The explanation I've seen is that "transformative" is a piece of legal jargon involving copyright law (i.e. works judged to be sufficiently "transformative" can fall under the increasingly narrow umbrella of fair use). By describing fanfiction as "transformative works," they're trying to make a case that fans shouldn't be prosecuted or sued for writing/sharing it.

You're not the first person to object to the use of SAT vocabulary words in the organization's name, though. A vocal set of fans think it's offputting and pretentious.