Donation

Fiscal Sponsor Funds: An Overview

What is a fiscal sponsor fund?

There are two (2) main types of fiscal sponsorships, Model A and Model C. This will be a very broad overview and not delve into the relative aspects of either. Our umbrella runs both, although mainly Model A which is comprehensive and Model C where there is a pre-approved grant relationship with an unrelated entity or person. In either case, the Fiscal Sponsor is the umbrella recognized as the 501(c)(3) and the person or entity contracting with the Fiscal Sponsor is the Fiscal Sponsee. The initiative and all funds must be received by the Sponsor(and not Sponsee). The Sponsor will disburse funds only to advance charitable purposes. It is deemed a public charity and must file its IRS Form 990 each year.

 

Can you earmark funds for individuals either through a fiscal sponsor fund or a donor advised fund?

Unfortunately, you are not able to earmark funds for a specific individual. In fact, it would be against the law. Now, of course, if you are a donor advised fund, you may disburse funds to qualified charities who may assist individuals but not earmarked. With fiscal sponsorship funds, there are less restrictions on disbursements to individuals, however, you also cannot earmark funds for a specific individual.

  

Is it possible to use the same 501(c)(3) umbrella to operate both a fiscal sponsor fund and a donor advised fund?

The answer is yes. Many may not run both however, Edward Charles Foundation would allow you to operate under its umbrella these two different types of funds. There are distinctions and subtleties to each.

 Whose income is it anyway?

This question comes up all the time. For tax exempt entities in which the funds are received by a fiscal sponsor, it is income for the fiscal sponsor at the time of receipt. Per industry standards, almost all fiscal sponsor agreements state that all such proceeds received on behalf of a charitable fund (either donor advised or fiscally sponsored) is income of the sponsor or the fund.