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Fiscal Sponsorship

This subject guide provides information and resources about fiscal sponsorship.

Additional Nonprofit Guides

Fiscal Sponsorship: Who Does What?

Infographic explaining what the fiscal sponsor does and what the sponsored project does.Infographic from the National Council of Nonprofits. Infographic link here.

Questions to Ask

Questions to ask of potential sponsors:

  • Is there alignment between the project and the mission of the sponsor?
  • Do they have experience w/ fiscal sponsorship?
  • Are there adequate resources (staff, systems) to ensure adequate oversight?
  • What is the board of directors’ approach to fiscal sponsorship?
  • How will risk and liability be handled?
  • Do they have adequate insurance coverage?
  • How would they manage closing the sponsorship?
  • Can you have an advisory board? Attend board meetings in a non-voting capacity?

Questions to ask of potential nonexempt community projects:

  • Does the project advance your mission?
  • Will the project be carried out by volunteers or will salaries for staff need to be raised?
  • What, if any, relationships do they have with potential donors/funders?
  • How long do they anticipate needing fiscal sponsorship?
  • Do they have a goal of establishing their own 501(c)3 organization?
  • How might this relationship either enhance or negatively impact our reputation?
  • Is taking on this project worth any potential risks it may present to our 501(c)3 status?
  • Do we have the administrative capacity to provide proper oversight and discretion over funding?
  • Are there any conflicts of interest?

Content - Fiscal Sponsorship: Setting Up for Success, Shannon Rauen, CFRE, MA

What to Expect

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.

Here’s why:

  • 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