We are a small group of individuals who would like to work with a fiscal sponsor to help us raise money for a specific charitable program. Although we call ourselves a Foundation, we have not incorporated or obtained a recognition of charitable exemption from the IRS. Therefore, to give deductibility for gifts from our donors, we need to deal with a fiscal sponsor. We only want to raise about $90,000 a year, but the fiscal sponsor wants to charge us $2500 a month. They say they will help us raise the contributions. Should we do it? —By email.
If you only want to raise $90,000 a year, a service fee of $2500 per month, or $30,000 a year (one-third of the anticipated revenue) is a pretty steep charge against your operations. If you are really in a hurry to get started and plan to file immediately for recognition of exemption, it may be worth it if you can get your money and terminate the sponsorship at any time. If you don’t have a couple of donors who are prepared to give everything you need at the start, you may find it isn’t easy to raise funds through a fiscal sponsorship and the proportionate cost could be even higher.
Sponsors that suggest that they will give lots of help in raising money are probably selling more than promising. If they have a lot of sponsored projects, they are not likely to be of much help in attracting donations beyond listing your project among their others on their website.
For more on the issues of fiscal sponsorship and how 2026 and 2027 may be the years it comes out of the darkness, join our webinar on November 11.
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