Last Words on a Model A Fiscal Sponsorship Agreement Template
Model A fiscal sponsorship offers a structured, legally compliant way to support charitable initiatives while maintaining financial and operational oversight. A well-drafted fiscal sponsorship agreement is essential to clearly define roles, responsibilities, and compliance expectations, ensuring both the fiscal sponsor and the sponsored project operate smoothly. By leveraging Crowded’s financial tools—such as subsidiary bank accounts, branded donation pages, Visa debit cards, fraud protection, and automated tax compliance—fiscal sponsors can streamline operations, minimize liability, and empower sponsored projects to thrive.
A well-crafted Model A fiscal sponsorship agreement template is a vital tool for nonprofits looking to support charitable initiatives effectively. It provides a clear framework for financial oversight, compliance, and governance, ensuring that both the fiscal sponsor and the sponsored project operate smoothly. In a Model A fiscal sponsorship, where the project functions as a program of the sponsor, a strong agreement is essential to define roles, responsibilities, and tax-exempt benefits. Having a structured agreement in place helps safeguard both parties while maximizing the impact of charitable efforts. Paired with Crowded’s financial oversight tools, fiscal sponsors can ensure effective implementation of fiscal sponsorship agreements.
Why a Strong Model A Fiscal Sponsorship Agreement Template Matters
A Model A fiscal sponsorship agreement is a legally binding document that defines the relationship between the fiscal sponsor and the sponsored project. It ensures:
- Clear governance and operational expectations
- Full compliance with IRS 501(c)(3) regulations
- Defined financial management and reporting structures
- Mitigation of risks related to liability, fundraising, and compliance
Key Components of a Model A Fiscal Sponsorship Agreement Template
1. Purpose & Structure
- Clearly state that the sponsored project operates under the fiscal sponsor’s legal and tax-exempt umbrella.
- Ensure the project aligns with the mission and activities of the fiscal sponsor.
- Define the project’s objectives and scope within the sponsor’s operational framework.
2. Roles & Responsibilities
- The fiscal sponsor will maintain full discretion and control over all funds, decision-making, and compliance matters.
- The sponsored project will operate under the fiscal sponsor’s tax-exempt status and comply with all applicable laws and regulations.
- The project’s mission and activities cannot materially change without the sponsor’s written approval.
- The project must avoid any activities that could jeopardize the fiscal sponsor’s tax-exempt status, such as prohibited political activities.
3. Financial Management
- The fiscal sponsor will establish and maintain a separate financial account for the project within its organizational accounts.
- All donations and grants for the project will be deposited into this account and used exclusively for its charitable purposes.
- The fiscal sponsor will process payments, payroll, and reimbursements for the project, ensuring IRS compliance.
- The project cannot incur financial obligations beyond its available balance without approval.
- Administrative fees, typically between 5-15%, may be charged to cover oversight and support costs.
4. Fundraising & Grant Compliance
- All fundraising activities must be conducted under the fiscal sponsor’s name and with its approval.
- The fiscal sponsor must review and approve all grant applications and funding agreements before submission.
- Grant funds will be managed, tracked, and reported by the fiscal sponsor, ensuring donor restrictions and IRS compliance.
- The fiscal sponsor will issue tax-deductible receipts for contributions received.
5. Reporting & Oversight
- The fiscal sponsor will maintain detailed financial records for the project, ensuring transparency and accountability.
- The sponsored project must provide regular activity and financial reports as required.
- The fiscal sponsor will include the project’s financial activities in its annual IRS Form 990 submission.
- The project must comply with all audit and compliance review requirements.
6. Compliance & Risk Management
- The fiscal sponsor must ensure the project does not engage in prohibited political activities or excessive lobbying under IRS regulations.
- Regular financial reporting and audits are required to maintain transparency.
- All records must be maintained per Generally Accepted Accounting Principles (GAAP).
7. Intellectual Property & Work Products
- Any intellectual property, reports, or deliverables created through the project remain the property of the project.
- The fiscal sponsor retains rights to access these materials for compliance and oversight.
8. Termination & Transition Provisions
- Either party may terminate the agreement with 30 days’ written notice.
- If the fiscal sponsor determines that continuing sponsorship poses a risk to its tax-exempt status, it may terminate the agreement immediately.
- Upon termination, remaining funds will be reallocated per nonprofit tax laws, either transferred to another qualified fiscal sponsor or returned to donors where possible
How Fiscal Sponsors Can Use the Model A Fiscal Sponsorship Agreement Template Effectively
The fiscal sponsorship relationship is delicate and if not carried out properly can put both parties at legal risk. Upholding the fiscal sponsorship agreement requires careful planning and powerful tools that help maintain oversight.
- Provide guidance to sponsored projects on financial reporting and compliance expectations. Delegate budgets and set custom permission tiers with Crowded’s subaccount feature to effectively steer sponsored projects within budget and compliance constraints.
- Maintain transparency by regularly reviewing Crowded’s centralized financial reporting dashboard which offers real- time visibility into all of the sponsored projects expenditures.
- Enforce compliance with Crowded’s automatic transaction capture, built in compliance safeguards and visa fraud protection.
Regularly review and update agreements to reflect changes in nonprofit laws or operational needs.
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Your questions, answered.
What is a Model A fiscal sponsorship?
Model A fiscal sponsorship is a structure where a sponsored project operates as a program of the fiscal sponsor, meaning the fiscal sponsor assumes full legal and financial responsibility for the project. With the sponsor’s tax exempt status at stake, financial oversight tools like Crowded are essential to ensure the sponsored project is compliant.
How does Model A fiscal sponsorship differ from Model C?
In Model A, the project functions under the fiscal sponsor’s tax-exempt status, while in Model C, the project remains legally independent and receives grant funding from the sponsor.
What financial responsibilities does a fiscal sponsor have in Model A?
The fiscal sponsor manages all funds, processes payroll, handles reimbursements, and ensures that donations and grants are used for their intended charitable purposes.
Can a Model A fiscal sponsorship project receive tax-deductible donations?
Yes! Since the project operates under the fiscal sponsor’s 501(c)(3) status, all donations and grants are tax-deductible for donors.
What are the risks of Model A fiscal sponsorship?
The fiscal sponsor assumes full liability for the project’s financial and legal activities, making compliance, risk management, and oversight critical to success.
How can Crowded help with fiscal sponsorship management?
Crowded’s all-in-one financial platform helps fiscal sponsors streamline fund management, automate reporting, track compliance, and minimize administrative burdens—all while maintaining full oversight.
