What is a fiscal Sponsor?
Can you explain the concept?
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What is a Fiscal Sponsor?
Getting incorporated and tax exempt takes money, time and energy, and may distract people from the program they are creating. As an alternative, people who have a new project, or an idea for one, often turn to a Fiscal Sponsor to get it off the ground. A Fiscal Sponsor is a non-profit organization with 501(c)(3) tax exempt status from the Internal Revenue Service that acts as a guardian of grants and donations for a Project that does not have 501(c)(3) designation.
A Fiscal Sponsor is necessary for one good reason: funders rarely (if ever) make donations to anyone without 501(c)(3) status. That's because tax exempt status, like incorporation, bylaws and other formal designations, inspires confidence in potential donors and funders. It demonstrates that the organization has a legitimate charitable purpose, has a structure for accomplishing its goals, and is accountable to the public.
Foundations, and sometimes governments simply cannot give grants to projects without a 501(c)(3). Individuals often prefer to give to 501(c)(3) organizations so they can deduct the charitable donation on their annual tax return.