them accept donations from the public, funds that go to Arabella’s nonprofits. This system also allows these groups to hide their funders, since it’s virtually impossible to trace individual grants to Arabella’s nonprofits to any particular group.

The flagship funds within the network—the New Venture Fund, Sixteen Thirty Fund, Hopewell Fund, Windward Fund, and North Fund—shuffle money among themselves, compounding the opacity. The five funds sent more than $52 million to Arabella Advisors as payment for operational and management services. On numerous occasions, the funds wired millions of dollars to each other, further obscuring which issues and initiatives individual grants supported.

Foreign money has entered this network as well. Swiss billionaire Hansjörg Wyss was able to move $475 million into various organizations to influence US politics and elections through his nonprofits. The Arabella Network can be linked directly to $265 million from Wyss’s Berger Action Fund and Wyss Foundations. Keep in mind that US election laws bar foreign nationals from contributing to candidates or PACs, but no equivalent restriction applies to nonprofits operating in this manner.

What did Arabella fund specifically? Arabella played a major role in battles over Supreme Court nominations, abortion, women’s sports, school discipline, environmental policies, fake local news outlets, “Zuck Bucks” that manipulate election offices, and more. One particularly notable example: An Arabella-sponsored group funded entirely with Soros money—”Governing for Impact,” started in 2019—worked with Harvard Law School to develop legal strategy memos on how to overturn dozens of federal regulations, including Title IX.

The Sixteen Thirty Fund in particular served as an electoral vehicle. The Sixteen Thirty Fund was behind several groups that ran issue advocacy ads to benefit Democrats during the 2018 midterms. The group also funded Demand Justice, which spent millions of dollars on ads attacking Brett Kavanaugh’s Supreme Court nomination. In 2020 alone, the Sixteen Thirty Fund donated $410 million toward defeating Trump and winning Democratic control of the US.

Arabella’s recent rebrand: Facing sustained scrutiny, Arabella announced it would be shuttering, to be replaced by a trio of successor organizations. The fiscal sponsorship division was acquired by Sunflower Services, a newly formed public benefit corporation. The remaining divisions of Arabella formed a new company called Vital Impact. Sunflower Services is at least majority-owned by the three biggest C3 charities in Arabella’s old empire—New Venture, Hopewell, and Windward Funds. Critics note this is a restructuring, not a shutdown; the same infrastructure continues under friendlier-sounding names.

Tides predates Arabella by three decades and essentially invented the fiscal sponsorship model for the Left. Tides founder Drummond Pike envisioned using fiscal sponsorship for progressive political activism. Fiscal sponsorship uses a tax-exempt charity to provide financial support to a non-exempt project or organization, thereby lending it tax exemption as long as the charity retains control of the way its funds are spent.

Between 1996 and 2010, the Tides Center served as a fiscal sponsor to some 677 separate projects with combined revenues of $522.4 million; in 2010 alone, the Center was actively managing nearly 200 projects.

Tides founder Pike himself acknowledged the core purpose of the model: “Anonymity is very important to most of the people we work with.” The Tides Center has been described as an organization that effectively washes away the paper trail between grants and the original donor.

The combined Tides network is enormous. The six Tides nonprofits saw combined total revenues of $785,605,823 in 2024. The Tides Center offers comprehensive fiscal sponsorship to projects that do not have their own tax-exempt status from the IRS. Again, note that Form 990 has no mechanism for disclosing fiscal sponsorship activities. Some current and past Tides Center projects include Fair and Just Prosecution, Palestine Legal, and the International Corporate Accountability Roundtable.

The Washington Free Beacon reported that in 2023, the Tides Foundation gave $286,000 to the Alliance for Global Justice, a group best known for serving as the fiscal sponsor of Samidoun—subsequently sanctioned by the US Treasury as a “sham charity” for providing material support to a Palestinian terrorist organization that participated in the October 7 Hamas attacks.

Tides has also used its fiscal sponsorship services to explicitly facilitate government grant-seeking. The fee for all funding from government sources is 15 percent, higher than standard rates because government grants entail significantly more paperwork and reporting—meaning Tides actively markets itself as a vehicle for its sponsored projects to access federal funding and takes a cut.

This is where taxpayer dollars enter the picture directly—distinct from private dark money, but often intertwined with it. Here are some estimates and examples.

USAID awarded more than $800,000 to New Venture Fund—a dark money pass-through nonprofit that cloaks which donors give to which nonprofits—and $27 million to the Tides Center.

