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Fiscal sponsorship

At the basic level, a fiscal sponsor gives your project tax exempt nonprofit status and the related benefits that entails. The process to become a 501(c)(3) can be slow and difficult to navigate, and staying in good standing is an ongoing challenge. A fiscal sponsor can get you up and running quickly and allow you to apply for nonprofit grants and solicit tax deductible donations right out of the gate. Comprehensive fiscal sponsorship goes beyond access to funding and supports your project administratively, freeing you up to focus on your goals instead of paperwork.

Classmates in Library

Interested in fiscal sponsorship?

Step 1: Learn About Fiscal Sponsorship with embolden

Interested in partnering with Embolden WI as your fiscal sponsor? Please take a few minutes to review our informational slide deck.

Step 2: Complete embolden'S needs assessment form

Once you've reviewed our Fiscal Sponsorship slide deck, feel free to fill out our needs assessment form to see if Embolden WI is a good fit for you. 

We wanted to let you know that due to an unexpectedly high volume of applications, we may not be able to accept all interested groups for fiscal sponsorship at this time. Our team is working hard to review each application thoroughly, but our current capacity is limited.


We understand this may be disappointing, and we apologize for any inconvenience this may cause. Please know that we are committed to providing the best support possible to all our partners, and we are exploring ways to expand our capacity in the future. Thank you for your understanding and patience as we navigate this situation together.

Model A: Comprehensive Fiscal Sponsorship

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A comprehensive fiscal sponsorship model works well for projects just getting started, for short-term initiatives, and for projects that are feeling the weight of maintaining the administrative costs, both time and money, of their growing organization. Some projects that seek comprehensive fiscal sponsorship plan to “spin off” into their own nonprofit once they get their feet under them. Others want a permanent home so they can focus their efforts on the mission and let someone else worry about taxes and financial reports. Whatever your goal, a comprehensive fiscal sponsor can bolster your project with controlled, predictable administrative costs. Plus, when applying for grants, you get a leg up: our financial history is your financial history, all 20 years of it, to assure funders their money is in good, sustainable hands

Model C: Pre-Approved Grant

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A preapproved grant sponsorship works well for a project or initiative that already has a funding source in mind but can’t apply without 501(c)3 status. You don’t need much from us in terms of guidance or administration. You’ve got this! The main benefit you see in a pre-approved grant relationship is no nonprofit red tape. We handle the board of directors, audits, and oversight necessary to qualify to accept tax-deductible funds. In this model, you do not become a part of Embolden. Instead, your project stays its own legal entity with its own tax and accounting responsibilities but with a wealth of new potential funding sources for your amazing work.

Fiscal Sponsorship Resources

Fiscal Sponsor FAQs

Why should we use a model C fiscal sponsor? The main benefit of a model C fiscal sponsor is to open up funding sources to its sponsored partners. There are many funding sources that are only available to 501c3 nonprofits. A vast number of grants, private foundations, and individual donors will only work with 501c3s. Unlocking these sources can rapidly grow your organization’s budget above what you could otherwise reach on your own. You have two main options to reach this funding: create a 501c3 charity, or seek out a fiscal sponsor. While becoming and sustaining a nonprofit has variable costs and expanded demands on your time, fiscal sponsors typically use a flat cost-sharing percentage to provide their administrative support. 


What costs are we sharing with a fiscal sponsor? When you become a sponsored partner, you’re not just getting access to more funds. A fiscal sponsor has already built up and takes on the administrative and IRS requirements to maintain nonprofit status, letting you focus your time and energy on the mission. Splitting off operational tasks conserves resources, reduces duplication of personnel, and simplifies organizational functions. It can take months or even years to get 501(c)(3) status, and setting up the systems and governance structures of a nonprofit take time and continual maintenance. This time commitment has already been absorbed by the sponsor.

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This backbone means a fiscal sponsor can act as a proving ground for a new idea or a new organization, lifting a group off the ground before they’re ready to take on the red tape. Should the sponsored partner thrive, they are able to scale quickly and meet urgent needs instead of being slowed down by building their administrative staff. Staff at fiscal sponsors also serve as a knowledge base, approving projects and helping ensure the people doing the work don’t run afoul of the law. Some partners “spin off” into their own nonprofits once they know how to deal with its administration. Others stay connected to their sponsor because they value the support and don’t want to take on the headache of back office work. Still others are in response to a short-term need and naturally end when the charitable venture is complete.

 

As a sponsored partner, you’re also gaining history. You leverage the sponsor's established grantor relationships and history to gain credibility and access to an even wider variety of grants than would be feasible for a brand new nonprofit. Fiscal sponsors are already familiar with grant reporting and can dot the i’s for you that you may miss.

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Wouldn’t it be better to do the work yourself and incur exactly the costs you use? Probably not. Nonprofits typically have overhead ratios of around 20%, which will vary over time with your needs. A flat rate far below that average is generally a good way to control costs and ensure the lion’s share of your funding and your time goes directly to programming. Mind you, some very large sponsored partners may “overpay” the exact amount of time and resources they use with their sponsor, but this is uncommon. Most fiscal sponsors actually don’t sustain their operations from the cost sharing they receive from their sponsored partners alone. Other funds raised by the sponsor, as well as any large partner’s “overpayment”, are used to fill their administrative deficits. 


Why would a sponsor purposely take on a deficit? Fiscal sponsors are cognizant of equitable distribution. Asking a $10,000 grantee to pay the actual cost of hours worked by their sponsor’s operational staff would be unfeasible and an antithesis to the point of fiscal sponsorship. Partners, whether big or small, should be given the opportunity to thrive and grow with their sponsor.

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Which activities by a group are not eligible for fiscal sponsorship: 

  • Designed primarily to financially benefit an individual or business (non-charitable) 

  • International activities involving financial transactions 

  • Raising funds through charitable gambling (such as raffles or bingo fundraisers) 

  • Licensed mental health care, medical services, personal care, or childcare as a direct service. Education and/or support services that do not require special licensing are allowed. 

  • Organizations that require exceptional governmental oversight and licensing 

  • Organizations that have already received their federal 501(c)(3) tax-exempt status from the IRS 

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