Fiscal Sponsorship is an arrangement between a 501(c)(3) public charity and a project (that does not have that tax status) in which the charity has made a choice to support the nonexempt project with "legal status" as if it were a fully designated public charity. Effectively a tax-exempt status granted by government is a type of 'social stewardship' to act in the public trust to create and preserve "community-wealth". In reality, government 'outsources' the responsibility of sponsoring nonprofits, to public charities that focus on social, economic and environmental issues. This outsourcing on the part of government to the public charity comprises a sanctity of contract not to be taken lightly, mismanage or abuse.
Creating economic, social and environmentalwealth...The legal status and IRS Letter of Determination for the sponsoring public charity is the authority that enables it to provide 'fiscal sponsorship' to qualified projects. In essence, the sponsoring charity 'spawns' or incubates other projects through the 'fiscal sponsorship' of social entrepreneurs and social ventures that are aligned with the organization's core values and mission. Fiscal sponsorship is an efficient way for public charities to expand and intensify their social impact.
What Fiscal Sponsorship Can Do for You? Fiscal sponsorship enables individuals and organizations to initiate new programs without creating a new nonprofit organization. It is a cost-effective way for both the project sponsorship and sponsoring organization to design, collaborate, plan and implement new programs and test new approaches to environmental and social change. The sponsoring public charity receives all charitable donations, sponsorships and grants on behalf of their fiscally sponsored projects and is legally and financially responsible for all project activities.
Sponsored projects become an integrated part of a specific public charity v, being a separate or isolated entity. As a sponsored project your philosophy and values are shared in common with the public charity's mission. By not duplicating legal and financial infrastructure, more focus can be directed into the shared core purpose and mission.