Fiscal Sponsorship - How it Works
The Community Foundation Serving SW Colorado supports the non-profit community
through various partnerships and initiatives as well as providing an opportunity for small organizations who are desirous of providing charitable services to their community.
Two choices that these new organizations have available to them are:
- to become a 501 © (3)
- to partner with the Foundation as their fiscal sponsor.
What is fiscal sponsorship?
A fiscal sponsorship is an agreement between an unincorporated group or project and a 501 ©(3) non-profit organization that provides the former with the benefits of tax exempt status. This partnership is interactive with the 501 ©(3) or Foundation providing mentoring, nonprofit expertise, marketing support along with having access to "tax exempt" status.
The Foundation will assess the community need and benefit, while interacting with the principals of the proposed project and endorse mission and goals or suggest appropriate changes to better meet community need and be compatible with the Foundation's mission and goals. The project or organization may have its own advisory board.
Once the preliminary Colorado Secretary of State application (see guidelines) is complete and the organization has been designated a Colorado nonprofit, the Foundation and the organization can then take the next step to gain Foundation Board approval and complete the fiscal sponsorship agreement.
Donors may contribute to the organization directly or through the Foundation and receive a tax deduction. All checks must be made payable to the Foundation. The Foundation maintains a separate account for the organization and makes "grants on behalf of the organization for expenses incurred as requested. by the organization.
The organization is expected to maintain regular contact with the Foundation. This can be done via email, telephone, meetings and organization minutes. Periodic financial reports are also expected from the organization.. The Foundation will provide calendar quarterly reports to the organization, identifying income and expense for the quarter.
When the organization holds public events, the Foundation asks to be acknowledged in their advertising as well as event literature. The Foundation staff are also available to provide support and assistance in consultation regarding any event.
The Foundation will provide organization information on Foundation web site as well as a link from Foundation website to organization web site. The Foundation is committed to supporting the new organization in its mission and community service.
The Foundation expects the fiscally sponsored organization to have solid leadership and governance, and stable finances. Lacking either of the aforementioned is a recipe for disaster for the organization and could have repercussions on the Foundation.
The Foundation makes the commitment to the organization being fiscally sponsored to make staff available for consultation. Foundation will provide reliable systems for accounting and reporting to provide adequate financial information in a timely manner.
The Foundation's primary goal is to provide the support necessary so that the organizations can focus their attention on their mission and programs. We are here to build capacity and to assist the organizations as they pursue sustainability and eventually obtain their own non-profit status, if appropriate.