Fiscal sponsorship: apply for grants without your own 501(c)(3)

Most grants go only to organizations with tax-exempt status. If your group is new, or you only have a single project, a fiscal sponsor can bridge the gap.

How it works

The sponsor is a nonprofit that already has tax-exempt status. You sign an agreement. Grants and donations are paid to the sponsor, which holds the money, keeps the books and pays your approved expenses. Your project does the work.

Two common setups

• Comprehensive sponsorship: your project becomes part of the sponsor. It handles the money, contracts, insurance and often payroll. You work under its oversight.
• Pre-approved grant relationship: the sponsor accepts a grant for your project and passes the money on to you, under an agreement about how it must be used.

What to ask before you sign

1. What is the fee, and what does it cover?
2. How fast are you paid after a grant arrives?
3. Who owns the project name, materials and relationships?
4. What are the reporting rules, and what happens if you want to leave?
5. Does the sponsor's mission fit what you do?

Is it right for you?

Fiscal sponsorship is a good fit for early projects, short-term efforts and groups still deciding whether to form a nonprofit. If you plan to run for years and want full control, forming your own nonprofit may suit you better.

General information, not legal advice. Have an attorney or experienced advisor look over any sponsorship agreement.