Nonprofit fiscal sponsorships are a strategic tool that allows established 501(c)(3) organizations to support charitable projects under their legal and tax-exempt status. By acting as a fiscal sponsor, your nonprofit can expand its impact, foster innovation, and provide essential administrative support to mission-aligned initiatives. With platforms like Crowded, managing fiscal sponsorship becomes simple, allowing you to focus on expanding your reach without increasing administrative burdens.
What are Nonprofit Fiscal Sponsorships?
Nonprofit fiscal sponsorships are a formal agreement where a nonprofit organization (the fiscal sponsor) assumes legal and financial responsibility for a charitable project or initiative. This arrangement allows projects to receive tax-deductible donations and grants while benefiting from the sponsor’s infrastructure, financial oversight, and administrative expertise. Crowded simplifies this process by providing intuitive financial tools that make managing fiscal sponsorship seamless.
There are multiple models of fiscal sponsorship, but the two most common are:
- Model A (Comprehensive Fiscal Sponsorship): The project operates as a fully integrated program within the fiscal sponsor, which assumes full financial and legal responsibility.
- Model C (Pre-Approved Grant Relationship): The project remains a separate entity, while the fiscal sponsor acts as a grantor, managing donations and disbursing funds to the project.
Why Become a Nonprofit Fiscal Sponsor?
Serving as a fiscal sponsor offers a range of benefits, both for your nonprofit and for the charitable projects you support. Crowded enhances these benefits by providing an all-in-one financial platform that makes fiscal sponsorship more efficient and scalable.
- Expand Your Organization’s Mission & Impact
By sponsoring aligned projects, your nonprofit can extend its reach and further its mission without directly managing new programs. Crowded provides the financial tools to support these initiatives effortlessly with minimal liability, centralized financial reporting and efficient platform management for reduced manual labor. - Attract New Funding Opportunities
Acting as a fiscal sponsor allows your nonprofit to access additional funding streams while ensuring proper fund management. With professional, branded donation pages for each project, 501(c)(3) tax receipts and one-click recurring donation setups, you can provide seamless, transparent donation experiences for supporters while helping non-501(c)(3) causes attract tax-deductible donations - Strengthen the Nonprofit Sector
Fiscal sponsorship fosters innovation by supporting emerging initiatives, allowing them to test ideas and grow under your nonprofit’s guidance before establishing independent legal structures. Crowded makes it easier to manage multiple projects by offering automated financial oversight and real-time reporting, enabling nonprofits to scale their initiatives efficiently. By reducing administrative burdens, Crowded helps organizations expand their reach, support more causes, and drive greater social impact at scale. - Enhance Financial Stewardship & Compliance
With fiscal sponsorship, your nonprofit ensures that charitable funds are used appropriately and in compliance with IRS regulations. This protects donors and maintains public trust. Crowded’s secure payment solutions and compliance safeguards minimize liability while providing real-time financial visibility. - Generate Revenue Through Administrative Fees
Most fiscal sponsors charge an administrative fee (typically 5-15%) to cover the costs of oversight, compliance, and financial management, providing a sustainable funding source for your nonprofit.
How to Become a Nonprofit Fiscal Sponsor
If your nonprofit is interested in serving as a fiscal sponsor, follow these steps:
- Develop Sponsorship Policies – Outline your eligibility criteria, oversight responsibilities, and fee structure.
- Draft a Fiscal Sponsorship Agreement – Establish clear terms defining financial management, reporting expectations, and legal obligations.
- Assess Potential Projects – Carefully vet applicants to ensure alignment with your mission and compliance capabilities.
- Implement Financial & Compliance Controls – Maintain separate accounting for each project and ensure adherence to IRS regulations. Crowded automates much of this process.
- Provide Support & Oversight – Offer financial management, reporting tools, and compliance guidance to sponsored projects using Crowded’s platform.
How Crowded Supports Nonprofit Fiscal Sponsorships
To simplify and enhance fiscal sponsorship, Crowded provides the essential tools to support sponsored projects efficiently.
- Create unlimited subsidiary bank accounts– Use these accounts to give your projects the freedom to manage finances, while you maintain oversight.
- Onboard Project Heads as Sub Account Admins- Much easier than opening a full bank account! No EIN or incorporation documentation required.
- Projects Manage Funds Autonomously- Admins enjoy built-in payment processing, fundraising and transparent spending tools.
Your questions, answered.
Are fiscal sponsorship agreements for Model A and Model C the same?
No, fiscal sponsorship agreements for Model A (Comprehensive Fiscal Sponsorship) and Model C (Pre-Approved Grant Relationship) are not the same. While both define the legal and financial relationship between the fiscal sponsor and the sponsored project, they have distinct structures and responsibilities.
Can a fiscal sponsorship project accept tax-deductible donations?
Yes! Under both Model A and Model C, the fiscal sponsor’s 501(c)(3) status allows projects to receive tax-deductible contributions.
What's the difference between a fiscal agent vs. a fiscal sponsor?
A fiscal sponsor is a 501(c)(3) nonprofit that provides legal and tax-exempt status to another project, offering financial oversight and compliance. A fiscal agent, on the other hand, is more limited, focusing primarily on financial management without taking full legal responsibility or involvement in the project’s operations.
