What is fiscal sponsorship?

Fiscal sponsorship is a legal arrangement in which a 501(c)(3) nonprofit, like Catalyst, provides its tax-exempt status to a project, allowing the project to accept tax-deductible donations without needing to establish an independent organization.

What is the difference between fiscal sponsorship and creating a nonprofit?

Creating a nonprofit involves setting up an independent 501(c)(3) organization, which can be time-consuming and requires ongoing management of legal, financial, and reporting responsibilities. Fiscal sponsorship, on the other hand, allows your project to operate under the legal framework of an existing nonprofit (such as Catalyst), providing immediate access to tax-deductible donations without the need to form a separate entity.

How does fiscal sponsorship benefit my project?

Fiscal sponsorship allows you to focus on your mission rather than the administrative work required to maintain a nonprofit. Through Catalyst, you’ll receive financial management, donor processing, and compliance services, ensuring your project operates efficiently and within legal guidelines. This also enables faster fundraising and access to grants that require 501(c)(3) status.

What types of projects benefit from fiscal sponsorship?

Fiscal sponsorship is ideal for projects that are charitable in nature, such as those focused on education, community development, arts and culture, social justice, environmental initiatives, and health services. Both short-term and long-term initiatives can benefit from this structure, particularly those that want to start operating quickly without waiting for nonprofit status approval.

How does fiscal sponsorship impact fundraising and donations?

When your project is fiscally sponsored, you can receive tax-deductible donations from individuals, foundations, and corporations. Donors contribute directly to Catalyst Philanthropy Fund, which then allocates funds to your project. This structure offers credibility and tax benefits to donors, which may enhance fundraising success.

What legal and financial oversight does Catalyst provide?

As a fiscal sponsor, Catalyst handles all back-office operations, including bookkeeping, legal compliance, financial reporting, and donor tax receipts. We ensure your project meets all IRS requirements, so you don’t have to worry about potential risks or penalties associated with mismanagement.

How does Catalyst ensure compliance with IRS regulations?

Catalyst, as a 501(c)(3), adheres to all IRS guidelines for charitable activities. We ensure that your project’s funds are used in alignment with IRS regulations, including restrictions on lobbying and political activities. Our team handles all reporting and audits, so your project remains in good standing.

What happens if I want to transition to my own 501(c)(3)?

If your project grows and you decide to establish your own independent nonprofit, Catalyst can help facilitate that transition. We can provide guidance on the process of forming a 501(c)(3) and ensure a smooth transfer of funds and responsibilities.

Can an existing 501(c)(3) work with Catalyst?

Yes. Even if your organization already has 501(c)(3) status, we offer administrative and back-office support to help lighten the load so you can focus on expanding your charitable reach.

How do I apply for fiscal sponsorship?

Simply reach out to us to share your project plan and our team will review it to ensure it aligns with our mission and meets all compliance requirements.