How can your new organization meet its goals and expand its community outreach? Fiscal sponsorship could be your answer.
Fiscal sponsorship is a formal arrangement in which a 501(c)(3) public charity sponsors a project that lacks exempt status, allowing that project to seek grants and solicit tax-deductible donations under the sponsor’s exempt status. At HSI, this includes tax exemption paperwork and marketing outlets. Using a fiscal sponsor satisfies IRS requirements, while allowing the organization to make its own decisions on how to charitably use its contributions.
How do I know If Fiscal Sponsorship Is Right For My Organization?
Newly formed nonprofits can benefit greatly from fiscal sponsors, especially in their incubation stage, as they are trying to raise enough money to file an IRS tax exemption and begin programming. Fiscal sponsorship provides programs that are not tax-exempt with a fluent path to revenue, which the organization may not otherwise be in a position to receive.
Keep in Mind:
- Donors may not claim a tax deduction unless they itemize deductions and donate to an organization that is recognized by the IRS as tax-exempt pursuant to IRS Code Section 501(c)(3) (National Council of Nonprofits).
- The guidelines of most private foundations explicitly require grantees to be recognized as tax-exempt by the IRS. Consequently, groups that are not formally recognized by the IRS as tax-exempt are generally not eligible for grants from private foundations (National Council of Nonprofits).
- Fiscal sponsorship can help newly formed nonprofits test-drive their ideas to determine whether there is a market or a desire among the public to fund the end product (National Council of Nonprofits).
- Some programs remain in a fiscal sponsorship relationship for a long time, as they can best achieve their mission in this structure. (National Council of Nonprofits).
- Some organizations – including those that are tax-exempt – find that outsourcing their administrative responsibilities to a fiscal sponsor, whether back-office tasks, or those relating to fundraising and disbursement of funds, is the right business model for them. This structure might be particularly well-suited for all-volunteer organizations (National Council of Nonprofits).
HSI offers fiscal sponsorship to charitable projects, grassroots movements or startup nonprofits looking to make an impact on humanity. If your organization needs connection to resources to empower you and maximize your organization’s impact, contact email@example.com for information about our application process.