For some charitable initiatives—including those at the start-up stage and those formed to tackle short-term or one-off projects—forming an independent 501(c)(3) organization might not be a practical or cost-effective strategy. Fiscal sponsorship allows charitable projects to operate under the tax-exempt status of an existing 501(c)(3) organization (the "sponsor"), including the ability to receive tax-deductible donations, without forming an independent entity. The fiscal sponsor may charge a fee to act in this capacity.
Fiscal sponsorship arrangements can be an effective way of leveraging the creativity and energy of individuals or groups; for existing 501(c)(3) organizations, sponsoring allied projects can advance the nonprofit's own charitable mission. However, both sponsors and projects must be careful when structuring their arrangement to comply with IRS rules, as failure to do so may jeopardize the sponsor’s tax-exempt status. Join us for a webinar where we discuss the key IRS requirements, the non-delegable duties of sponsors and projects, and considerations for drafting a written fiscal sponsorship agreement.