What is Fiscal Sponsorship?
Fiscal sponsorship is an efficient, cost-effective business model — nearly sixty years old — that enables you to launch your charitable or community program and start accepting tax exempt funding within days.
Any nonprofit agency deemed a tax-exempt public charity by the Internal Revenue Service can be the fiscal sponsor of a nonexempt community program conducted for charitable purposes. The charity must have been awarded its tax-exempt status under Section 501(c)(3) of the Internal Revenue Code and have a legally binding agreement to sponsor the project or program.
How Free Country Can Sponsor Your Program
As a Section 501(c)3 tax exempt organization, Free Country has a broad remit to help “ordinary people changing the world.” If you are one of those people, it is likely that we can help you.
Your program must be charitable in nature, have a charitable component, serve an underserved demographic, or otherwise engage in activities that are tax exempt. There are six (6) approved models of fiscal sponsorship, three of which are briefly described on this page. It is likely that we can find a model that fits your program.
Our role as your fiscal sponsor is to accept the donations, disburse funds on behalf of your program (such as to your employees and vendors), or directly to your program (depending on the model for which your program qualifies).
We handle all of the IRS Form 990 disclosures for donated funds and provide the necessary accounting and compliance infrastructure that enables your program to receive tax free status and funds, maintain grant compliance, and become eligible for funding previously barred. Imagine being able to accept tax-deductible donations, and to run your program without taxation, or even the obligation to file!
This is possible because we handle these tax-exempt compliance requirements for you. Our flat fee for sponsorship, accounting, and compliance is 15% which goes to cover our G&A costs.
We also offer nonprofit business incubation, educational, fundraising, and grant application services on an affordable a la carte basis.
Two Models of Fiscal Sponsorship
Comprehensive
In a Model A (employment) or Model B (contractor) fiscal sponsorship relationship, the fiscally sponsored project becomes a fully integrated program of the fiscal sponsor, which maintains all legal and fiduciary responsibility for the sponsored project, including its employees and activities and provides comprehensive financial management and administrative support. This model, is particularly helpful when a project has employees. This is a common way to get started if your program is new and needs incubation or help in fundraising. When it is ready, your program can be graduated to another model and/or become an independent entity at a later date.
Model C or Preapproved Grant
This fiscal sponsorship model is often used in the arts. Under Model C, the fiscally sponsored project remains largely autonomous. It is a separate entity responsible for managing its own tax reporting and liability issues. The sponsor assures that the project will use the grant funds to accomplish the ends described in the grant proposal. For example: A for profit ballet or theater company may receive a Department of Education grant to put on a series of performances for inner city schools.
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