What is Fiscal Sponsorship?
According to the Trust for Conservation Innovation, a fiscal sponsor is “a nonprofit organization that provides
fiduciary oversight, financial management, and other administrative services to help build the capacity of charitable projects.”
Fiscal sponsorships are valuable for organizations that are not yet recognized as tax-exempt under IRS Code Section 501 (c)(3),
have had their tax-exemption revoked or find that it makes sense for them to operate under the umbrella of another tax-exempt organization
with a compatible mission.
What are the benefits?
The benefits are different for each fiscal sponsorship agreement – based on the specific needs of the individual organization
entering into the contract. Some basic benefits include:
- Donors are able to claim a tax deduction (for organizations which do not have tax-exempt status but are in a fiscal sponsorship
- The non-tax-exempt organization can, under a fiscal sponsorship agreement, accept grants from private foundations
- For emerging organizations, it can provide an opportunity to test its ideas to determine community need and/or value
- Allows for some organizations/programs to achieve their mission without ever creating a new and separate entity
- For some organizations, either tax-exempt or not, entering a fiscal sponsorship relationship makes sense because it allows
them to outsource some or all back-office tasks.
What services are available?
The services are customized to the needs of each individual organization entering into a fiscal sponsorship agreement.
Some of the possible services offered through such an agreement include:
- Receipt and administration of charitable contributions on behalf of the sponsored organization
- Paying bills
- Cash flow analysis
- Inclusion in annual Audit/990
- Capacity building
- Staff development
- Access to a data management and/or case management system
- Cloud services
- Programmatic compliance technical assistance and oversight
- Cash management
- Grant management
- The National Network of Fiscal Sponsors
- National Council of Nonprofits – Fiscal Sponsorship for Nonprofits
- Fiscal Sponsorship: Who Does What?
- Nonprofit Expert: Fiscal Sponsorship