Fiscal Sponsor
An established 501(c)(3) organization that provides its tax-exempt status and administrative infrastructure to a project or group that lacks its own exemption.
Fiscal sponsorship is an arrangement in which an established 501(c)(3) tax-exempt organization (the fiscal sponsor) extends its legal and tax-exempt status to a project, group, or initiative that does not have its own 501(c)(3) determination. This allows donors to make tax-deductible contributions to the sponsored project through the sponsor, and it enables the project to apply for grants that require 501(c)(3) status. Fiscal sponsorship is commonly used by newly formed organizations awaiting their own IRS determination, community projects that may not need permanent nonprofit status, artistic and cultural initiatives, and social movements. There are two primary models: Model A (comprehensive or direct project) where the project is a program of the sponsor and the sponsor maintains full legal and fiduciary control, and Model C (pre-approved grant relationship) where the sponsor makes grants to the project, which operates with more independence. The National Network of Fiscal Sponsors has established guidelines and standards of practice for this arrangement. Fiscal sponsors typically charge an administrative fee of 5-15% of the project's budget. On Form 990, fiscally sponsored projects appear within the sponsor's financial data, which means a large fiscal sponsor's revenue and expenses may include multiple distinct projects. Donors researching fiscally sponsored projects on NonprofitTruth should be aware that the financial data reflects the sponsor organization's aggregate operations, not the individual project.