5 Ways That You Can Benefit From Fiscal Sponsorship

Fiscal Sponsorship Has Both Financial and Administrative Benefits

Fiscal Sponsorship has many financial and administrative benefits. Fiscal sponsorship refers to the practice of non-profit organizations offering their legal and tax-exempt status to groups or projects who engage in activities aligned with the nonprofit’s mission. It began as a stepping stone for artists to eventually incorporate as their own 501(c)3. Over the years, more and more artists have chosen to remain fiscally sponsored without taking that next 501(c)3 step.

Fiscal Sponsorship benefits for artists include:

1.  Ability to offer tax-exemption for your donors

The tax-exemption status offers benefits to individual donors with an incentive that could encourage your donor base to consider giving more.

2. Eligibility to apply for certain foundation and government grants

Your grant opportunities expand to those usually only offered to 501c3 applicants, allowing you also to establish a name and relationship with these grantors.

3. Established business model for your company or project.

If entering into a more comprehensive fiscal sponsorship, you will reap the benefits of systems that are already in place such as an established chart of accounts, payroll processing, insurance policies, and other administrative support.

4. Alleviation of administrative burdens of filings and board structure.

501(c)(3)s require a lot of administrative time just to maintain. From incorporation documents to an annual audit or review at the end of every year, these tasks can be time consuming and expensive. Becoming fiscally sponsored puts that burden as well as establishing a board of directors on the 501(c)3 who is sponsoring.

5. Reduced costs from incorporation/legal fees and tax filings.

With fiscal sponsorship, you are entering into a relationship with a 501(c)3 organization that has already incorporated and handles their own tax filings, so you will not owe these fees yourself. This saves you money.

Thinking of applying for Fiscal Sponsorship? Check out our list of Fiscal Sponsors here.

NEXTSTEPS | 1.14.21

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