Fiscal Sponsor
A fiscal sponsor is a 501(c)(3) organization that provides legal and tax-exempt status to a project or group that does not have its own nonprofit status.
A fiscal sponsor is an established 501(c)(3) organization that extends its tax-exempt status to a project, initiative, or group that has not yet obtained (or doesn't intend to obtain) its own nonprofit status. Donations to the project flow through the fiscal sponsor and are tax-deductible for donors.
Why It Matters for Fundraising
Fiscal sponsorship lets new initiatives start fundraising immediately without waiting months for IRS determination. It also allows temporary or small projects to accept tax-deductible donations without the overhead of forming a separate nonprofit. For donors, giving through a fiscal sponsor provides the same tax benefits as giving directly to a 501(c)(3).
How It Works
The fiscal sponsor holds legal and financial responsibility for the sponsored project. They receive donations, manage funds, ensure compliance, and typically charge a fee (5-10% of funds received). The sponsored project retains programmatic control. When the project matures, it can apply for independent 501(c)(3) status and "graduate" from the sponsorship.