Fiscal Sponsor

What is a Fiscal Sponsor

A Fiscal Sponsor ( a.k.a. Fiscal Agent) is a non-profit organization with an active 501(c)(3) tax exempt status from the IRS that acts as a guardian of grants and donations for a project or organization that does not have a 501(c)(3) designation. Most such affiliations with fiscal sponsors are rather formal, based on a written contract that spells out who will do what, and some sponsors will extract a fee for this service.

A Fiscal Sponsor is necessary for one good reason: most funders do not make donations to anyone without 501(c)(3) status. That’s because tax exempt status, like incorporation, bylaws and other formal designations, inspires confidence in potential donors and funders. It demonstrates that the organization has a legitimate charitable purpose and is accountable to the public. Additionally, 501(c)(3) status provides the donor with the ability to deduct the charitable donation on their income taxes.

Situations that could call for a Fiscal Sponsor include:

Projects that are short term or temporary that wish to avoid the time and expense of applying for a 501(c)(3);

Organizations that may receive a significant donation or grant, but have not yet received 501(c)(3) status.

A Fiscal Sponsor Manages Specific Grants Made to a Project

  • Receives the funds for the designated program from the grantor;
  • Approves and allocates funds for program expenses;
  • Reports the grant revenue in its annual tax return and audit;
  • Produces transaction and balance report for funders.
Below are several organizations that provide Fiscal Sponsorship support including HelpNet USA.
Click on the links below to learn more about the fiscal sponsor eligibility and requirements.