Fiscal Sponsor Agreement Sample

The use of a tax sponsorship agreement is effective in attracting donors, even if it is not yet recognized as exempt under Section 501(c)(3). Essentially, the tax sponsor serves as the administrative “house” of the case. Public utility contributions are paid to the tax sponsor who then grants 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. You will find an example below. The agreement should stipulate that the tax promoter is responsible for compliance with all legal provisions relating to the receipt, notification 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 any registration obligations that the sponsored organization owes to the tax sponsor. It is quite common and quite acceptable for the tax promoter to charge an administrative fee for their services, which is normally a percentage of the budget of the sponsored organization or sponsored program. The use of a tax sponsor meets the requirements of the IRS as long as the tax sponsor retains the right to decide, at its discretion, how it uses the contributions. Control of donated funds is a prerequisite for a legitimate tax sponsorship agreement.

We`ve posted many other useful resources on an additional website for those looking for more details and ideas, where to find a tax sponsor, or what you should think about if your organization is considering serving as a tax sponsor. A tax sponsor is a non-profit organization that provides fiduciary oversight, financial management, and other administrative services to build capacity for nonprofit projects. Tax sponsorship is often used by newly created nonprofits, which must raise funds during the startup phase before being recognized as exempt by the IRS. The use of a tax sponsor allows a program or organization that is not itself considered exempt to attract funds for its operations that are tax deductible for donors through the tax sponsor. As a result, tax sponsorship agreements benefit organizations or programs that are not exempt from tax by providing a cash flow channel for revenues that the organization may not otherwise be able to obtain. The role of the tax sponsor may include performing many different administrative functions on behalf of the sponsored organization or program, including taking on responsibility for receiving and managing non-profit contributions on behalf of the sponsored organization. Some tax sponsors do much more, for example.B. back-office functions. Tax sponsorship: what and why? Video of Propel Nonprofits Fiscal Sponsorship: a 360 Degree Perspective, Trust for Conservation Innovation. . . .

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