By NEO Law Group
Fiscal sponsorship describes a number of varying contractual relationships that have through custom and practice developed between “sponsors” and “projects,” allowing charitable projects to receive deductible contributions. Having a charitable project fiscally sponsored by a sound and reputable fiscal sponsor may be an attractive alternative to starting a nonprofit, especially when an idea is being tested or incubated. There are several ways to properly structure such relationships, and it is important to get it right from the start. There are also a number of traps that can leave a project’s leaders vulnerable to losing typical rights associated with fiscal sponsorship, including the right to transfer the project to another 501(c)(3) entity, and/or losing funds raised for the project’s mission.
Fiscal sponsorship is a term commonly understood to reference one type of relationship – where the fiscally sponsored project is operated within the fiscal sponsor with all project assets, liabilities, revenues, expenses, employees, and volunteers being the fiscal sponsor’s. But this model, commonly referred to as Model A, is...
Fiscal sponsorship sometimes gets a bad rap because an organization setting itself up as a fiscal sponsor fails – sometimes for ordinary reasons, similar to why other nonprofits and for-profit businesses fail at a relatively high rate, and sometimes because someone did something wrong, similar to what can happen...
I have the pleasure of speaking at the Fiscal Sponsor Conversations forum (“FSC”) on Tuesday, August 12, at 10 am PDT / 1 pm EDT. With inspiration from an old post I wrote, Fiscal Sponsorship: Six Ways to Do It Wrong, FSC organizers Andrew Schulman and Oliver Hack asked...
A new nonprofit is commonly created when a program or project spins off from a separate nonprofit. Sometimes a project spins off from a fiscal sponsor, perhaps after a planned incubation period. And sometimes a program spins off from a nonprofit because of a mutual desire to provide greater...
I’m a longtime participant with, and supporter of, the Bar Association of San Francisco’s Community Organization Representation Project (CORP). I’m also a big fan of, and regular writer on, fiscal sponsorship done right. So, it was great to learn about the following free webinar from CORP on Friday, July...
Fiscal sponsorship is a complicated relationship to understand because it is not defined by law, it takes on multiple forms, there are nonprofits that have improperly structured fiscal sponsorship relationships (misleading others), and, in one form (comprehensive or Model A fiscal sponsorship) it allows for what may appear to...
The National Association of Attorneys General (NAAG) and National Association of State Charities Officials (NASCO) held their 2024 Charities Conference on October 8-10. This conference is the sole annual event at which charity regulators and nonprofit organizations and their attorneys, accountants, fundraisers, and advisers can meet, learn about, and...
A donor advised fund (“DAF”) is generally defined in Section 4966(d)(2)(A) of the Internal Revenue Code as a fund or account On November 13, 2023, the Internal Revenue Service and Treasury Department released proposed regulations on DAFs (the “Proposed Regs”) which has attracted a number of comments and criticisms, including with...
On July 11, 2023, Fiscal Sponsor Conversations (“the weekly form for fiscal sponsors”) focused its discussion on governance for fiscal sponsors. What role does your Board of Directors play in your organization’s fiscal sponsorship work? How is it working? What could be improved? As with most things in fiscal...
On June 1, Social Impact Commons hosted a great practitioner conversation on the intersectionality between fiscal sponsorship and donor advised funds (“DAFs”). The following is a description of the event: We increasingly see fiscal sponsors accidentally or intentionally developing Donor Advised Fund (DAF) programs and, likewise, organizations running DAFs...