Fiscal sponsorship is a relationship in which an unincorporated group or project seeking to carry out charitable activities affiliates with an existing 501(c)(3) nonprofit organization that shares a compatible mission. Multiple models of fiscal sponsorship exist, each offering a slightly different approach (Colvin & Petit, 2019). However, the most common model, known as Model C or the “preapproved grant relationship,” involves the fiscal sponsor receiving and managing funds on behalf of the project (, 2023, para. 18).

As noted by Spack (2005), “fiscal sponsorship is by definition a behind-the-scenes service, … often under the public and philanthropic radar” (p. 24). That last point is important to note: fiscal sponsorship — either as the host or recipient organization — is not currently disclosed on any of the IRS Form 990 annual returns, nor is fiscal sponsorship required to be disclosed on websites or annual reports (Andersson & Neely, 2019). Even so, there are key situations when fiscal sponsorship is the preferred way of implementing a nonprofit’s services (National Council of Nonprofits, n.d.):

  • when newly formed nonprofits are fundraising before they seek independent status with the IRS;
  • when a new or existing nonprofit wants to test drive an idea or service that could be a spin-off entity; and
  • when a collective, organization, or program:
    • decides that it prefers to focus its efforts on fulfilling its mission instead of on supporting or ancillary activities; or
    • decides that an existing nonprofit has office staff, supporting vendor relationships, fundraising operations, or other resources that it can leverage or purchase cheaper than if it did so on its own.

Additionally, there are many reasons why this model is becoming more attractive:

  1. Efficiency and Shared Administration: By leveraging the infrastructure and experience of existing nonprofits — including financial and risk management, human resources administration, and even capacity-building support — projects can focus on their vision and mission while keeping costs low (Andersson & Neely, 2017; Trust for Conservation Innovation, 2014; Sattely, 2017; Takagi, 2020).
  2. Lower Barrier to Entry: Individuals and groups seeking to engage in charitable activities can immediately access tax-exempt contributions and grant support without the need to navigate the complex process of establishing a separate nonprofit (Sattely, 2009).
  3. Regulatory Compliance and Trust: “Simply stated, fiscal sponsors place responsibility for implementing programs in the hands of project leaders while ensuring appropriate [legal and] fiduciary oversight” (National Network of Fiscal Sponsors, n.d., para. 1).
  4. Support Network: Fiscal sponsorship provides a built-in network for physical, intellectual, and emotional support (Sattely, 2009) as well as leveraging an existing board of directors — because finding volunteer board members is often one of the largest challenges of a nonprofit startup (, 2023).

Read the full article about fiscal sponsorship model by Jeff Williams and Alexandra Akaakar at Dorothy A. Johnson Center .