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.
Many fiscal sponsors enter into relationships to support multiple fiscally sponsored projects (“Projects” or “FSPs”). Typically, these fiscal sponsors have some screening mechanism before agreeing to enter into these relationships, but often, the screening is superficial, resulting in significant risk exposure and/or undesirable administrative burdens for the fiscal sponsor....
The following are some of the highlights from the session on Nonprofits in Distress at the 2020 Western Conference on Tax Exempt Organizations (WCTEO), presented by Erin Bradrick (NEO Law Group), Ofer Lion (Seyfarth Shaw), Tania Moyron (Dentons), and Stephanie Petit (Adler Colvin): Zone of Insolvency, Bankruptcy, and Debt Restructuring Under...
Social entrepreneurs have a number of options for housing a charitable project, and many recognize fiscal sponsorship as the best option. But how do you find and select a fiscal sponsor? What is a fiscal sponsor? While no legal definition exists, a comprehensive (Model A) fiscal sponsor is generally...
The twin crises of pandemic and recession are straining the region’s philanthropies and could force as many as a third of nonprofits to close or merge before the economy recovers, according to top executives in the sector. The Washington Post (8/3/20) In these historically challenging times, there are predictions...
You’ll find a wealth of information provided by numerous organizations and law firms regarding COVID-19-related issues facing nonprofits, including this page from the NEO Law Group. Such issues include those related to new laws providing for paid employee leave, small business (and nonprofit) loans, and enhanced charitable contribution deductions....
Earlier this month, at the American Bar Association Fall Tax Meeting, the San Francisco Study Center released the 3rd edition of Fiscal Sponsorship: Six Ways to Do It Right, authored by Greg Colvin and Stephanie Petit. This is a complete revision of the seminal book on relationships it coined...
Filmmakers who seek philanthropic or public funding to support their works may be considering fiscal sponsorship as a vehicle for obtaining such funding. In our first post on this subject, we covered the basics of fiscal sponsorship and on the qualifications of a sound fiscal sponsor. Here, we’ll discuss...
Filmmakers who seek philanthropic or public funding to support their works may be considering fiscal sponsorship as a vehicle for obtaining such funding. And fiscal sponsorship can be of great value to a filmmaker. But it’s also a misunderstood and widely misapplied area of law that can create risks...
The Office of the Attorney General (“AG”), Department of Justice (“DOJ”) of the State of California is proposing to amend certain regulations and Forms that will affect charities subject to registration in California. The Notice of Amendments to Regulations and related documents can be found here. We wrote about proposed...
A fiscal sponsorship relationship may, at some point, come to an end. Whether the project leaders have found a new sponsor, created a new nonprofit entity with its own exempt status under 501(c)(3) of the Internal Revenue Code, or decided to move on in order to focus on other...