The US Committee for Refugees and Immigrants, one of the nonprofits that transported illegal aliens across the country under the Biden administration, reported receiving $284 million of its $289 million in revenue from government grants—98.2 percent government-funded.

The Solidarity Center has received over $86 million from the federal government since 2008; $61 million of that was given under President Biden. Three Solidarity employees joined Biden’s Labor Department. Solidarity receives 99 percent of its total revenue from American taxpayers and serves the AFL-CIO, which gave 86 percent of its 2024 political donations to Democrats.

On the climate front: Inflation Reduction Act funds set aside hundreds of billions for the green agenda. A former staffer from an environmental group called the Coalition for Green Capital joined the Biden EPA specifically to direct $27 billion in green funding. Under his tenure, $5 billion was granted to his former organization. Power Forward Communities received nearly $9 billion despite being only a few months old when it applied—and one recipient was a group affiliated with Stacey Abrams that had only $100 in the bank when it received $2 billion.

The Environmental Law Institute, which ran a “Climate Judiciary Project” to educate federal and state judges in favor of climate tort litigation against energy companies, received millions of dollars in grants and contracts from the EPA, the Departments of Justice, Homeland Security, Agriculture, and State, and the National Science Foundation between 2021 and 2024.

Regarding the SPLC specifically: Despite the SPLC reporting $132.7 million in revenue and nearly $770 million in net assets for 2021, the State Department still granted honorariums and speaker fees to SPLC officials. Additionally, a Biden-era Department of Labor approved a $6 million “employment training” grant for NextGen, a nonprofit that fights for “progressive policy change” through advocacy and civic engagement.

The SPLC itself is in the news for separate reasons: the Justice Department indicted the Southern Poverty Law Center on federal fraud charges, alleging it improperly raised millions of dollars to pay informants to infiltrate the Ku Klux Klan and other extremist groups.

The revolving door between these funded NGOs and Democratic administrations is a key part of the story. Personnel from Open Society Foundations and associated left-wing groups cycled in and out of the Biden White House, Justice Department, and other agencies—the same people who had previously shaped grantmaking priorities then directed government money toward aligned organizations.

In just the first month of the Trump administration, 15 groups that had received federal cash from the previous administration sued the current administration, mostly to protect their funding, which totaled $1.6 billion. This is the feedback loop in miniature: government grants activist groups → activist groups lobby for more government → activist groups litigate against anyone who tries to stop it.

Several converging factors explain the timing of the Treasury Department’s April announcement:

1. Congressional pressure has been building. Multiple House hearings over the past year—the DOGE Subcommittee hearing “Public Funds, Private Agendas: NGOs Gone Wild” and the Judiciary Subcommittee hearing “How Leftist Nonprofit Networks Exploit Federal Tax Dollars”—have built an extensive public record and created political momentum for regulatory action.

2. The rebrand attempt flagged the problem. Arabella’s restructuring into Sunflower Services and Vital Impact in late 2025 was widely seen as an attempt to launder its reputation and escape scrutiny. The Treasury announcement signals that rebranding won’t be sufficient.

3. Form 990 has a structural blind spot. As noted in the Treasury Department’s press release, Form 990 has no mechanism for disclosing fiscal sponsorship activities. This isn’t a bug in enforcement—it’s a gap in the regulatory framework itself, one that has been known and exploited for decades. Treasury is finally moving to close it through regulatory action rather than waiting for Congress to act legislatively.

4.The SPLC indictment and related scrutiny. The indictment of the SPLC, combined with sustained focus on the Tides Foundation’s role in funding anti-Israel groups, has elevated the broader question of nonprofit accountability in the current political moment.

5. The “revolving door” has been documented. The Biden years produced extensive documentation of personnel moving between the dark money network and government agencies, with the explicit effect of directing public funds toward aligned organizations. The Trump administration is using every available tool—executive, regulatory, and prosecutorial—to dismantle these arrangements.

The bottom line is pretty straightforward: for decades, a small number of sophisticated nonprofit aggregators have used fiscal sponsorship to create a system in which billions of dollars—from private megadonors, foreign nationals, and American taxpayers—flow to politically aligned left-wing activist organizations with direct ties to the Democrat Party with essentially no public accountability. The sponsored groups don’t file their own 990s.

The pass-through organizations don’t have to disclose which projects their money supports. And the whole system is perfectly legal under current IRS rules. The Treasury announcement is the first significant regulatory step toward forcing disclosure of these arrangements, and its timing reflects both the political will of the current administration and the groundwork laid by over a year of congressional investigation.

