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Fiscal Sponsorship Benefits & Limitations

Benefits

A fiscal sponsorship can give you the opportunity to see if your idea, project or coalition works. 

It also provides:

  • Access to 501(c)(3) sponsorship by the Foundation to further our tax-exempt purpose 
  • Ability to accept and receipt charitable donations 
  • Ability to make disbursements to undertake the Project 
  • Access to the Foundation’s expertise and knowledge of the philanthropic landscape in central Texas 
  • Increased credibility for new projects 
  • Ability to accept complex gifts including: cash, appreciated stock, privately-held stock, business interests, real estate and other assets 

Limitations

While the Foundation is well equipped to provide technical support we are not the best solution for groups seeking:
  • Payroll and HR services
  • Event based fundraising with high transaction volume
  • Booster clubs 
  • Projects with less than $20,000 per year in revenue
  • Projects designed to benefit individuals 
  • Projects that do not comply with legal and Foundation policies on fundraising, including:
    • No raffles 
    • No sales 
    • No cash donations 
    • No booster clubs 
    • No lobbying groups 

The IRS has a strict policy against the use of “conduits.”  If the elements of fiscal sponsorship are not present, then a donation of funds to a fiscal sponsor earmarked for the Project will be treated as a donation from the donor directly to the Project and will not be tax-deductible to the donor if the Project is not tax-exempt.

To avoid this result, the Foundation must have “complete discretion and control” over the funds. This means the Foundation must be legally responsible for the funds to ensure that payment of funds to the sponsored project are made to further the sponsor’s own tax-exempt purposes. There are several models of fiscal sponsorship. Accordingly, it is important for the Foundation and a Project to understand the exact nature of their relationship and to memorialize the terms in a written agreement.

Fiscal Sponsorship Services & Fees