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What is Fiscal Sponsorship?

Jim B.
Jim B.

Fiscal sponsorship occurs when a non-profit, tax-exempt organization offers financial assistance to an individual or group undertaking some sort of project. The project may be related to the arts, or it can be some sort of charitable undertaking that is related to the mission of the charitable organization acting as the sponsor. As the sponsor has tax-exempt status, any funds given to the sponsored entity are also free from taxes. By using fiscal sponsorship, an entity without tax-free status can secure the type of funding it might not be able to manage on its own in order to get a project off the ground.

The importance of the arts and charitable undertakings in a society cannot be overstated, but such projects often require significant capital to start up. Luckily, there are organizations that are afforded tax-free status by governments that have the type of funding to help these projects get underway. For that reason, artists and other individuals looking to begin a project that will benefit society should consider seeking out fiscal sponsorship.

Woman holding a book
Woman holding a book

There are many reasons that might require an individual or organization to secure some sort of fiscal sponsorship. For example, the project might be a temporary one that will require funding for only a few months. In other cases, the organization starting out the project may eventually want to become large enough to gain its own tax-exempt status from the government, and a sponsorship from an established non-profit is one way to begin that process.

Any individual or group looking to gain fiscal sponsorship should look for non-profit groups or charities that have similar goals to what their project is trying to achieve. For example, artists should seek out organizations known for acting as benefactors to the arts. In a similar manner, a group looking to perform some sort of charitable good should look for aid from groups that have the same sort of charitable mission. The proper match between artist and benefactor is crucial to the sponsorship arrangement.

Once fiscal sponsorship is arranged, the group receiving the benefits can use all of the resources afforded by its sponsor. In addition to the obvious monetary benefit, this arrangement can also include administrative services, use of the sponsor's property, and any other help the sponsor may be willing to give. To hold up its part of the agreement, the group using the funding must report the progress of its project to the sponsor to ensure that it is following up on the promises of its initial proposal.

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