What’s fiscal sponsorship?

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Fiscal sponsorship is when a tax-exempt non-profit organization offers financial assistance to an individual or group for a project related to the sponsor’s mission. The sponsored entity receives tax-exempt funds and may also receive administrative services and other assistance. Seeking sponsorship from a non-profit with similar goals is crucial.

Fiscal sponsorship occurs when a non-profit, tax-exempt organization offers financial assistance to an individual or group undertaking some type of project. The project may be related to the arts, or it may be some type of charitable endeavor related to the mission of the charitable organization acting as sponsor. Because the sponsor has tax-exempt status, funds awarded to the sponsored entity are also tax-exempt. Through the use of fiscal sponsorship, an entity without tax-exempt status can secure the type of financing that it may not be able to manage on its own to get a project off the ground.

The importance of the arts and charitable enterprises in a society cannot be overstated, but such projects often require significant capital to get started. Fortunately, there are organizations that are given tax-free status by governments that have the kind of funding to help get these projects off the ground. For that reason, artists and others looking to start a project that will benefit society should consider seeking tax sponsorship.

There are many reasons that may require an individual or organization to secure some type of fiscal sponsorship. For example, the project could be temporary and will require financing for only a few months. In other cases, the organization starting the project may want to become large enough to obtain its own tax-exempt status from the government, and sponsorship from an established nonprofit is one way to begin that process.

Any individual or group looking to obtain fiscal sponsorship should look for non-profit groups or charities that have similar goals to what their project is trying to achieve. For example, artists should look for organizations known to act as benefactors of the arts. Similarly, a group seeking to do some type of charitable good should seek help from groups that have the same type of charitable mission. The right mix between artist and benefactor is crucial to the sponsorship deal.

Once the fiscal sponsorship is arranged, the group that receives the benefits can use all the resources that its sponsor offers. In addition to the obvious monetary benefit, this agreement may also include administrative services, use of the sponsor’s property, and any other assistance the sponsor is willing to provide. To keep their end of the deal, the group using the funding must report the progress of their project to the sponsor to ensure that they are following through on the promises in their initial proposal.

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