Fiscal Sponsorship: 6 Ways To Do It Right

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What is Fiscal sponsorship: 6 ways to do it right?

Fiscal sponsorship is a valuable arrangement in the world of nonprofits that allows organizations to carry out charitable activities without having to establish their own 501(c)(3) status. This partnership enables a sponsoring organization to provide oversight and support to a project or initiative, while the sponsored organization can focus on its mission-driven work. Doing fiscal sponsorship right is crucial for ensuring compliance with tax laws and maintaining a successful relationship.

What are the types of Fiscal sponsorship: 6 ways to do it right?

There are several types of fiscal sponsorship arrangements that nonprofit organizations can consider:

Direct Project Sponsorship
Preapproved Grant Relationship
Comprehensive Fiscal Sponsorship
Shared Services
Group Exemption
Donor Advised Funds

How to complete Fiscal sponsorship: 6 ways to do it right

Completing a fiscal sponsorship successfully involves a few key steps:

01
Clearly define the roles and responsibilities of both parties in a written agreement.
02
Ensure regular communication and transparency between the sponsoring and sponsored organizations.
03
Maintain accurate financial records and adhere to reporting requirements.
04
Comply with all relevant tax laws and regulations.
05
Monitor the project or initiative's progress and impact.
06
Evaluate the partnership periodically to ensure it remains effective and beneficial.

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