FISCAL SPONSORSHIP PROGRAM
At C.A.E., we are passionate about helping you help our community in which we work and live. We have provided Fiscal Sponsorship Services to individuals, groups, and organizations, offering programs that align with our mission.
Since 2010, C.A.E. has served as a fiscal sponsor for over twenty organizations and programs, enabling more than $885,000 in direct programming to the community. Below is more information about a fiscal sponsor, what your program can expect from C.A.E. as the Fiscal Sponsor, and what you are expected to provide.
What is a Fiscal Sponsorship?
Most commonly, Fiscal Sponsorship is necessary when a person or group (the Sponsee) wants to provide a charitable program (the Program) and fund it with tax-deductible contributions. However, the Sponsee does not have an Internal Revenue Service (IRS) 501(c)(3) tax-exemption status to allow the contributions to be designated as tax-deductible. C.A.E. acts as the sponsor of the Program.
The Fiscal Sponsor is legally responsible for doing the following:
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Collect contributions to support the Program.
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Disburse the funds to pay valid, program-related expenses.
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Financial reports, as well as acknowledgment letters for all charitable contributions.
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Ensure that the use of funds aligns with its mission and furthers its purpose.
What types of Fiscal Sponsorship Services does C.A.E. offer?
Once The Program is deemed in line with its mission and the Board of Directors agrees to provide fiscal sponsorship service, C.A.E. employs five Fiscal Sponsorship models to meet the Sponsee’s needs:
1) Comprehensive Fiscal Sponsor (Model A)
This service is provided to an individual or group that is not part of a separate legal business entity and is initially not concerned with owning the Program’s resulting work products. The Program becomes a C.A.E.-owned program. Any Program personnel become employees and/or volunteers of C.A.E. All fundraising is done in C.A.E.’s name, and its Board controls the use of funds. All assets, contributions, and liabilities belong to C.A.E. and are reported solely within the Organization’s financial statements. This model is often best suited for projects in an “incubator” stage, as the Sponsee grows funding, programming, and recognition of the program; while reducing the Sponsee’s liability and limiting IRS challenges of tax-exempt designations of donations. A board resolution may be adopted during the agreement process to address the potential or eventual separation of the Program from C.A.E.
2) Independent Contractor (Model B)
In this model, the Sponsee is a separate legal entity. Ownership of the Program, including work-product and other assets, can belong to C.A.E., the Sponsee, or both parties, however; C.A.E. maintains control over the project. Actual operations of the Program are contracted out to the Sponsee for execution. All fundraising is done in C.A.E.’s name, contributions belong to C.A.E., and C.A.E. reports funds as contributions in and expenses out. Typically, a Form 1099 will be issued to the Sponsee to report funds disbursed during the year for inclusion on the Sponsee’s tax return. Depending on ownership agreements and the nature of the Program, the Sponsee may be liable for the Program and may be required to carry liability insurance, listing C.A.E. as a named insured.
3) Pre-Approved Grant Relationship (Model C)
The Sponsee is a separate, legal, non-profit entity. The Sponsee maintains ownership of the Program, although C.A.E. retains discretion and controls over the use of funds. The Sponsee goes through a formal grant request process, through which C.A.E. Staff evaluates the Program’s grant proposal. Once approved, funds are only provided up to the amount of funds received for the Program at agreed intervals. Often, The Sponsee has potential funding sources identified. Charitable contributions go to C.A.E., which reports funds as contributions in and grants out. The Sponsee reports grants or income in and expenses out. Program personnel works for the Sponsee, who maintains total liability for the Program.
4) Technical Assistance (Model D)
The Sponsee has its own 501(c)(3) but needs help with financial management, including bookkeeping, tax returns, and other administrative tasks that may be beyond the Sponsee’s internal capacity or skills. The Sponsee maintains ownership of the Program; all funds are raised in the Sponsee’s name. Fees for these services are typically less than those available through for-profit service providers to meet IRS requirements.
5) Single Member LLC (Model L)
In this model, a single-member LLC is the Sponsee and is treated as part of C.A.E. for tax purposes. The Sponsee can receive tax-deductible contributions and grants in its own name. C.A.E. would form a new LLC by filing articles of formation in the appropriate state. C.A.E. would serve as the LLC's sole member. As a result, the LLC would fall within the sponsor's federal tax exemption, and the LLC itself would not be required to satisfy the organizational test for exemption under Section 501(c)(3).
How does the Sponsee apply for Fiscal Sponsorship Services?
The Sponsee must submit the C.A.E. Fiscal Sponsorship Application, which provides an executive summary and a detailed budget of The Program. C.A.E. will meet with the Sponsee to discuss The Program and gather any additional information necessary to determine if the Program is eligible for services. If the Program is deemed eligible for services, C.A.E. will determine which service model best fits the sponsorship needs and request additional information for further consideration. This includes a detailed narrative of the Program, financial information, a list of prospective funders, and organizational information.
A draft Fiscal Sponsorship Agreement will be forwarded to the Sponsee for consideration and edits. Once all language is agreed upon, a final agreement document will be forwarded to the Sponsee for signature. Once both parties sign the agreement, Fiscal Sponsorship Services will begin.
What are C.A.E.’s Fiscal Sponsorship Fees?
Fees for the program vary and depend on the Model chosen and services provided by C.A.E. Fiscal Sponsorship Fees range from 8% to 12% of all contributions received. Additionally, direct program expenses are charged as incurred.
FOR MORE INFORMATION, PLEASE CALL B.J. PLEASANT, CEO, AT (866) 961.2239 ext 1