Deciding Whether to Form a New Nonprofit or Use a Fiscal Sponsor
People ask 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 IRS recognition letter.
Fiscal Sponsorship: 6 Ways To Do It Right 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.
Take a look at this chart, which describes the pros and cons of setting up your own tax-exempt entity versus fiscal sponsorship.