History of Fiscal Sponsorship

Where does Fiscal Sponsorship in the United States Come From?

Fiscal sponsorship, the practice of one nonprofit organization providing administrative and financial support to another organization or project that lacks 501(c)(3) status, has a long and rich history in the United States.

The concept of fiscal sponsorship first emerged in the 1970s, as community-based organizations sought ways to pool resources and collaborate on projects. Initially, fiscal sponsorship was often an informal arrangement between organizations, with a fiscal sponsor providing financial support and oversight to a project without any legal or contractual agreement.

In the 1980s and 1990s, however, the practice of fiscal sponsorship became more formalized, with many nonprofits creating specific fiscal sponsorship programs and entering into written agreements with sponsored projects. This shift was driven in part by changes in the tax code, which made it more difficult for smaller organizations to obtain 501(c)(3) status on their own.

Today, fiscal sponsorship is an increasingly common practice, with many nonprofit organizations offering fiscal sponsorship services to emerging and established projects alike. These services typically include financial management, legal compliance, and administrative support, and can help organizations to access funding, build capacity, and achieve their mission more effectively.

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