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Preparing for What’s Next: Treasury and IRS Guidance Priorities for Not-For-Profit Organizations
The U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) released their 2026-2027 Priority Guidance Plan on September 29, 2026. The plan’s 121 projects include reporting and private foundation grantmaking.
The plan now follows the federal fiscal year, covering October 1, 2026, through September 30, 2027. Inclusion on the Priority Guidance Plan does not mean a rule is final or that guidance will be issued this year or in the immediate future.
The potential impact will vary considerably by organization type. Fiscal sponsorship programs, private foundations, higher education institutions and other tax-exempt organizations should evaluate the projects most relevant to them and consider how future guidance could affect them.
Key Areas for Tax-Exempt Organizations to Monitor
Fiscal Sponsors and Sponsored Projects
- The section 6033 project explicitly names fiscal sponsorship, but no new disclosures or model changes have been announced.
- On April 23, 2026, the Treasury announced IRS plans for a Form 990 transparency initiative that includes fiscal sponsorship. The aim is clearer reporting about who runs sponsored projects, who controls their funding and how it’s used. Treasury and the IRS expect to issue proposed rules and public comments before finalizing reporting changes.
Donor-Advised Fund Sponsors
- Guidance on certain donor-advised fund arrangements under sections 4966 and 6033 is on the agenda. The plan doesn’t specify which donor-advised fund arrangements are involved or announce new distribution or reporting requirements, leaving the scope and potential impact of the guidance to be determined.
- For sponsors, the line between donor advice and sponsor control deserves attention because an account’s classification affects its distribution rules and Schedule D reporting. Depending on what the guidance covers, sponsors may want to review account structures, grant approvals or reporting practices.
Private Foundation Grantmaking
- The agenda includes expenditure responsibility regulations under section 4945 and guidance on public-inspection locations under section 6104. It doesn’t say whether either will offer relief.
- If a grant requires expenditure responsibility, the foundation needs written commitments, grantee reports and Form 990-PF reporting. Failures can trigger excise tax. Changes to inspection locations wouldn’t make Form 990-PF or exemption materials private.
Higher Education Investment-Income Tax
- The IRS has section 4968 regulations on its agenda for the net investment income tax that applies to certain private colleges and universities.
- Changes made in 2025 apply to tax years beginning after December 31, 2025. Covered private institutions pay tax on net investment income, not the endowment balance itself. Affiliate assets can affect whether the tax applies and at what rate, which in turn affects cash available for programs and aid.
Private Schools and Scholarship-Granting Organizations
- The school-related projects cover final private-school racial nondiscrimination regulations and section 25F scholarship regulations. Temporary and proposed section 25F rules were already issued on October 1, 2026.
- The private-school proposal isn’t final, but admissions and scholarship criteria can affect a school’s exemption. In 2027, individuals can receive up to a $1,700 credit for qualifying cash gifts to eligible scholarship-granting organizations listed by participating states. Donors shouldn’t assume every scholarship charity qualifies.
Political Campaign Guidance
- The agenda also includes Johnson Amendment guidance on section 501(c)(3) political campaign prohibition, without announcing any new permission or exception.
- An organization’s candidate endorsements or campaign contributions can put its exemption at risk and trigger excise tax. Nonpartisan forums or voter guides may be permissible, depending on how they’re conducted.
Group-Exemption Networks
- Revisions to Rev. Proc. 2026-08 for certain types of group exemption letters are on the list, but the plan doesn’t spell out the changes.
- A chapter’s coverage depends on its affiliation and the central organization’s supervision or control. Chapters still have to file annual returns or be included in a group return unless a filing exception applies. Filing records help with oversight, and existing groups also have transition provisions.
Thinking Ahead (Cautiously)
The Priority Guidance Plan provides a roadmap of where the Treasury and IRS intend to focus their attention, but it should not be treated as a set of new requirements. For tax-exempt organizations, the immediate priority is to understand which potential developments could affect them organization and what those developments may mean. Organizations that understand their potential areas of impact now will be better positioned to make informed decisions and respond efficiently if final guidance is issued.
Have Questions or Need Guidance?
Withum’s Not-for-Profit Services Team can help organizations assess which projects may be most relevant, evaluate potential implications and develop a proportionate strategy for future guidance.
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