Fiscal Sponsorship Agreement

FISCAL SPONSORSHIP AGREEMENT

TABLE OF CONTENTS

1. Parties
2. Recitals
3. Model Selection
4. Model A — Comprehensive Fiscal Sponsorship
5. Model C — Pre-Approved Grant Relationship
6. Administrative Fee
7. Fundraising and Donations
8. Financial Management
9. Reporting
10. Intellectual Property
11. Indemnification
12. Insurance
13. Term and Termination
14. Governing Law
15. Dispute Resolution
16. General Provisions
17. Signatures
18. Sources and References

1. PARTIES

Fiscal Sponsor: [________________________________________]
Address: [________________________________________]
EIN: [__-_______]
(the "Sponsor")

Project / Sponsored Organization: [________________________________________]
Address: [________________________________________]
EIN (if applicable): [__-_______]
Project Lead: [________________________________________]
(the "Project")

Effective Date: [__/__/____]

2. RECITALS

WHEREAS, the Sponsor is a tax-exempt organization under IRC § 501(c)(3) and is classified as a public charity under IRC § 509(a);

WHEREAS, the Project [is an unincorporated project / is a nonprofit corporation that has not yet received its own 501(c)(3) determination / seeks fiscal sponsorship for the following purposes]:

[________________________________________]
[________________________________________]

WHEREAS, the Project's purposes are consistent with and further the Sponsor's tax-exempt mission;

WHEREAS, the Sponsor is willing to serve as fiscal sponsor for the Project under the terms and conditions set forth herein;

NOW, THEREFORE, the parties agree as follows:

3. MODEL SELECTION

☐ Model A — Comprehensive / Direct Fiscal Sponsorship (Section 4 applies; Section 5 does not apply)

☐ Model C — Pre-Approved Grant Relationship (Section 5 applies; Section 4 does not apply)

4. MODEL A — COMPREHENSIVE FISCAL SPONSORSHIP

4.1 — Project as Program. The Project shall be a program of the Sponsor. The Sponsor shall have exclusive legal control over all Project assets, activities, and operations.

4.2 — Employment. All individuals working on the Project who receive compensation shall be employees or independent contractors of the Sponsor, subject to the Sponsor's employment policies.

4.3 — Contracts. All contracts related to the Project shall be entered into by the Sponsor. The Project Lead may not enter into contracts on behalf of the Sponsor without prior written authorization.

4.4 — Grants and Donations. All grants and donations solicited for the Project shall be made payable to the Sponsor. The Sponsor shall maintain variance power (discretion and control) over all contributions in accordance with IRS Rev. Rul. 68-489.

4.5 — Liability. The Sponsor assumes liability for Project activities conducted within the scope of this Agreement and the Sponsor's policies.

4.6 — Project Lead. The Project Lead shall serve at the direction of the Sponsor's Board of Directors and Executive Director.

5. MODEL C — PRE-APPROVED GRANT RELATIONSHIP

5.1 — Separate Entities. The Sponsor and the Project are (or shall become) separate legal entities. The Project is not a program, division, or agent of the Sponsor.

5.2 — Pre-Approved Grants. The Sponsor shall receive contributions designated for the Project's charitable purposes. The Sponsor shall disburse such funds to the Project as pre-approved grants, subject to the Sponsor's ongoing review and approval.

5.3 — Variance Power. The Sponsor retains discretion and control over the use of all contributed funds in accordance with IRS Rev. Rul. 68-489. The Sponsor may withhold, redirect, or return funds if it determines that the Project's activities do not further the Sponsor's tax-exempt purposes.

5.4 — Grant Disbursement. Funds shall be disbursed to the Project [monthly / quarterly / upon request], less the administrative fee described in Section 6, and subject to the Project's compliance with reporting requirements.

5.5 — Independent Operations. The Project shall be solely responsible for its own operations, employees, contracts, and liabilities. The Project shall not represent itself as a program or agent of the Sponsor.

6. ADMINISTRATIVE FEE

6.1 — Fee. The Sponsor shall retain an administrative fee of [____]% of all contributions received for the Project. The standard fee range is 5%–15%.

6.2 — Calculation. The fee shall be calculated on gross contributions received and deducted before disbursement to the Project (Model C) or from the Project's program budget (Model A).

6.3 — Additional Costs. The fee does not include costs for specialized services such as legal review, audit, or insurance, which shall be charged separately as agreed.

7. FUNDRAISING AND DONATIONS

7.1 — Solicitation. All fundraising materials shall clearly identify the Sponsor as the recipient organization and shall state that the Sponsor maintains discretion and control over contributions.

7.2 — Acknowledgments. The Sponsor shall provide tax-deductible donation acknowledgment letters in accordance with IRC § 170(f)(8).

7.3 — Donor Data. Donor information shall be maintained by the Sponsor and shared with the Project as appropriate, subject to donor privacy and applicable law.

