Is Short Term Fiscal Sponsorship Right for You?

Have you heard short term fiscal sponsorship but don’t really know what that means? Fiscal sponsorship is a legal arrangement between an established 501(c)(3) nonprofit organization (the sponsor) and a charitable program or project (the sponsee). Basically, a short-term project will “borrow” the nonprofit (or 501c3) status of an established organization, making it easier to accept donations and grants. This setup can be a great option for a variety of short-term projects like giving out turkeys to families in need at Thanksgiving, or organizing a 5K to fundraise for medical research. If your project doesn’t operate year-round and you don’t want to go through the hassle of paperwork to form your own 501c3, this is a great alternative. In this article, we’ll break down the benefits of short term fiscal sponsorship, along with the nitty gritty details you need to know before diving in.

What Are The Benefits For Your Project?

If you’re fundraising for a charitable cause, you’ll need to do Charitable Solicitation Registration (CSR) in every state where people you ask for money live. Even if you ask via email, text, social media or phone, if you ask someone for funds in that state, you’ll need to register. CSR usually requires a form and a fee being filed with the appropriate state’s authority. But if you have a fiscal sponsor, you won’t have to register! Fiscal sponsors usually take care of the CSR process so you don’t have to spend time and money chasing down the requirements for each state.

With short term fiscal sponsorship, you will also have access to valuable fundraising opportunities like grants and corporate sponsorships. These resources are often out of reach for projects and organizations who haven’t filed as a nonprofit. With a fiscal sponsor, you can fundraise or apply for grants without your own 501c3 status, but the donor or foundation still gets the peace of mind from donating to a registered charity (your fiscal sponsor).

The grant process can be difficult to navigate if you’re not familiar with it. Many sponsors will help guide you through the process, from lending a hand in the application process to managing reporting requirements. Corporate sponsors can also offer financial support, volunteer hours for your project, or in-kind donations. Having a fiscal sponsor in your corner opens doors to these types of partnerships that would be difficult to work out on your own.

What Are The Types of Fiscal Sponsorship?

Fiscal sponsorship for short-term projects can offer more than just CSR and tax exemption for donations. Different models provide different levels of support and oversight. There isn’t a one-size-fits-all option so you should consider the different models of fiscal sponsorship when you’re choosing what’s right for your organization.

Model C Fiscal Sponsorship

Model C, which FSA offers, is known for being the more flexible and less hands-on model. This can be a great option for short-term projects or startups that you want to stay in control of while still accessing the key benefits. With Model C, you retain more autonomy of your project while your sponsor manages the incoming donations and ensures the charitability of the funds spent. A fiscal sponsor will handle sending tax receipts to donors, tracking the funds for your project, and maintaining compliance with IRS rules. They take some of the administrative burden off your plate while you run your project.

Who Can Be Fiscally Sponsored?

Just about anyone running a charitable project can be fiscally sponsored. That includes individuals, a local sports team, and even for-profit organizations (though there may be some additional requirements for that last group). Different sponsors focus on different types of causes. Some will only support the arts, while others focus on environmental causes. You’ll want to do a little bit of research on the sponsor you’re eyeing to make sure that your goals align. At the end of the day, a fiscal sponsor has final say over what projects they will lend their resources to. FSA keeps the barrier to entry low, with no restrictions on mission or ideology, ensuring that your project can get the support that it needs to succeed.

What Do I Need to Know Before Getting a Fiscal Sponsor?

Before you jump into an agreement with a fiscal sponsor, you’ll want to understand their:

Fee structure (what they charge to be your fiscal sponsor)
Minimum requirements (some have donation minimums or mission requirements)
Available resources (what services they will provide your event or project)
Communication style (email, phone, Zoom or in person)
Policy on fundraising events (what they allow and don’t allow for fundraising events)

Based on studies done by the Fiscal Sponsorship Directory, the typical fees of a fiscal sponsor are between 5-10% of donations you raise, while others will use a sliding scale based on program revenue (up to 15%). Some sponsors may require you to hit a monthly or yearly donation minimum to continue to be a sponsored project. These can be tough requirements for smaller projects, so be sure to ask about them upfront. Take into consideration the available resources to your project from your sponsor.

What questions should I ask a potential fiscal sponsor?

What are their fees?
What happens when you’re ready to end your fiscal sponsorship? What is their cancellation policy?
Do they have a donation minimum? If so, what is it? What happens if you’re not able to meet the minimum?
How does the fiscal sponsor manage donor information? Will they give you access to donor information?
What software platform(s) will you gain access to as part of your fiscal sponsorship?
Will they allow you to raise donations online? Which donation platforms will you be allowed to use?
Will you be able to sell tickets or sponsorships to fundraising events?
Are there any limits to what you’re allowed to do at fundraising events to raise money for your cause?
What help do they offer with grants? Do they help you find grant opportunities?
How fast is their typical response rate for questions? Do you have one specific contact or team to reach out to?

Does Fiscal Sponsorship Allies (FSA) offer short term fiscal sponsorship?

Yes! FSA does offer short-term fiscal sponsorship with no donation minimums. Our fees are 3.89% of donations, rather than the typical 5-10%.

You’re able to get started and start accepting tax-exempt donations within one business day if your program is approved. You can apply for fiscal sponsorship here. That means you will have more time to fundraise, apply for grants, and run your project without ever having to file for your own 501c3 status. We fiscally sponsor charitable programs and events across the US.

What’s the process to apply for short-term fiscal sponsorship through FSA?

A straightforward application with FSA makes it as easy as possible for your project to find a fiscal sponsor you can call home. The application with Fiscal Sponsorship Allies will ask about your project and charitable mission, how you plan to fundraise and your contact information. The FSA team reviews applications daily. Once the application is approved, we’ll send you a fiscal sponsorship agreement. Once you sign the agreement, you’ll gain access to our software platform and be able to create online donation pages so you can start fundraising without 501c3 status ASAP.

I’m Ready To Find a Fiscal Sponsor, What Now?

Whether you’re an individual with a mission or a for-profit business launching a community initiative, short-term fiscal sponsorship can help you do more with less stress. It opens the door to tax-deductible donations, access to grants, corporate sponsorships, and professional support, without having to form your own nonprofit. If you’re ready to get started, apply for fiscal sponsorship with FSA today!

Short Term Fiscal Sponsorship: Perfect For Your Organization?