Formal Fiscal Sponsorship Agreement

The use of a tax sponsorship agreement attracts donors, even if they are not yet recognized as tax-exempt under Section 501 (c) (3) of the Internal Income Code. For the most part, the tax sponsor serves as an administrative “homeland” for the cause. Non-profit contributions are made to the financial organization, which then allocates them to support the cause. Learn more about tax sponsorship in this short video (NEO Law Group). It is best to outline the responsibilities and obligations of both parties in a written agreement between the tax sponsor and the sponsored organization. An example is published below. The agreement should provide that the tax sponsor is responsible for complying with the legal provisions regarding the receipt, reporting and recognition of donations of public utility. The agreement should also describe the administrative costs that the sponsored organization makes available to its tax sponsor, as well as all the responsibilities that the sponsored organization owes to the tax sponsor. As part of a broad tax sponsorship relationship, the tax-funded project becomes a tax-funded sponsor program (a clear difference from the pre-approved grant relationship) and is an integral part of the tax sponsor who assumes full legal and fiduciary responsibility for the sponsored project, its collaborators and its activities.

Each work product is available to the public or the voluntary sector. The tax sponsor assures donors that the purposes and limitations of all grants and/or contributions are fulfilled. [4] A tax sponsor is a non-profit organization that provides fair supervision, financial management and other administrative services to develop the capacity of non-profit projects. However, over the past decade, the phenomenon of tax sponsorship has become a common activity for public charities that deal with human services, environmental and artistic efforts. Non-profit institutions have sought to open across the country, exclusively dedicated to financial sponsorship, from documentary sponsors to public health research groups to separate companies separated from community foundations. [2] Projects can benefit from tax support for a variety of reasons: an expected short lifespan, better access to financing, increased credibility, and low-cost financial and administrative services.