Remember that fiscal sponsors to ensure nonexempt community projects are acting in accordance with all applicable local, state, and federal laws.
- Projects will have to regularly communicate, submit reports and records
- The fiscal sponsor does retain control and discretion over the use of funds
Fiscal sponsors must also follow all applicable laws and regulations
- To include receiving, booking, and acknowledging all contributions in accordance with GAAP and IRS requirements
Negotiating these relationships takes time
- Expect that a legal document like a memorandum of understanding (MOU) or another type of agreement will need to be put into place
- This document should spell out expectations for both sides
- It should also clearly identify how the sponsorship will end and how remaining funds will be managed; it is always best to begin with the end in mind
A fiscal sponsor will likely charge some form of an administration fee.
- Accounting systems, bookkeepers, 990 & state/local filings
- Staff time for overseeing and managing the program
- Liability insurance
- No set amount but typically ranges between 5-10% of all funds held on behalf of the sponsored community project
Content - Fiscal Sponsorship: Setting Up for Success, Shannon Rauen, CFRE, MA