Every summer, the IRS Exempt Organizations (EO) division releases its work plan – offering a glimpse into the agency’s priorities for oversight and enforcement. The 2025 Work Plan confirms what many nonprofit leaders and advisors have suspected – the IRS is sharpening its focus on transparency, accountability, and modern fundraising practices.
Here’s what to watch for—and what to do about it.
1. Digital Asset Fundraising – IRS Scrutiny Is Coming
The IRS’ 2025 Exempt Organizations Work Plan is prioritizing review of nonprofits that solicit or receive cryptocurrency and other digital assets. They’re especially focused on whether organizations:
- Have a gift acceptance policy that addresses crypto,
- Properly value and report crypto gifts,
- File Form 8282 when required, and
- Avoid improper donor benefits or private inurement.
What to do – If your nonprofit accepts crypto (or plans to), now is the time to draft or update your gift acceptance policy, tighten internal controls, and ensure your accounting system is equipped to handle valuation and tracking.
2. Foreign Grantmaking and Operations Abroad
Cross-border grants remain a hot button. The IRS is reviewing whether U.S. charities are following expenditure responsibility rules or exercising appropriate oversight over foreign affiliates and partners. EO agents are also on the lookout for potential terrorism financing risks and whether activities abroad are advancing exempt purposes.
What to do – Document your vetting process, contracts, and reporting for foreign grantees. If you rely on equivalency determinations, be prepared to support them.
3. Audit Triggers – Unusual Grants, Compensation, and Related-Party Transactions
According to the 2025 Exempt Organizations Work Plan, the IRS is continuing its focus on governance and transactions that hint at private benefit or abuse. This includes –
- Large or recurring grants to insiders or affiliates,
- Excessive compensation, especially for board members, and
- Loans or asset transfers to related entities.
They’re also flagging Form 990s that show no board meetings, no whistleblower policies, or unchecked “yes” answers with no explanations.
What to do – Review your 990 with an auditor’s eye. Make sure disclosures are complete and accurate, and your policies are more than paper.
4. Donor-Advised Funds (DAFs) and Supporting Organizations
While Congress debates further reforms, the IRS is targeting DAFs and Type III supporting organizations for compliance reviews. The agency is particularly interested in payout practices, control by donors, and circumvention of private foundation rules.
What to do – If you sponsor or advise DAFs or work with supporting organizations, make sure your structural and operational compliance is well documented.
5. The Big Picture – Technology, AI, and Data Matching
The IRS continues to modernize how it selects organizations for audit. Expect more data-driven enforcement using AI to identify anomalies across thousands of Form 990s. The agency is also investing in digital infrastructure to speed up enforcement.
What to do – Assume the IRS is connecting the dots across forms, years, and related parties. Consistency and transparency matter more than ever.
Final Thoughts
The 2025 IRS EO Work Plan isn’t about new rules—it’s about heightened enforcement. For well-run charities, this is a chance to tighten compliance and stand out for the right reasons. For others, it’s a warning shot.
If your nonprofit hasn’t reviewed its policies, filings, or governance practices in the last 12 months, now is the time.
Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on federal tax and fundraising regulations nationwide. Ellis also advises donors concerning major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.