Sometimes the best approach to solving a problem is to leverage others’ strengths and focus effort. Fiscal Sponsorship is a proven way to address community-wide problems and an alternative to starting and running your own nonprofit organization.
A Fiscal Sponsorship agreement allows a charitable venture to operate under the legal and tax status of Austin Community Foundation. This “umbrella” partnership allows projects to leverage the Foundation’s robust back-office infrastructure and technical assistance to support their efforts. Project leaders can focus on implementing mission-based programs and services while the Foundation team takes care of the management functions of finance, legal compliance, and risk management.
Fiscal sponsorship also assures funders and others who invest in sponsored projects that their dollars are being accounted for and well managed.
Projects working in Central Texas that offer a unique or innovative solution to a local need or close the opportunity gap may apply to for fiscal sponsorship by Austin Community Foundation.
Download more information on Fiscal Sponsorships
What is a Fiscal Sponsorship?
Fiscal Sponsorship is a cost effective way for individuals or coalitions to implement new programs and test new approaches for social change in our community. It is a formal arrangement in which Austin Community Foundation agrees to provide its tax exempt status to a Project with significant community benefit but lacking its own tax exempt status. This alternative to starting your own nonprofit allows you to seek grants and solicit tax-deductible donations under the Foundation’s exempt status. The Foundation is legally and financially responsible for all of the Project’s activities. The Foundation enters a formal agreement with the Project to ensure the program outcomes are delivered by the project team while the Foundation oversees the fiscal management.
The IRS criteria are as follows:
- A 501(c)(3) tax exempt organization (in this case, Austin Community Foundation) accepts charitable donations or grants, acting as a guardian of the funds, for a project that does not have 501(c)(3) status.
- The funds received by the Foundation on behalf of the project must be used for specific charitable projects that further the Foundation’s own tax exempt purpose.
- The Foundation retains discretion and control as to the use of the funds.
- The Foundation maintains records that establish that the funds were used for 501(c)(3) purposes.
- The Project should either be short term or the non-exempt organization should be actively seeking its own tax exempt status.
What are some examples of Fiscal Sponsorships?
- Coalitions and networks
- Start-up projects
- Innovative projects looking to test a concept
- New or spinoff programs scaling beyond their start-up phase
- Projects seeking to reduce administrative costs and overhead
Fiscal Sponsorship Criteria