In the simplest terms, "fiscal sponsorship" is one entity accepting and managing funds for another. Fiscal sponsorship is necessary if a group or an individual with a charitable project wants to solicit funding from philanthropic sources that only make contributions or grant funds to nonprofit organizations with IRS tax-exempt status. These donations are then tax-deductible to by the donor or grantor. In-kind contributions may be tax-deductible as well, if the gift is used only for purposes related to the project.
SFFCM is a tax-exempt non-profit organization.
To be considered tax-exempt, an organization must hold a current 501(c)(3) status certificate from the IRS. However, the process of securing tax-exempt status is lengthy and costly and an alternative is to contract with a nonprofit fiscal sponsor whose tax-exempt status can be legally extended to your project. By law, projects contracted with a fiscal sponsor must be consistent with the fiscal sponsor's charitable purposes.
SFFCM's Fiscal Sponsorship Program is based on a model of a preapproved grant relationship, known as a Model C relationship. According to Greg Colvin's 1993 book, Fiscal Sponsorship: Six Ways to Do It Right (SF Study Center, 1993):
“In Model C, the project does not become a program belonging to the sponsor. Instead, the sponsor chooses to further its exempt purposes indirectly by giving financial support to another entity or person for a specific project that the sponsor has reason to believe will advance the sponsor's charitable goals. The sponsor is not seeking ownership of any part of the results of the work, but simply an assurance that the project will use the grant funds in a reasonable effort to accomplish the ends described in the grant proposal.”
901 Mission Street, Suite 306
San Francisco, CA 94103
Phone: (415) 818-2825