Fiscal sponsorship is a formal arrangement in which a 501(c)(3) public charity sponsors a project that may lack exempt status with the IRS. Through fiscal sponsorship, a 501(c)(3) non-profit organization offers their legal and tax-exempt status to groups engaged in activities related to the sponsor's missions.
A major difference in being a sponsored project versus your own separate 501(c)(3) organization is that the fiscal sponsor is legally and financially responsible for all your activities. In upholding this responsibility, the sponsor absorbs all of the administrative duties of the project pertaining to processing and disbursing funds. There is typically a fee-based contract between a project and an established non-profit. Fees for fiscal sponsorship differ, but the average range is between 5% - 14%. SEE’s current fiscal fee is at 6.5%, a rate lower than most fiscal sponsors.