A fiscal sponsor is an organization that agrees to accept, and be responsible for, tax-deductible contributions and charitable gifts on behalf of a project that does not have its own tax exemption. Using a fiscal sponsor, a non-exempt individual, project, event, or organization can take advantage of a lot of the benefits of a tax exempt nonprofit organization.
Fiscal Sponsorship is a good solution for organizations (or certain individual projects or events) that only want to do a few small projects over a specified period of time, those who don’t have the time or staff for a lot of organizational administration, or those who need to be able to receive tax-deductible donations while they wait for 501(c)(3) nonprofit status approval from the IRS.
A fiscal sponsor:
- Accepts and safeguards charitable donations on behalf of a project
- Takes on legal liability for those funds
- Creates and maintains some accounting records for the project
- Qualifies the project for some grants and funding that would otherwise be inaccessible
- Brings experience to the project and may provide such additional aids such as administrative services and/or strategic planning assistance
Legally, any existing tax exempt nonprofit organization can act as a fiscal sponsor (including a church or library) but, because of the legal complexity and administration required, not all non profits will do so. If you’re looking for a fiscal sponsor, it’s best to partner with an organization with which you have a good relationship, and/or one that has an existing fiscal sponsorship program.
Springboard’s program is designed for artist-led groups and projects. Our sponsored projects must have a nonprofit purpose, and the arts product or process must be based in Minnesota.
A “nonprofit purpose” means that the organization or project’s mission comes before any individual’s advancement or profit motive. That mission must also be in service of some aspect of the “public good.”
Springboard can sponsor organizations that are registered as sole proprietorships, nonprofit corporations, or single-member LLCs that are non-profit in purpose and meet all other eligibility requirements. Springboard cannot manage funds meant for for-profit purposes and can only enter into a fiscal sponsorship agreement with a for-profit corporation (S and C corps) or S, C, or P classification LLCs to support a nonprofit project that is distinct from their standard for-profit activities.
Sponsoring organizations nearly always charge fees to cover administration costs. It’s free to apply to Incubator, but programs that are admitted into the program are charged an annual fee on a sliding scale of $60.00 -$120.00, and 7% of any funds that are deposited with us. We also charge rush fees if we need to accommodate requests for materials on short notice.
Springboard offers fiscal sponsorship because it is an important part of our non-profit mission; the fees do not cover the full cost of the program’s costs.
All of Springboard’s fiscally sponsored projects and organizations are self-managed, which means that they are responsible for filing their own tax return.
If your project is a sole proprietorship, single-member LLC, or unincorporated association, you will need to account for your project on your personal tax return(s). This mean you will need to:
- Fill out a 1099-MISC form for any individual(s) you pay a total of $600 or more during the calendar year.
- Claim all income from Springboard on your tax return and deduct project expenses by filling out a Schedule C.
- If you are a corporation in Minnesota that has yet to file their application for 501(c)(3) or is waiting on the IRS as a sole proprietor, then you may need to complete a 990, depending on your budget size. Consult a tax professional for more information.
Potential projects can determine their eligibility with a short online questionnaire. Eligible candidates can continue to the online application form.
If you still have specific questions, you can email incubator@springboardforthearts.org.
Applications are reviewed by a selection committee once a month. Projects are then notified of their admittance or receive follow-up questions for further review. We receive applications on an ongoing basis, and the process from receipt of application to acceptance can take up to 6 weeks. We generally review applications around the middle of the month.
Congratulations! We’ll set up some time to discuss the program 1 on 1. We’ll then send you a contract to review, sign, and return to us.
Once we have a signed contract on file, we’ll send you information about how to set up an online fundraising campaign and links to forms and tools to help manage your account with us online. Then, let us know when you’re getting your grant proposal or other fundraisers together! We want to know your materials are legally acceptable, and grantors will almost always need some paperwork from us before you turn in proposals.
Your sponsorship will remain active so long as a member is current with an annual renewal, and can be terminated by the project at any time. (If, for example, a sponsored project obtains their own federal tax exempt status, the project would no longer need a fiscal sponsor.) If Springboard decides to end a contract for any reason, we must give the project 30 days notice.
Once a fiscal sponsorship relationship with Springboard ends, we will keep your records on file for five years.
Ask us! Springboard holds monthly info/Q&A sessions for Incubator on the fourth Wednesday of every month at noon CST. For the foreseeable future, we’ll be holding this meeting via Zoom. Let us know if you’d like to attend and we’ll send you info on how to connect. Members and non-members alike are welcome.
