Clawson Community Foundation
Providing Fiscal Sponsorship for Clawson’s Good Deed Doers
Do you have a good idea for Clawson? We can help turn your ideas into action! The Clawson Community Foundation provides tax exempt status and fiscal management for your project so you can focus on making your idea happen.
What’s that? Tell you more?
In short, by working through the Clawson Community Foundation, your donors can deduct their donations under our 501(c)(3) status and we do all the bean counting. That means you can focus on planning and implementing your idea and on raising the funds needed to do so.
So how does it work you ask?
Ok, here are some of the more technical (dry but important) Frequently Asked Questions (FAQs):
What is a fiscal sponsor?
Fiscal sponsors provide a legal structure to people and groups that want to provide charitable services but don’t have either their tax-exempt status or the structure in place to provide those services. A fiscal sponsor is a nonprofit organization that provides fiduciary oversight, financial management, and other administrative services to help build the capacity of charitable projects.
What does a fiscal sponsor do?
Fiscal sponsors perform various administrative functions on behalf of the sponsored organization or program, including receiving and administering charitable contributions.
To provide these services, a fiscal sponsor charges an administrative fee, which is usually a percentage of the budget of the sponsored organization or program. Using a fiscal sponsor satisfies IRS requirements as long as the fiscal sponsor maintains control over the donated funds.
What is the benefit of using a fiscal sponsor?
Fiscal sponsorship is often used by newly formed nonprofits to raise money before being recognized as tax-exempt by the IRS. A fiscal sponsor lets a program or organization attract funding for its operations that will be tax-deductible to donors.
- Donors that itemize deductions can’t claim a tax deduction unless they donate to an organization recognized by the IRS as a 501(c)(3) tax-exempt organization.
- Groups that are not tax-exempt 501(c)(3) organizations generally are not eligible for grants from charitable foundations.
- Fiscal sponsorship is a way for a sponsored group to test-drive ideas.
- Some organizations/programs stay in a fiscal sponsorship relationship for a long time if their mission can be achieved in that structure.
- Some organizations - including those that are tax-exempt - find outsourcing administrative responsibilities to a fiscal sponsor is the right business model for them. This structure can work well for all-volunteer organizations.
How it works
Prior to establishing the fiscal sponsorship, the organization submits an application that outlines the purpose and goals of the program/project. If approved, the responsibilities and obligations of both parties are outlined in a written agreement. The agreement specifies what the fiscal sponsor is responsible for including all legal compliance relating to receiving, reporting, and acknowledging charitable donations. It also describes the administrative fee charged as well as any recordkeeping responsibilities of the sponsored organization.
The following resources provide in depth information about fiscal sponsorship:
- Fiscal Sponsorship: A Balanced Overview
- The Use of LLCs in Fiscal Sponsorship: A New Model
- Should a New Nonprofit Start Fundraising Before 501c3 Status?
- Fiscal Sponsorship vs. Fiscal Agency
Check out the following documents to get your project moving: