Fiscal Sponsorship

International Giving Solutions

Fiscal Sponsorship

Fiscal Sponsorship is the practice of established, tax-exempt nonprofits who lend their legal and financial infrastructure to donors who wish to fund projects or initiatives that are not initiated or managed by an existing or established nonprofit.   

Fiscal Sponsorship involves 3 main stakeholders:

Donors

A funder seeking to support a project or opportunity that isn't led or originating out of an existing nonprofit or otherwise is outside an existing legal structure

Fiscal Sponsor

An established nonprofit organization with tax-exempt status that handles financial and administrative aspects of sponsoring the project, including accounting, compliance, and reporting

Sponsored Project

The initiative or project that has charitable, educational, or other tax-exempt activities but does not have its own tax-exempt or charitable status

How does it work?

Fiscal Sponsorship relies on a contractual relationship between the Donor, which could be an individual or an organization, and the Fiscal Sponsor, wherein the sponsor accepts a donation intended for a specific project or initiative.  The donor receives a tax receipt from the sponsor, and the sponsor provides fiduciary oversight, financial management, compliance and other administrative services to help implement the project or initiative.  

A contractual relationship also applies to the Sponsor and the sponsored project or initiative.  It's important for both the fiscal sponsor and the sponsored project to have a clear understanding of their roles and responsibilities and to formalize the arrangement through a written agreement. This arrangement can be temporary or long-term, depending on the needs and goals of the project and the fiscal sponsor. 

Let’s breakdown how fiscal sponsorship could work through an example: 

  1. Let’s say that an American donor wants to fund a literacy project being proposed by a small low-income community within the US. While the donor can give funds to the community directly, the donor will not be able to get a tax receipt, since the community being funded is not a legal entity.  

  2. What the donor can do is avail a Fiscal Sponsorship service from an established, tax-exempt nonprofit such as TrustBridge Global Foundation.   

  3. By donating the funds for the project to TrustBridge Global or the Fiscal Sponsor, the donor can receive a tax receipt; And moreover, the small community will be able to implement the proposed project more efficiently and effectively through the Fiscal Sponsor’s agreed upon services such as financial oversight, compliance and reporting. 

Donor

Donated Funds Routed to Project

Tax Receipt, Reporting

Fiscal
Sponsor

Established,
Tax-exempt Nonprofit

Donated Funds

Financial Oversight,
Compliance, Reporting

Sponsored Project

Led by a community,
which is not a legal entity nor an established nonprofit

What are the advantages of Fiscal Sponsorship?

Fiscal sponsorship can be an attractive option not just for donors, but also for new or smaller charitable projects, as it allows them to benefit from an established nonprofit's infrastructure and expertise without having to go through the process of obtaining their own tax-exempt status.

Flexibility – Donors can easily support projects or initiatives outside existing organization structures 

Tax Efficiency – Donors can maximize the tax-efficiency of donations to support projects 

Security – Donors and the Supported Project can receive financial oversight, compliance and other administrative support provided by TrustBridge 

Who is it for?

Donors

Including individuals, groups, communities, and organizations that are not technically recognized as a charitable organization.  

Wealth Advisors

Charities

Case Study

BAHAMAS: Fire House Project 

Eager to help a community in the Bahamas, a family from the United States wanted to assist the improvement of local fire department services. The family inquired about the appropriate structure necessary to oversee the temporary project to renovate and reconstruct the local fire house. 

After speaking with our experts, a fiscal sponsorship was determined to be the best solution and a TrustBridge Global Network Member facilitated payment for the construction. The family was able to claim a tax-deductible contribution for their donation and the renovations were completed. 

  • Yes, as with most charitable giving, there are several risks with fiscal sponsorship arrangements with the key risks being the following: liability, reputation and mission creep, project oversight, risk of funds and lack of control. However, by partnering with experienced, trusted, capable partners, these risks can be effectively mitigated and minimized.  

  • The recognition and implementation of fiscal sponsorships vary globally. Some countries may have similar mechanisms, but they might not be as widely recognized or utilized as in the U.S. , Europe, and other developed countries. 

    When considering a fiscal sponsorship arrangement, consulting with experts such as TrustBridge Global will be beneficial to ensure compliance with local laws and regulations. 

Frequently Asked Questions

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