A fiscal sponsorship is an arrangement in which a 501(c)(3) nonprofit organization provides financial and legal oversight to projects and groups doing work related to the sponsoring nonprofit’s mission.
Some key things to know about fiscal sponsorships for nonprofits:
Allows new projects/groups to operate under an existing nonprofit’s legal and tax-exempt status. This avoids the need to incorporate separately and apply for 501(c)(3) status.
The fiscal sponsor handles all legal compliance, manages funds, and provides oversight on spending and activities.
The sponsored project/group can receive grants and tax-deductible donations through the fiscal sponsor. Donors write checks to the fiscal sponsor and earmark funds for the specific project.
The fiscal sponsor typically charges an admin fee to the sponsored group (5-15% of funds managed) for providing oversight and management.
Allows new projects to get up and running quickly while building a track record needed to eventually spin off into their own standalone nonprofit if desired.
Provides credibility to funders since an established nonprofit is providing oversight versus a new standalone organization.
Common for arts/culture, advocacy, health/science projects wanting nonprofit status faster and with less startup costs.
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