fiscalsponsorship.com

"There is a right way and a wrong way to go about the use of fiscal sponsorship.
Mr. Colvin’s book brings much-needed sunshine and clarity to those who want to do it correctly.”
— John A. Edie, Director, Exempt Organizations Tax Services, PricewaterhouseCoopers
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ABOUT GREG COLVIN

a. For answers to frequent questions, see the article "Not a Nonprofit? When to Use a Fiscal Sponsor," a site maintained by Community Resource Center in Colorado. The answers were written by David Barlow, CPA.

b. For individuals and organizations seeking a fiscal sponsor, The Foundation Center is a great resource. Headquartered in New York, it has field offices in Atlanta, Cleveland, San Francisco, and Washington, D.C. with coorperating collections in libraries across the country. For locations, click here. On line, The Foundation Center has information directed to individuals here. The FAQ refers to fiscal agents rather than using the correct term "fiscal sponsor" because inquiries are often posed in that way.

c. For a synopsis of Mr. Colvin's presentation on fiscal sponsorship, delivered to the Western Conference on Tax Exempt Organizations, November 2006, in Los Angeles (with chart and diagrams), click here.

d. For fiscal sponsorship agreement forms, click here.

Deciding Whether to Form a New Nonprofit or Use a Fiscal Sponsor

April 2008
Book Page 70 (Model A, Common Uses)

At speaking events in Los Angeles, Denver and elsewhere lately, and in my law practice, people ask me whether they should create a new 501(c)(3) organization or find a fiscal sponsor. Or do both--incorporate now but "incubate" using a fiscal sponsor to receive and spend donated income until they receive their recognition letter from the IRS.

The book does not describe how to form a new tax-exempt corporation; there are many government and private "how to" guides for that. Nevertheless, I thought it would be useful to compare the pros and cons of starting an independent 501(c)(3) entity versus using a fiscal sponsor, and the chart linked below is the result.

Take a look at the chart, "Comparison of Starting a New 501(c)(3) Organization with Using a Fiscal Sponsor (Model A)," which describes the pros and cons of setting up your own tax-exempt entity versus fiscal sponsorship.

Project Intake Checklist

January 2006
Book Page 71 (Transfers of Projects, In and Out)

If you are a fiscal sponsor, how much do you need to know about a new project before you decide to take it on? Obviously, you will want a written application stating its purpose, proposed activities, budget, personnel and advisory committee or board. There might be more to find out, to determine whether it will be a Model A, B, or C project and whether it has a history with another sponsor or a founder that you need to address in the fiscal sponsorship agreement. Click here for a checklist of 15 questions to ask about the new project.

IRS Promotes Disaster Relief Sponsorship

September 2005
Book Page 71 (Model A, Common Uses, Sudden Needs)

In a bulletin issued on 9/6/05, the Internal Revenue Service provided guidance to those interested in forming new organizations for relief of Hurricand Katrina victims. IR-2005-93, found here. The IRS also promoted the concept of fiscal sponsorship of relief projects through charities already in place, saying: Use of existing charitable organizations is encouraged because such organizations, including churches, are frequently able to administer relief programs more efficiently than newly formed organizations, because they already have fund-raising and distribution infrastructures in place. Further, the IRS provided answers to 8 FAQs on use of existing charities here.

This website is intended to provide general information to the public in the area of fiscal sponsorship, not to provide legal or tax advice to any specific person or organization. Please consult your own lawyer or accountant for advice in these matters. Any tax advice contained on this website was not intended to be used, and cannot be used, for the purpose of avoiding penalties that may be imposed under federal tax law. You may rely on our advice to avoid penalties only if you have an attorney-client relationship with our firm based on a signed engagement letter and the advice is reflected in a more formal tax opinion that conforms to IRS standards. Please contact us if you would like to discuss the preparation of a legal opinion that conforms to these rules.