A fiscal sponsor is a nonprofit organization with 501(c)(3) tax-exempt status that helps manage money and other administrative tasks for individuals or groups working on projects that support the sponsor’s mission. This arrangement allows these groups or individuals to apply for grants and receive tax-deductible donations under the sponsor’s tax-exempt status. The fiscal sponsor collects and manages donations on behalf of the sponsored group.

Fiscal sponsorship is often used by new nonprofits that want to apply for grants before getting official tax-exempt status from the IRS. It can also be helpful for projects that align with a nonprofit’s mission but don’t need to become a separate organization. The Broomfield Community Foundation requires applicants using a fiscal sponsor to have a written agreement.

This agreement explains the responsibilities of both the sponsor and the sponsored group. It must state that the fiscal sponsor is responsible for following all legal rules when handling donations. If the fiscal sponsor charges an administrative fee, the agreement should include that information, along with any record-keeping requirements for the sponsored group.