Fiscal sponsorship is a mechanism that allows a tax-exempt 501(c)(3) organization (the sponsor) to support another group (the sponsored partner). The WRCD serves as a fiscal sponsor, meaning that we are legally and financially responsible for any sponsored partner. As a fiscal sponsor, we offer fiduciary oversight, financial management, and other administrative services to help develop the capacity of the charitable project or group. If a potential Partner’s mission is compatible with ours, we will establish a written agreement with them.
One of the primary purposes of fiscal sponsorship is to allow a sponsored Partner to apply for grants and receive tax-deductible donations. This helps reduce the partner’s expenses, preserve resources, minimize duplication of personnel, and simplify organizational tasks. When done effectively, fiscal sponsorship serves as a testing ground for new ideas or newly formed nonprofits, utilizing the administrative resources of the sponsor.
COMPREHENSIVE FISCAL SPONSOR (MODEL A)
This service is provided to an individual or group that is not part of a separate legal business entity. The project is a charitable program of the WRCD. The Program becomes a WRCD program. Any Program personnel become employees and/or volunteers of WRCD. All fundraising is done in WRCD’s name, and the WRCD Board has control over the use of funds. All assets, contributions and liabilities belong to WRCD and are reported solely within the WRCD’s financial statements. This model is often best suited for projects in an “incubator” stage, as The Partner grows funding, programming, and recognition of the program; while reducing The Partner’s liability and limiting IRS challenges of tax-exempt designations of donations. A board resolution may be adopted during the agreement process to address potential or eventual separation from WRCD.
INDEPENDENT CONTRACTOR (MODEL B)
In this model, The Partner is a separate, legal entity. Ownership of The Program, including work-product and other assets, can belong to WRCD, The Partner, or both parties however; WRCD maintains control over the project. Actual operations of The Project are contracted out to The Partner for execution. All fundraising is done in WRCD’s name, contributions belong to WRCD, and WRCD reports funds as contributions in and expenses out. Typically, a Form 1099 will be issued to The Partner to report funds disbursed during the year for inclusion on The Partner’s tax return. Depending on ownership agreements and the nature of The Project, The Partner may be liable for the Project and may be required to carry liability insurance, listing WRCD as a named insured.
PRE-APPROVED GRANT RELATIONSHIP (MODEL C)
The Partner is a separate, legal, non-profit entity. The Partner maintains ownership of The Program, although WRCD retains discretion and control over the use of funds. The Partner goes through a formal grant request process, through which WRCD evaluates The Program’s grant proposal. Once approved, funds are only provided up to the amount of funds received for The Project, at agreed intervals. Often, The Partner has potential funding sources identified. Charitable contributions go to WRCD, who reports funds as contributions in and grants out. The Partner reports grants or income in and expenses out. The Project personnel work for The Partner, who maintains total liability for The Project.
Request a Fiscal Sponsorship application from:
Once received, the WRCD Board of Directors will review the application to determine if the project or partnership is eligible for services. If the applicant is deemed eligible for services, WRCD will determine which service model best fits the partner’s sponsorship needs and, if necessary, request additional information for further consideration.
Develop a fiscal sponsor agreement outlining the terms and conditions of the partnership. Once all language is agreed upon, a final fiscal sponsorship agreement document will be forwarded to partners for signature. Once both parties sign the agreement, Fiscal Sponsorship Services will begin.
