Sample Fiscal Agent Agreement

It is quite common and perfectly acceptable for the tax sponsor to charge an administration fee for their services, which is usually a percentage of the sponsored organization`s or program`s budget. The use of a sponsor or tax meets the requirements of the IRS as long as the tax sponsor retains the right to decide, in its sole discretion, how it will use the entries. Maintaining control over donated funds is a prerequisite for a legitimate tax sponsorship agreement. The role of the tax sponsor may include performing many different administrative functions on behalf of the sponsored organization or program, including taking over the receipt and management of charitable donations on behalf of the sponsored organization. Some tax promoters do much more, such as .B. performing back-office functions. A financial sponsor is a not-for-profit organization that provides fiduciary oversight, financial management, and other administrative services to build capacity for charitable projects. We`ve posted many other helpful resources on an additional website for those looking for more details and ideas on where to find a tax sponsor or what to think about if your organization is considering acting as a tax sponsor. Tax sponsorship is often used by newly formed nonprofits that need to raise funds during the start-up phase before being recognized as tax-exempt by the IRS.

The use of a tax promoter allows a program or organization that is not itself considered tax-exempt to receive funds for its operations that are tax deductible for donors through the tax sponsor. As a result, tax sponsorship agreements benefit organizations or programs that are not exempt from tax by providing a means of transferring income that the organization may not otherwise be able to receive. The use of a tax sponsorship agreement allows a cause to attract donors, even if it is not yet recognized as tax-exempt under Section 501(c)(3) of the Internal Revenue Code. Essentially, the tax sponsor serves as the administrative „home“ of the case. Charitable donations are made to the tax sponsor, who then grants them to support the cause. Learn more about tax sponsorship (NEO Law Group) in this short video. It is preferable to describe the responsibilities and obligations of both parties in a written agreement between the sponsor and the sponsored organization. An example can be found below.

The agreement should stipulate that the tax sponsor is responsible for any compliance with legal requirements regarding the receipt, reporting and recognition of charitable donations. The agreement should also describe the administrative costs that the sponsored organization makes available to its tax sponsor, as well as any record-keeping obligations that the sponsored organization owes to the tax promoter. Tax incentives: what and why? Video of Propel Nonprofits Fiscal Sponsorship: a 360-degree perspective, Trust for Conservation Innovation. .