Texas – “Liberals are using loopholes in the nonprofit tax system to secretly fund groups that promote leftwing political violence,” Texas Senator Ted Cruz said as he called for new restrictions on tax-exempt organizations and defended a federal investigation into nonprofit funding networks.
“The DOJ is right to investigate, and I’m working with colleagues in Congress to advance my legislation closing those loopholes,” Cruz wrote in a July 2026 post on X.
Cruz’s comments came as the Department of Justice investigates the financial activities of a network of nonprofit organizations connected to Neville Roy Singham, a wealthy technology entrepreneur whose funding of progressive and activist groups has drawn scrutiny from Republican lawmakers. According to reports, the DOJ investigation is examining financial relationships involving tax-exempt organizations and whether any laws were violated.
The senator has been promoting the SPONSOR Act, legislation that would change how accountability is handled for organizations that provide financial support to nonprofits accused of engaging in illegal activity. Cruz argues that current tax rules allow organizations to avoid responsibility by using nonprofit structures to direct money toward groups involved in political violence.
The legislation, formally known as the Stop Proxy Organizations Nurturing Subversive Operations and Riots Act, would seek to hold tax-exempt sponsors accountable if organizations they support engage in certain unlawful activities, according to Cruz’s office and reports about the bill, PRN reported.
Cruz and other Republican lawmakers have argued that nonprofit transparency rules need to be strengthened to prevent abuse of the tax-exempt system. The issue has also been part of broader congressional oversight efforts examining the funding sources of nonprofit organizations operating in the United States.
The House Ways and Means Committee has separately conducted oversight of nonprofit organizations and raised concerns about foreign influence, funding transparency and whether some organizations are properly following requirements tied to their tax-exempt status. Committee Republicans have specifically focused on groups they say have connections to foreign interests and political activity.
Supporters of Cruz’s proposal say the legislation would prevent wealthy donors and nonprofit networks from using tax benefits to support illegal activity. They argue that organizations receiving tax advantages should face consequences if they facilitate unlawful actions.
Critics of similar proposals have raised concerns that expanding government authority over nonprofit organizations could threaten legitimate charitable groups and create opportunities for political targeting. They argue that existing laws already prohibit illegal activity and that enforcement should focus on violations rather than broad restrictions on nonprofit funding.
The DOJ investigation referenced by Cruz centers on allegations involving the nonprofit network associated with Singham. Republican lawmakers have highlighted the investigation as evidence that additional oversight may be necessary, while the details of the probe remain ongoing.
Cruz’s comments come as lawmakers continue debating the role of tax-exempt organizations in American politics. Federal law generally limits political activity by certain nonprofit organizations, while allowing many charitable and educational groups to operate with tax benefits under specific requirements.
The senator’s push for the SPONSOR Act reflects a broader Republican effort to increase scrutiny of nonprofit funding networks, while Democrats and nonprofit advocates have warned that new restrictions must be carefully balanced to protect legitimate organizations and free expression.
