Fiscal sponsorship:
501(c)(3) nonprofit status in just 24 hours
Organizing an event, project, or organization to serve the public good or your community? Consider fiscal sponsorship before the pain of paperwork distracts you from your goals.
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Why organizers go after 501(c)(3) status
Every year, 1.6 million nonprofits in the U.S. apply for and renew 501(c)(3) status through the IRS for charitable recognition and tax exemption for their funding. It can take anywhere from 2-12 months to hear a decision back from the IRS, and in general, nonprofit organizers should be prepared for:$3,000 in up-front costs, from forms to state fees to support from legal counsel
The potential for the IRS to reject an application
Hiring bookkeepers and accountants to prepare taxes and provide upkeep annually to stay in good standing
Closing costs averaging around $5,000 if you lose or terminate status
The ability to receive tax deductible donations from sponsors.
Reduced taxable income for your U.S. supporters, which incentivizes giving.
Exemption from U.S. federal income tax and unemployment tax.
Potential exemption from state income, sales, and employment taxes.
Potential for reduced rates on postage, marketing, advertising, legal counsel, and more.
Fiscal sponsorship?
By legally working with an existing nonprofit offering fiscal sponsorship, projects and events can claim most of the legal benefits of individual 501(c)(3) status. Piggy-backing off this existing status, organizations also gain access to resources from their fiscal sponsor like:Bookkeeping and administration to ensure that all paperwork and taxes are filed
Fully established HR and benefits, which can vary by the fiscal sponsor
Waived responsibility to organize a board of directors
Fully transparent operational fees, typically ranging from 7-12% that prevent you from paying typical operating costs.
The ability to terminate your fiscal sponsorship agreement and file for separate tax-exempt status at any point.
Requirements for fiscal sponsorship
Depending on the fiscal sponsor you choose, requirements for working together can vary. Fiscal sponsors generally ask that your nonprofit’s goals be similar to theirs. They also usually ask that your organization or event commits to remaining charitable in nature and refrains from activities that may result in loss of 501(c)(3) status.HCB, the #1 fiscal sponsor
While many fiscal sponsors require that their partners relate to their mission in similar ways, at HCB, we’ve built our infrastructure to support hundreds of causes in all areas of charitability.Check out some of the resources we’ve built our fiscal sponsorship foundation on:A beautiful web interface to manage finances
Fee-free invoicing, ACH or check transfers, and reimbursements
A customizable and embeddable donations URL
An account & routing number to connect to external platforms, like Shopify and GoFundMe
Perks like PVSA certification, newsletter software, and 1Password credits