“Treasury Secretary Scott Bessent put the matter bluntly: “We are ending the days of hiding fraud, abuse, and extremist activity behind complicated nonprofit arrangements. When bad actors misuse charitable structures, directors and officers should understand that transparency can lead to scrutiny, accountability, and liability under the law.”

No wonder the deep state is so desperate to take out the president. Imagine how this country would look without all the grift and corruption and back room political dealing. Taxes would be far far less. Homelessness would be almost nonexistent. Racism would not be what it is today as entities like the SPLC are stoking it. Crime wouldn’t be as prevalent for the same reason as well as the corrupted judges who are no doubt in the pockets of these nefarious groups. But no, our own money along with the billionaire donor class money is taking out the middle class, destroying families while promoting everything antithetical to the American way. Sadly.

I have not had time to digest this article completely, but in my first reading, this seems to be one of the best and most descriptive articles about this subject. I have only vaguely understood the concept of “Dark Money”, and that it involves money from unknown entities (both foreign and domestic) finding its way to Leftist candidates for American public office.

This article explains it, for the first time in my experience, in a way that I can understand it.

And it seems like a superhighway for money from people foreign and domestic who wish to see America either destroyed or “fundamentally transformed”, and that money can be pumped in by those people as they exploit loopholes.

This is long overdue. It explains the dismemberment of USAID and why the Trump Administration was absolutely, spot on correct and just to do it since it was a prime conduit for TAXPAYER MONEY to go DIRECTLY to people who wish to “Fundamentally Transform” America.

Great article. Thank you again for posting it. I hope it gets more eyes. Can you send it to a ping list?

"...No wonder the deep state is so desperate to take out the president. Imagine how this country would look without all the grift and corruption and back room political dealing...."

YES. That bears repeating. Excellent post, subterfuge.

Excellent post.

“”””revise Form 990—the annual information return filed by tax-exempt organizations—to improve transparency and strengthen oversight, specifically targeting reporting on government contracts, government grants, and fiscal sponsorship arrangements.”””

Do it, Sec Bessen!!!!

This change is much needed to expose the phony charities and NGO’s that are receiving government money.

Absolutely, I agree. From the article:

"...Arabella’s recent rebrand: Facing sustained scrutiny, Arabella announced it would be shuttering, to be replaced by a trio of successor organizations. The fiscal sponsorship division was acquired by Sunflower Services, a newly formed public benefit corporation. The remaining divisions of Arabella formed a new company called Vital Impact. Sunflower Services is at least majority-owned by the three biggest C3 charities in Arabella’s old empire—New Venture, Hopewell, and Windward Funds. Critics note this is a restructuring, not a shutdown; the same infrastructure continues under friendlier-sounding names..."

That is very revealing right there. You are spot on. This is a typical Leftist/scammer strategem. 100% typical of fraud and deception.

Change the name so people and simple investigators lose track of it. It muddies the water and obscures the trail to those who typically give up when the trail goes cold or takes a turn.

And our society is full of those kind of people who are too busy, don't possess the concentration or persistence, or are just too exhausted to follow the trail when it disappears when something as simple as the name is changed.

According to the article, you are correct. USAID appears to be one of the biggest sources of dark money (dark taxpayer money, that is) that is finding its way into entities that would further launder the money and distribute it to politicians and entities who wish evil on this country.

It makes me appreciate the seriousness of the Trump administration to put a lid on this kind of thing. I distinctly clearly recall that many people were puzzled about why an agency like USAID was treated in this manner.

Looking at it now, someone saw transparently what was being done and how much damage it was doing to the country by funding people who wanted to see it destroyed. Many of us may have been puzzled at this, seeming non sequitur, but someone in the Administration got the ear of Donald Trump and other important people, and acted on it.

I very much like and appreciate that approach. That is government that works.

When President George W Bush pushed his Faith Based Initiative in about 2004, it gave the government bureaucrats the green light to fund charitable organizations that were willing partners to do what government bureaucrats were legally prevented from doing.

Such things as escorting illegals into the USA and then placing them in US communities. Such charities like Catholic Charities were funded by the government to do this work.

I like the way Bessent is tackling this issue by revising the Form 990. This will force the 501C3 organizations to report funding from local, state, and federal governments.

The problem is not just a Federal government issue. Many times the Feds are sending money to a state or county and the state or county then distributes the money to charities or NGOs.

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