How Much do Fiscal Sponsors Charge?

Fees vary greatly amongst fiscal sponsors depending upon the services provided, the activity level of the contributions received and disbursements, the nature of the charitable activities, as well as other potential factors.

Services Provided

In terms of services provided, it is important to understand the types of services that a fiscal sponsor may provide. While there are sufficient varietals in terms of types of fiscal sponsorship and their respective services, we will attempt to address the two (2) main types, “Model C” and “Model A”. Model C is the pre-approved grant model and Model A is the comprehensive financial accounting model of fiscal sponsorship. Typically, in Model C, the sponsee is obligated to maintain the books and ledgers of the accounting functions which greatly amplifies its responsibilities and its costs, by providing a budget in advanced to the sponsor. On the other hand, the cost of Model C is lessened since the Sponsor has less accounting obligations and thus can provide the service with less effort and expense. In Model A fiscal sponsorship, the Sponsor has all of the obligations of reporting and accounting including providing full financial statements to the sponsee, thus a higher price.

For the most part, Model A services should include most (if not all) of the following services:

 Sponsor maintains all bank accounts of sponsee.
Sponsor issues all checks, wires and ACH.
 Sponsor monitors all income, funds and contributions and notifies sponsee of any significant funds received by wire and check, daily, to the extent received.
Sponsor issues all charitable receipts.
Sponsor provides sponsee with a profit and loss statement monthly and year to date as well as a balance sheet, within a certain number of days of the close of the month.
 Sponsor does all payroll.
  Sponsor does all 1099s.
  Sponsor reports all income of the Fund on its IRS Form 990 annual tax return.
Sponsor has an online portal to receive online donations on behalf of sponsee.
 Sponsor stores all back up and accounting data for Sponsee in a secure Cloud. Sponsee may need insurance for any specific activities. For example, if sponsee puts on an event, event insurance must first be obtained.
  Sponsor will assist in obtaining quotes. If sponsee conducts an event in a state in which Sponsor is not registered (for charitable solicitations)
Sponsor will prepare and submit the necessary paperwork to that state to become registered free of charge to sponsee, except for any out-of-pocket expenditures including registration, renewal and mailing fees. 

Model C places all of the above accounting functions squarely on the sponsee except for charitable receipts. (Usually not Model C is not common for higher frequency donor transactions, it is more akin for singular or few donation transactions mostly in “grant” scenarios)

In any event, when considering fees, one should truly consider the service levels of the sponsor to make sure (1) it is obtaining the services desired and (2) it is comparing apples to apples, so that you can insure the compensation received is commensurate with the services provided to determine which fiscal sponsor is providing the best fee structure.

Fiscal sponsors can provide other strategic services including “strategic planning”, grant writing, board development, etc. Typically, these services are “add-ons” and one should determine the cost of each and level of services prior to selection of the fiscal sponsor.

Mostly fiscal sponsors charge a percentage of funds raised, although some may charge a flat fee or a monthly rate as well. Percentages for fiscal sponsor services range for Model C fiscal sponsorship from typically on the low side 3% up to 10% of first funds in Model A fiscal sponsorship and everywhere in between. Some Fiscal Sponsors may charge extra for receiving and accounting for large grants. There may be other up charges or hidden costs such as merchant account fees, etc. One should thoroughly question all potential fiscal sponsors to have a comprehensive understanding of their services, costs and fees.

Inflows & Outflows

Another variable that might alter fees charges are inflows and outflows meaning the frequency of disbursements as well as donation transactions. For example, if there are 1,000’s of micro-donations received each month, this may drive the cost of the services up. On the other hand, if there are minimal transactions per month, it may drive the cost of fiscal sponsor services down.

Nature & Activity of Services

Each charitable initiative has a different set of activities and depending upon whether they are domestic, or, international, or the nature of the work itself, as these factors shift so does the cost of fiscal sponsorship.

All in all, any fiscal sponsor that does not have its own due diligence process to understand the above criteria when considering sponsoring a charitable initiative should not be trusted. This is a very nuanced business and both parties should be quite comprehensive and thorough in their investigation of the other party to find the right partner.