Jumpstart’s fiscal sponsorship program is designed to provide a simple solution to forming a new charitable project. The idea is to lower the cost of market entry, speed time to action, and provide basic management skills to project leaders who hope to grow their initiative into a 501(c)(3) nonprofit corporation. Sponsored projects operate under Jumpstart’s supervision and tax-exempt status, allowing them to take charitable donations and receive grants from foundations. Jumpstart’s compliance regime assures those funds are managed in accordance with IRS guidelines, and use for IRS-approved charitable purposes. Funds for sponsored projects appear on Jumpstart’s federal tax-filing, and may request funds from their sequestered account at Jumpstart by providing documentation of their use for charitable purposes. This type of fiscal sponsorship, sometimes called “re-granting” or “Model C” allows project leaders to focus on building their program and acquiring resources necessary for their success.
Fiscal Sponsorship FAQs
What is fiscal sponsorship?
Projects and organizations seeking to do public charity work must have legally recognized tax-exempt status in order to receive tax-deductible donations and grants from many foundations – and for individual donors to claim tax deductions for their contributions. Fiscal sponsorship is a system where these projects establish a partnership with an established 501(c)(3) rather than (or on the way to) getting their own tax-exempt status.
How does it work?
The fiscal sponsor (such as Jumpstart) provides legal and financial oversight to the sponsored project in exchange for a fee that covers the cost to the sponsor of providing that oversight. Typically the fee is charged as a percentage of revenues raised by the project, since the costs of managing the project rises with the amount of money under management. This relationship allows the sponsored project to accept tax deductible donations (though the sponsor) and enter into grant agreements with foundations (with the sponsor as the responsible signatory).
What kind of fiscal sponsorship does Jumpstart offer?
There are several types of fiscal sponsorship, ranging from a simple re-granting system (called Model C in the fiscal sponsor business) to full integration with the sponsoring organization’s operations (Model A). Jumpstart offers both types. Model C Jumpstart does alone. Model A is offered through the Project Partnership, Jumpstart’s joint venture with Community Partners which is a national leader among Model A fiscal sponsors (see projectpartnership.org for details).
How do I choose what is right for my project?
In general the full-service form of fiscal sponsorship is of greater value to initiatives that have enough complexity and maturity to require the value-added services it provides. These include payroll processing, employee benefits management, other forms of insurance coverage and technical assistance. If your project is just starting, small, unstaffed, has a limited duration, already has this infrastructure or doesn’t meet Project Partnership criteria (see projectpartnership.org), the re-granting type of fiscal sponsorship is probably more appropriate.
What kinds of initiatives does Jumpstart work with?
Jumpstart works with projects that share our vision of a diverse, vibrant and inclusive future. To get a sense of our values, check out Jumpstart’s values. The programmatic focuses of the projects span the range of Jewish life and beyond – from education to arts to activism to spirituality to…you name it. The common denominator is that we are looking for projects that build community among their leaders, participants and beneficiaries. We have a pretty expansive view of what contributes to the future we’re trying to help build.
What do I get if my project opts for re-granting fiscal sponsorship?
Model C, or re-granting fiscal sponsorship, is a limited service focused on the receipt and disbursement of funds for charitable purposes. In other words, the sponsoring organization (in this case Jumpstart) assumes expenditure responsibility for granted and donated funds. However projects fiscally sponsored by Jumpstart do receive a limited amount of our hands-on help, as well as access to our other services at a reduced rate via service grants. And of course, being sponsored by Jumpstart means being part of network of projects that are transforming the world globally, and we do everything we can to connect leaders with the knowledge, resources, people and organizations that will help them achieve their mission.
What do I get if my project qualifies for full-service fiscal sponsorship with the Project Partnership?
Do I need to be incorporated to be fiscally sponsored?
Not if you are based in the U.S. But if you are based in the U.S. and you’re the leader of an unincorporated project, you personally assume full legal and fiscal responsibility for all aspects of your fiscal sponsorship agreement with Jumpstart. We still require that your project have a structure, goals, a budget, and a mission. Our objective is to enable the work of social entrepreneurs who are thinking creatively. Even if you are just at the outset of that process, but have a coherent idea, a game plan, and the ability to raise funds to support your venture we may be able to work with you.
What if my project is already incorporated?
That works too. Jumpstart requires that all our sponsored projects have an IRS-issued EIN (Employer Identification Number) and a business banking account in the name of the project to receive re-granted funds (or the equivalent of both in your project’s country of origin). If you are incorporated already then you already have an EIN and probably have a bank account. If not, you can register for an EIN as an unincorporated community group at the IRS website, and then get a bank account for your project using that EIN. If you project is incorporated, you’ll need to provide Jumpstart with your organization’s governing documents and other documentation that shows your project’s separate existence as a legal corporation.
Do you sponsor non-U.S.-based projects?
Working with organizations and projects based outside the U.S. is slightly more complicated, but we do that as well under our re-granting program (the Project Partnership is for U.S.-based projects only). For projects based outside the U.S. there does need to be some kind of legal entity to receive funds in the country of origin, but we can work with a variety of organizational types as long as the use of funds is for religious, educational, or charitable purposes, or public benefit. Essentially Jumpstart acts as a “friends of” sponsor for non-U.S. projects that are established in another country. There are additional requirements for those projects based upon the added due diligence and potential liability of working with them.
What are the drawbacks to re-granting fiscal sponsorship?
In general fiscal sponsorship is an efficient and cost-effective way for organizations seeking to do public benefit work to manage their finances. The potential downside is that fiscal sponsorship is a complex financial and legal framework that is regulated by the IRS, and nothing involving the IRS is simple. However Jumpstart has worked with the country’s leading law firm in these matters to craft our Model C re-granting contract and program. Despite the seriousness with which we’ve approached it, at the end of the day Jumpstart—just like every other legally recognized 501(c)(3)—has the potential to be affected by changing rules and regulations. In the unlikely event that a fiscal sponsor loses its c3 status, sponsored projects could be forced to return the funds raised under the sponsorship arrangement. As long as we continue to be compliant with the rules, and make sure our sponsored projects do as well, Jumpstart fiscal sponsorship is great solution.
How do I apply?
Once we’ve determined which program you should apply for you will be given further instructions. If you are applying to the full service option, applications are downloadable from the Project Partnership website and can be submitted to the email address listed on that site. If you are applying for the regranting options, we will send you a list of questions so that you can prepare to fill out the simple online application for that program. Applications for this program are not accepted via email.
Any other questions?
Drop us a line at regranting@jumpstartlabs.org.
