Fiscal sponsorship is a unique relationship between a nonprofit like the Community Foundation (the fiscal sponsor) and a charitable project or group. In this relationship, the fiscal sponsor receives and manages charitable donations on your behalf, providing limited gift and grant oversight and stewardship so your project can get the resources it needs to reach its goals.

Fiscal sponsorship is typically a formal relationship between a nonprofit organization that is recognized by the Internal Revenue Service as 501(c)(3) tax-exempt (the fiscal sponsor) and an organization that may lack exempt status (the sponsored organization or project) to allow the sponsored organization to receive tax-deductible donations. In order for a fiscal sponsorship arrangement to pass muster with the IRS, the fiscal sponsor must: (1) retain supervision and control of funds raised and (2) ensure that funds are used in manner that furthers the fiscal sponsor’s own mission. In other words, the fiscal sponsor cannot simply act as a pass-through for donations to the sponsored organization.

Fiscal sponsorship can be a great option for new organizations that are unsure of whether they will be viable or that only intend to operate for a short time (such as those that respond to a disaster or organize a one-time event). Fiscal sponsorship can also be a temporary solution while an organization waits on the IRS to approve its own tax-exempt application.

For a group of caring people who want to make a difference, fiscal sponsorship can be a great fit in one of two situations:

1. You’re working on short-term, time-limited project with a clear end point—fundraising for a park or memorial, for example. During that time, fiscal sponsorship helps you access the donations and grants you need for your project.
2. You’re considering or working toward creating a 501(c)(3) nonprofit organization but want to be able to receive dollars for your efforts now, while still you’re pursuing that status. By the time you’re incorporated, you’ve already begun your work!

Entering into fiscal sponsorship doesn’t create a 501(c)(3) nonprofit organization or make your effort part of the Community Foundation, though it does involve opening a fund at the Community Foundation. Projects may use fiscal sponsorship as a stepping stone on the way to official incorporation as a nonprofit or as an alternative to incorporation for short-term goals.

Some donors and funders only give gifts and award grants to organizations with 501(c)(3) status. By partnering with the Community Foundation as your fiscal sponsor, you can receive those gifts and grants before you attain that status—or without ever needing to. Ultimately, this means you can access resources you couldn’t otherwise!  

Whether your project is time-limited or in its early stages, fiscal sponsorship by the Community Foundation can help give donors confidence because they know we will ensure that their dollars are used as intended. In other words, fiscal sponsorship can help extend the Community Foundation’s credibility to your project.

For those hoping to grow into independent 501(c)(3) status, fiscal sponsorship allows you to get started on your mission now, while you’re still working on that process.

As a bonus, fiscal sponsorship provides an easy way for donors to make online gifts for your project, and the Community Foundation takes care of the work of gift receipting for you.  

Although there are several issues for a start-up organization to consider before deciding to seek a fiscal sponsor, the overall benefits often outweigh the potential drawbacks. The primary reason most organizations seek a fiscal sponsor is the opportunity to receive tax-deductible donations, but fiscal sponsors can provide other services as well. For example, these services may include:

•  Bookkeeping
•  Insurance
•  Human resources administration
•  Legal advice
•  Grant reporting

For a brand new organization without paid staff, these services can be a tremendous benefit.

Fiscal sponsorship offers other benefits as well. For example, start-up organizations are able to focus on the mission of their organization and not be distracted by a lengthy 501(c)(3) application. They may also have access to funding sources that would otherwise not be available. Some funders that refuse to

support new organizations without a track record may consider donating to an organization with a fiscal sponsor, especially if the sponsor is established and respected. Finally, a sponsored organization may also be able to benefit from the sponsor’s guidance and support.

Keep in mind that the fiscal sponsor must exercise control over any funds that are designated for the project. The sponsored organization will therefore be subject to the fiscal sponsor’s oversight and the terms of any fiscal sponsorship agreement. Any project considering a fiscal sponsor should make sure that they are comfortable with the sponsoring organization and with this loss of autonomy.

In selecting a fiscal sponsor, a project should first look for organizations that have a similar mission to the project in order to comply with the IRS requirement that the project further the fiscal sponsor’s mission. Projects should also consider the reputation of the organization, whether it has experience acting as a fiscal sponsor, and whether it has the capacity to do the job.

Fiscal sponsorship is a truly valuable—but relatively specific—relationship.

For example, while the Community Foundation is always there to serve as a trusted ear, bounce around ideas, or offer advice, fiscal sponsorship does not include any official training, capacity building, or technical assistance.

As a fiscal sponsor, the Community Foundation is also not a marketer or fundraiser for your project. We can’t write grant applications for your project, but we will look at them to make sure they comply with what we can accept. And we will make sure your fund is well taken care of and that gifts are properly receipted, but you will still need to handle your own overall accounting for the dollars your group receives from your fund and from other sources, ensuring that you have a place to receive money and tracking your use of it.

Coweta Community Foundation (“CCF”) provides three types of fiscal sponsorships: 1.

Projects 2. Programs and 3. Agencies. All fiscal sponsorships of CCF must comply with

the mission of CCF which is to enhance our community’s quality of life by encouraging

philanthropic interaction in Coweta County.

This Fiscal Sponsorship Policy and Procedure defines: (a) how many of each type of

sponsorship CCF will support at any one time, (b) the structure and responsibilities

under each type of fiscal sponsorship, (c) the application, review, and approval process, (d) the services provided by CCF to each type of fiscal sponsorship, (e) the costs charged by CCF for each type of fiscal sponsorship, and (f) the length of each type of fiscal sponsorship.

Yes, your group must have its own advisory board or oversight committee made up of unrelated members. This is mandated by the IRS and used to demonstrate broad community support. Fiscal sponsorship is only available to groups. Individuals may not use fiscal sponsors to apply for a grant.

If you think fiscal sponsorship might be a good fit for you, reach out us at board@cowetafoundation.org or (770) 253-1833 for a conversation.