8. FINANCIAL MANAGEMENT

8.1 — Separate Accounting. The Sponsor shall maintain a separate fund or account for the Project's funds.

8.2 — Expenditure Approval. Under Model A, expenditures shall be approved in accordance with the Sponsor's policies. Under Model C, the Project shall submit budgets and grant proposals for Sponsor approval before funds are disbursed.

8.3 — Prohibited Uses. Project funds shall not be used for political campaign activity, impermissible lobbying, private inurement, or any purpose that would jeopardize the Sponsor's tax-exempt status.

9. REPORTING

9.1 — Project Reports. The Project shall provide the Sponsor with:

(a) [Quarterly / semi-annual] narrative and financial reports;

(b) An annual report summarizing activities, expenditures, and outcomes;

(c) Any information required for the Sponsor's Form 990 filing.

9.2 — Sponsor Reports. The Sponsor shall provide the Project with periodic statements of fund balances and disbursements.

10. INTELLECTUAL PROPERTY

10.1 — Model A. Intellectual property created in connection with the Project shall be owned by the Sponsor. Upon termination, IP may be transferred to the Project or its successor, subject to Board approval.

10.2 — Model C. Intellectual property created by the Project shall be owned by the Project. The Sponsor shall have no claim to Project IP except a nonexclusive license to reference the Project for the Sponsor's reporting and promotional purposes.

11. INDEMNIFICATION

11.1 — Model A. The Sponsor shall indemnify the Project Lead for acts within the scope of their duties, to the extent permitted by law and the Sponsor's bylaws.

11.2 — Model C. The Project shall indemnify and hold harmless the Sponsor from claims arising from the Project's operations, activities, and use of grant funds.

11.3 — Limitation. Each party's liability under this Agreement shall not exceed the total funds received and disbursed under this Agreement during the preceding twelve (12) months.

12. INSURANCE

12.1 — Sponsor Insurance. The Sponsor shall maintain general liability and directors' and officers' insurance.

12.2 — Project Insurance (Model C). The Project shall maintain its own general liability insurance with minimum coverage of $[________________________________________] and shall name the Sponsor as an additional insured.

13. TERM AND TERMINATION

13.1 — Term. This Agreement shall be effective for [____] year(s) from the Effective Date and shall automatically renew for successive [____]-year terms unless either party provides written notice of non-renewal at least [____] days before the renewal date.

13.2 — Termination. Either party may terminate this Agreement upon [____] days' written notice.

13.3 — Termination for Cause. The Sponsor may terminate immediately if the Project engages in activities that jeopardize the Sponsor's tax-exempt status.

13.4 — Effect of Termination.

(a) Model A: Upon termination, the Sponsor may transfer remaining Project funds to another 501(c)(3) organization with a similar mission, or retain the funds for its own charitable purposes.

(b) Model C: Upon termination, the Sponsor shall disburse remaining Project funds (less fees and obligations) to the Project if the Project has obtained its own 501(c)(3) status, or to another 501(c)(3) organization designated by the Project and approved by the Sponsor.

14. GOVERNING LAW

This Agreement shall be governed by the laws of the State of [____________________].

15. DISPUTE RESOLUTION

15.1 — Mediation. Disputes shall first be submitted to mediation.

15.2 — Arbitration (Optional). ☐ If mediation fails, disputes shall be submitted to binding arbitration under the rules of [________________________________________].

15.3 — Injunctive Relief. Either party may seek injunctive relief in a court of competent jurisdiction.

16. GENERAL PROVISIONS

16.1 — Entire Agreement. This Agreement constitutes the entire agreement between the parties.

16.2 — Amendments. Amendments must be in writing and signed by both parties.

16.3 — Assignment. This Agreement may not be assigned without written consent.

16.4 — Notices. Notices shall be in writing and delivered to the addresses in Section 1.

16.5 — Severability. Invalid provisions shall not affect the remaining provisions.

17. SIGNATURES

FISCAL SPONSOR:

Organization: [________________________________________]

By: ___________________________________________

Name: [________________________________________]

Title: [________________________________________]

Date: [__/__/____]

PROJECT:

By: ___________________________________________

Name: [________________________________________]

Title: [________________________________________]

Date: [__/__/____]

SOURCES AND REFERENCES

• IRS Revenue Ruling 68-489 (earmarked grants through intermediary)
• IRS Revenue Ruling 85-49 (fiscal agent vs. fiscal sponsor distinction)
• Gregory L. Colvin, Fiscal Sponsorship: 6 Ways to Do It Right (3rd ed., Study Center Press)
• National Council of Nonprofits, "Fiscal Sponsorship for Nonprofits," https://www.councilofnonprofits.org/running-nonprofit/administration-and-financial-management/fiscal-sponsorship-nonprofits
• Social Impact Commons, "Fiscal Sponsorship 101," https://www.socialimpactcommons.org/fiscal-sponsorship-101