Fiscal sponsorship is an arrangement in which an organization without 501(c)(3) status is “sponsored” by a 501(c)(3) organization.

The fiscal sponsor can accept charitable donations on behalf of the fiscally sponsored entity and distribute them to that entity, usually after payment of an administrative fee.

The IRS has multiple criteria for fiscal sponsorships:

• A 501(c)(3) tax-exempt organization receives and acts as a guardian of donations on behalf of an entity that does not have 501(c)(3) status.
• The sponsor must use funds received for specific charitable projects that further the sponsor’s tax-exempt purpose.
• The sponsor must retain discretion and control over the use of the funds.
• The sponsor must maintain records that corroborate the use of funds for appropriate charitable purposes.
• The arrangement must not result in impermissible private benefit or inurement to the project or its stakeholders

The sponsored entity must propose activities (a “project”) that aligns with the fiscal sponsor’s charitable purpose.

Funds can only be used in support of this charitable project. They cannot be used for exorbitant salaries or non-charitable expenses of the sponsored entity.

There are multiple types of fiscal sponsorships. Ours is a Model C, an arrangement in which a tax-exempt organization (the fiscal sponsor) enters into a grantor-grantee relationship with an independent project or entity.

The key characteristics of Model C fiscal sponsorship include:

• Independent Legal Entity: The sponsored project is a separate legal entity, such as a for-profit or nonprofit organization.
• Grantor-Grantee Relationship: The fiscal sponsor provides grants to the project, subject to the terms of a written agreement.
• Charitable Purpose: The project must serve a charitable purpose that aligns with the fiscal sponsor’s tax-exempt mission.
• Control and Oversight: The fiscal sponsor must exercise “discretion and control” over the use of funds to ensure compliance with IRS regulations.

Other types of fiscal sponsorships include Model A, also known as “direct” or “comprehensive” fiscal sponsorship, Model B or “independent fiscal partnership,” and Model L, wherein a public charity conducts a fiscally sponsored project through a wholly owned LLC.

Fiscal sponsorship allows a nonprofit or program that doesn’t have tax-exempt status to benefit from the 501(c)(3) tax-exempt status of a sponsoring organization for any funds accepted under the sponsorship agreement.

Fiscal agency refers to an arrangement with an established charity that has 501(c)(3) tax exemption to act as the legal agent for a project. The fiscal agent doesn’t retain ultimate control and discretion over funds usage.

The fiscal agent acts on behalf of the project, but the project (or its parent organization) has the ultimate right and legal duty to direct and control the agent’s activities (See: Charity Lawyer Blog).

No, as a Model C fiscal sponsor, we only receive and distribute charitable donations.

There is a one-time, $250 application fee, and a 2.5% administrative fee per donation received. There is no annual fee for our fiscal sponsorship services.

No.

Donors can make a tax-deductible gift or grant from a DAF or foundation to Realize Impact in cash, public securities, or cryptocurrency. Let us know by email that this donation is designated for your fiscally sponsored project.

Our mailing address and banking details are here: realizeimpact.org/donations. Donors should contact us directly before making a gift of securities or cryptocurrency at info@realizeimpact.org.

In addition, your donor could make a tax-deductible gift of up to $4,999 without any credit/debit card fees or up to $10,000 with no bank transfer transaction fees at realizeimpact.org/donate.

A Certificate of Good Standing (AKA Certificate of Existence or Authorization) is a government-issued document that shows that your organization has met its statutory requirements and is authorized to do business.

In the US, this is typically issued by the the office of the secretary of state and can be requested online. To be in good standing, your organization must be up-to-date on all required filings and tax payments.

A Certificate of Good Standing is NOT a Certificate of Incorporation.

Fiscal sponsorship agreements are non-exclusive. You may be fiscally sponsored by multiple organizations.

Our application form asks about your organization’s mission, vision, and the purpose of the charitable project and its beneficiaries. We also ask for a current Certificate of Good Standing and a 12-month project budget.

We review your application and supporting materials to verify that your proposed activities are sufficiently charitable and aligned with our mission. We may contact you for further information or to clarify your proposal.

Every 12 months, we will ask you to fill out a renewal application that asks for information on how you used the charitable funds granted to you over the preceding 12 months.

Grants must be used only in support of the approved charitable project. They cannot be used for fundraising or other non-approved expenses.

Generally, a fiscally sponsored organization cannot use grant funds to provide donor perks. Our fiscal sponsorship grants are restricted in use to only the approved charitable activities in your application.

No, this responsibility is an IRS-required process for private foundations granting funds to non-501(c)(3) entities, ensuring money is used for charitable purposes. As a 501(c)(3) nonprofit, grants to us are not subject to expenditure responsibility.

Fill out this application form.