Fiscal sponsorship is a practice where a non-profit organization offers its legal and tax-exempt status to groups, typically projects, engaged in activities related to the sponsoring organizations mission. The role of a fiscal sponsor can include performing many different administrative functions on behalf of the sponsored organization or program, including taking on the responsibility of receiving and administering charitable contributions on behalf of the sponsored organization. Some reasons why projects may seek fiscal sponsorship include an anticipated short lifespan, improved access to funding, increased credibility, and low-cost financial and administrative services. Fiscal sponsors can also provide payroll, employee benefits, office space, publicity, fundraising assistance, and training services, sparing projects the necessity of developing these resources and allowing them to focus on programmatic activities.

Fiscal sponsorship can enable projects to share a common administrative platform with a larger organization, thus increasing efficiency. One of the most common uses of fiscal sponsorship is to enable a sponsored partner to apply for grants and solicit tax-deductible contributions. It is quite common and acceptable for the fiscal sponsor to charge an administrative fee for its services, which is usually a percentage of the budget of the sponsored organization or program.

Fiscal sponsorship is an important and useful tool for the charitable community. As fiscal sponsorship becomes more prevalent, it is increasingly important that sponsoring organizations follow best practices. The decision by an existing nonprofit to provide fiscal sponsorship services to a group or project is not to be done without careful consideration. Legally, the sponsor is the organization that the project’s donors are financially supporting.