Fiscal sponsorship: models, fees, and how to find the right sponsor

Fiscal sponsorship is one of the most useful and most misunderstood tools in the nonprofit world. Done well, it lets a new project raise charitable money, get administrative support, and test its model before taking on the cost of a separate nonprofit. Done poorly, it creates confusion about who owns what, who's liable, and who controls the money.

This guide explains the main models, what sponsors charge, how to find one, and what belongs in your agreement.

What fiscal sponsorship is

In a fiscal sponsorship, an established tax-exempt nonprofit (the sponsor) agrees to support a charitable project that doesn't have its own tax-exempt status, or that chooses not to form one. Depending on the model, the sponsor either takes the project in as one of its own programs or receives funds for it and regrants them.

Because the sponsor is a 501(c)(3) public charity, donors can make tax-deductible gifts and many foundations can make grants that benefit the project. In exchange, the sponsor provides oversight and services and typically charges a fee.

Who uses fiscal sponsorship

• New projects waiting on, or not yet ready for, their own 501(c)(3) determination
• Time-limited projects like a festival, a documentary, a research initiative, or a coalition campaign
• Grassroots and community groups that want to stay small and focus on programs instead of administration
• Projects testing a model before deciding whether to incorporate
• Collaborations that need a neutral home for shared funds

The models: Colvin's framework

Most practitioners describe fiscal sponsorship using the lettered models in attorney Gregory Colvin's book Fiscal Sponsorship: 6 Ways to Do It Right, published by the San Francisco Study Center (the third edition was co-authored with Stephanie Petit). According to the Study Center, the first three models (A, B, and C) grew out of analysis by the late attorney Tom Silk. The six models are:

In practice, Models A and C are the ones you'll hear about most, and they're the focus of this guide.

Model A: comprehensive (direct project)

In a comprehensive sponsorship, the project is legally part of the sponsor. The Nonprofit Law Blog describes it this way: the fiscal sponsor has complete ownership of the project, and everyone who works on or manages the project acts as an employee, volunteer, or agent of the sponsor.

What that means in practice:

• Ownership: The sponsor owns the project's assets, contracts, and intellectual property (subject to your agreement).
• Staff: Project staff are typically on the sponsor's payroll.
• Liability: The sponsor carries legal responsibility for project activities, so it'll want insurance, policies, and oversight.
• Finances: All money runs through the sponsor's books. The sponsor reports it on its own financial statements and tax return.
• Leadership: Project leaders often serve as an advisory or steering committee, and the agreement may give them the right to end the sponsorship and move the project.

Best for: Projects that want a full back office (payroll, HR, insurance, accounting, compliance) and don't want to run their own legal entity.

Model C: pre-approved grant relationship

In a Model C sponsorship, the project is its own entity, often a nonprofit corporation that doesn't yet have 501(c)(3) status, or an unincorporated association. The sponsor raises or receives funds for the project's purposes and regrants them to the project, much like a foundation making a grant.

Key features, per the Nonprofit Law Blog's summary:

• Ownership: The project (the "grantee") owns itself and its work.
• Staff: People who work on the project are employees, volunteers, or agents of the grantee, not the sponsor.
• Discretion: The sponsor raises funds for the project's purposes without a legal obligation to pass them to the grantee, and generally regrants what it collects. The Pittsburgh Foundation's guide notes the sponsor retains authority to redirect funds if the project becomes infeasible or noncompliant.
• Reporting: The sponsor requires grant reports, as any grantmaker would.

Best for: Projects with their own structure and capacity that mainly need a charitable conduit for tax-deductible gifts and foundation grants.

Comparing A and C at a glance

What fiscal sponsors charge

Fees vary widely by model and services. The Pittsburgh Foundation's 2025 fiscal sponsorship guide says most fiscal sponsors charge between 5% and 15% of project revenue, with fees varying by the level of administrative support, risk exposure, and reporting complexity. Some sponsors also charge setup fees, minimum annual fees, or separate charges for services like payroll or audits.

When comparing sponsors, ask:

• Is the fee a percentage of all revenue, or only certain types (for example, grants but not earned income)?
• Is there a minimum fee or a setup fee?
• What does the fee include: accounting, payroll, HR, insurance, grant reporting, donor acknowledgments, audit costs?
• How quickly are funds available after a grant or donation arrives?
• Are there extra fees for government grants or complex reporting?

How to find a fiscal sponsor

1. Search the Fiscal Sponsor Directory. The San Francisco Study Center maintains it, and it lists sponsors by state, service category, and keyword.
2. Explore the National Network of Fiscal Sponsors (NNFS). NNFS promotes understanding and professional practice of fiscal sponsorship, and its steering committee is made up of fiscal sponsors from across the country. In 2010 it published widely cited best-practice guidelines for comprehensive fiscal sponsorship.
3. Ask your community foundation. The National Council of Nonprofits notes that many community foundations are willing to serve as fiscal sponsors.
4. Look for mission-aligned nonprofits. An established local nonprofit in your field may be willing to sponsor a closely related project.
5. Ask funders. Program officers often know which sponsors are reliable in your field and region.

Questions to ask a prospective sponsor

• Which models do you offer, and which would you recommend for us?
• What's your fee, and what does it include?
• How do you handle grant applications? Who signs and submits?
• How fast do you pay invoices and process payroll?
• What reports will we receive, and how often?
• What insurance do you carry, and what will we need?
• What happens if we want to leave or become our own nonprofit?
• Can we speak with two or three projects you currently sponsor?

What belongs in a fiscal sponsorship agreement

A written agreement is essential. The Pittsburgh Foundation's guide stresses that it should define roles, responsibilities, and expectations, and address intellectual property ownership and decision-making authority. At minimum, it should cover:

• The model and the legal relationship
• The project's charitable purpose, which must fit the sponsor's exempt purposes
• Control and discretion over funds, including the sponsor's authority to redirect funds if needed
• Fees and how they're calculated
• Fundraising rules: who can solicit, how gifts are acknowledged, and how grants are applied for
• Financial management: budgets, approvals, reporting, and timelines for payments
• Staff and contractors: who employs or engages them
• Insurance and liability
• Intellectual property and assets: who owns them now and on termination
• Termination and transfer: how either party can end the relationship, and what happens to remaining funds and assets (often transfer to a successor 501(c)(3) the sponsor approves)

Applying for grants as a sponsored project

When you apply for grants under a sponsor:

• Check eligibility. Some funders don't accept fiscally sponsored applicants, and some technology programs, like Google for Nonprofits, require your own 501(c)(3) status.
• Follow the sponsor's process. Most sponsors want to review applications before submission, and the sponsor usually signs as the legal applicant.
• Name the relationship clearly. Explain who the sponsor is and which model you're using.
• Include the sponsor's documents as the funder requests: IRS determination letter, financial statements, and a letter confirming the sponsorship.

When to leave fiscal sponsorship

Many projects stay sponsored for years; others "graduate" when they need their own governance, when sponsor fees outgrow the cost of running independently, or when a funder requires independent status. Plan the transition with your sponsor: get your own 501(c)(3) determination, set up finances, and arrange for the transfer of assets, staff, and funder relationships under your agreement's termination terms.

For more on building fundability as a young organization, see grants for new nonprofits.