We drafted an overview of fiscal sponsorship for The Nonprofit Quarterly (republished on 1/28/20), discussing the pros and cons.
When done right, fiscal sponsorship is a valuable alternative to starting a nonprofit that produces private and public efficiencies through shared administration and fewer nonprofits requiring fiduciary and regulatory oversight.
But when done wrong, fiscal sponsorship may result in an individual or for-profit company inappropriately deriving a private benefit from charitable contributions. This may occur when the fiscal sponsor acts as a mere conduit for contributions to flow to the individual or company without exercising the required control and oversight.
Our senior counsel Erin Bradrick wrote Fiscal Sponsorship: What You Should Know and Why You Should Know It for the American Bar Association (5/4/15), targeting lawyers working with founders of nonprofit projects.
In March 2022, Erin presented on Oversight and Control: Fiscal Sponsors’ Legal Obligations to Their Projects for the Fiscal Sponsor Conversations forum hosted by Schulman.Consulting. The accompanying article was published on the Fiscal Sponsor Directory.
Here are some other articles on our blog that you may find helpful:
Is Fiscal Sponsorship a Service Provided for a Fee? Why it isn’t and why it matters.
Fiscal Sponsorship: A Valuable Option for Grantmakers and Grantees
Stipulated Judgment Against Fiscal Sponsor for Misspending Donations
Two Vehicles, One Home: Fiscal Sponsorship and Donor Advised Funds
Additional resources:
Best Practices for Fiscal Sponsorship (National Network of Fiscal Sponsors)
A Board’s Guide to Fiscal Sponsorship (Propel Nonprofits and Springboard for the Arts)