Fiscal Sponsorship Info Guide

What is Fiscal Sponsorship/Hosting?

"A fiscal sponsor is a nonprofit organization that provides fiduciary oversight, financial management, and other administrative services to help build the capacity of charitable projects." -Trust for Conservation Innovation: Fiscal Sponsorship: a 360 Degree Perspective

Why choose to be fiscally hosted/Who needs a fiscal host?

It can take years for a group to get 501(c)(3) non-profit status. Fiscal hosts are especially helpful to newly formed nonprofit groups-both large and small.

We act as a legal entity for your group-organizing the back-end of your fundraising efforts.

We offer "Comprehensive Fiscal Hosting" meaning:

  1. Project becomes an internal program of the sponsor

  2. Project has no separate legal existence

  3. Project is not responsible for its own legal or tax filings

It’s fast and easy to apply to be hosted by our foundation. Once your group is approved, you can begin collecting funds immediately

What is a 501(c)(3)?

“Section 501(c)(3) is the portion of the US Internal Revenue Code that allows for federal tax exemption of nonprofit organizations, specifically those that are considered public charities, private foundations or private operating foundations. It is regulated and administered by the US Department of Treasury through the Internal Revenue Service. There are other 501(c) organizations, indicated by categories 501(c)(1) – 501(c)(29). “

“Being "501(c)(3)" means that a particular nonprofit organization has been approved by the Internal Revenue Service as a tax-exempt, charitable organization. "Charitable" is broadly defined as being established for purposes that are religious, educational, charitable, scientific, literary, testing for public safety, fostering of national or international amateur sports, or prevention of cruelty to animals and children.” - https://www.501c3.org/what-is-a-501c3/

  • Simply Put:

    • A 501(c) is a nonprofit organization.

      • '3’ means it is charitable. This means it receives income tax exemption, and its donors may take a tax deduction for their donations

How it works:

  1. Donations are made to our 501(c)(3)

    • Tax-exempt status applies

  2. We make a “grant” to your group/project

  3. We send donors their receipts, disburse funds/reimburse expenses after your approval, send out tax forms to independent contractors as applicable

  4. You have complete access to collect, spend, manage your money on our platform

  • We are a tax-exempt 501(c)(3) public charity non-profit meaning:

    • You will have special access to grant opportunities - wider range of funding opportunities

    • Donations to your fund are tax-deductible

    • Groups hosted by us are aligned with our charitable mission

Who is eligible to apply?

According to our terms and conditions:

1. Criteria: In furtherance of Sponsor’s Mission, it promotes projects in the United States with the charitable purposes outlined below. As such, Sponsee has provided evidence and Sponsor has confirmed that Sponsee’s Project has met one (1) or more of the following criteria for Sponsor’s fiscal sponsorship of the Project:

  • Increasing access to educational resources and training: With the advance of technology and the movement towards a society where people work together to enhance and develop the future, there has been an increase in the number of organizations and groups that are coming together to promote education.

  • Creating a positive social impact: Sponsor’s social impact purpose is aimed at finding ways to (i) eliminate prejudice and discrimination; (ii) combat community deterioration; (iii) decrease juvenile delinquency; (iv) serve the less fortunate or distressed; (v) serve to prevent animal or child cruelty; or (vi) create a positive impact on society.

  • Developing tools to improve civic participation within cities or communities: Sponsor sponsors projects aimed at fostering civic participation, democratic debate and rebuilding community ties and strengths.

What is a DAF?

  • From DAFDirect.org:

    • A DAF is a Donor-Advised Fund

      • A DAF is a centralized charitable account

      • It allows charitably inclined individuals, families, and businesses to make tax-deductible charitable donations of cash, publicly-traded stock, and, in some cases, certain illiquid assets, to a public charity that sponsors a DAF program..

  • Basically, you give your money to a DAF, and they invest it for you by donating to different charities. Once you give them your money, you don’t control it anymore, but you can still advise them to direct the money into specific funds.

    • The more DAFs you receive money from, the more credibility your fund will gain

    • DAFs are required to donate exclusively to 501(c)(3)s but are not required to meet annual distribution requirements

    • DAFs allow donors to donate non-cash assets, such as shares, in a private company or real estate

    • DAFs typically charge fees

Six of the top ten nonprofit organizations in the United States were DAFs and four of the top ten were operated by financial institutions

References:

https://www.classy.org/blog/dafs-pose-problems-nonprofits-social-progress/#:~:text=DAFs%20are%20not%20required%20to,distant%20point%20in%20the%20future.

What's the Deal with DAFS?: A User-Friendly Guide to Donor-Advised Funds

NPTrust DAF FAQ

5 questions to ask when choosing a donor-advised fund sponsor