Fiscal Sponsorship
Doing it Right
Greg Colvin
Adler & Colvin
San Francisco, California
Copyright 2010, Adler & Colvin
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What is Fiscal Sponsorship?

An arrangement between a 501(c)(3)
public charity and a project in which,
typically, the charity receives and expends
funds to advance the project while
retaining discretion and control over the
funds.
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Not Fiscal Agency

Fiscal Agency – Wrong Term
charity is not agent to receive project $

Fiscal Sponsorship – Preferred Term
charity directs, controls project $
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Two Main Ways to Do It Right

Direct Project Model (A)
* Independent Contractor is Model B

Pre-Approved Grant Model (C)
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Direct Project, Model A
1.
2.
3.
4.
Project belongs to sponsor
Project is not a separate legal entity
Project personnel are employees /
volunteers
Contributions belong to sponsor
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Direct Project, Model A
5.
6.
7.
8.
Sponsor is liable for everything
Sponsor reports revenue and expenses
Sponsor OWNS project
Project may have advisory committee
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Legal Steps
Project director or advisory committee
establishes a contract with sponsor.
 Sponsor’s board has already approved a
sponsorship program or approves now.
 Fundraising done in name of sponsor.
 Sponsor receives grants, donations into
project fund account, pays costs directly.

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Pre-Approved Grant, Model C
1.
2.
3.
4.
Project belongs to grantee
Project is in a separate legal entity
Project personnel work for grantee
Charitable contributions go to sponsor
first
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Pre-Approved Grant, Model C
5.
6.
7.
8.
Grantee is liable for project
Sponsor reports contributions in and
grants out
Grantee reports grant in and expenses
out
Sponsor retains “variance power”
(discretion and control) over funds
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Pre-Approved Grant – 7 Steps
1.
2.
3.
4.
5.
6.
7.
Written grant proposal from project
Sponsor evaluation of proposal
Sponsor Board approval
Written grant agreement
Proper solicitation of funds
Proper accounting for funds
Reports from grantee to sponsor
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How Could Anything Go Wrong?
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Problems Common to Both Models
1.
Sponsor is “absent,” or
“We are just using their 501(c)(3)”
2.
3.
4.
5.
No written agreement
Confusion with DAF or other programs
Sponsor mischaracterizes relationship
Donor confusion about recipient
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Direct Project Problems
1.
2.
Sponsor fails to plan for liability
No pre-nuptial agreement

3.
4.
5.
6.
Dealing with the break-up
Ownership of intellectual property
Project spends more than it has
Organizing an advisory committee
Treatment of employees
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Pre-Approved Grant Problems
1.
2.
3.
4.
5.
6.
Failure to pre-approve the grant
relationship
Grantee fails to report income
Ownership of intellectual property
Grantee fails to report back to sponsor
Sponsor pays grantee’s bills directly
Lack of professional grants management
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Resources
Fiscal Sponsorship: 6 Ways To Do It Right,
2005 edition
 www.fiscalsponsorship.com
 www.fiscalsponsordirectory.org
 National Network of Fiscal Sponsors:
www.tides.org/community/networkspartners/nnfs/

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