Fiscal Sponsor Models
There are several types of fiscal sponsorship models, ranging between seven and eight, each identified by a different letter of the alphabet. The two models most frequently used are "Model C," known as the pre-approved grant relationship, and "Model A," referred to as direct or comprehensive fiscal sponsorship.
"Model C” Pre-approved Grant Relationship
In “Model C,” the sponsor engages in a re-granting arrangement with an independent entity or individual conducting a charitable project. The sponsor collects charitable donations and subsequently re-grants these funds to a third party responsible for the execution and expenditure on the charitable activity. The sponsee is then required to report back to the sponsor on how the funds were utilized.V
“Model A” Comprehensive Fiscal Sponsorship
Unlike “Model C,” in a “Model A” arrangement, the project is integrated into the fiscal sponsor for the duration of the relationship. This model allows the fiscal sponsor to advance its mission by providing its legal framework and back office support to mission-aligned projects, while maintaining the necessary discretion to ensure compliance with relevant laws and regulations. The back office support includes, but is not limited to, tax and regulatory filings, financial and grants management, compliance, staffing capabilities, asset management, and liability insurance. Essentially, the project operates as a program within the nonprofit, with clearly defined roles and responsibilities regarding how the nonprofit supports and collaborates with the program. This includes granting the project the maximum possible strategic and programmatic decision-making authority, as well as the option to terminate the relationship.
