Fiscal Sponsorship
| Date start | Aug 2017 |
| Type of Program | Community · Education · Professional Development |
| Parent program | Community Abundance |
| Staff | Zac Traeger · Executive Director |
| Current Opportunities |
| Opportunity | Description | Type | |
|---|---|---|---|
| Fiscal Sponsorship Opportunity | The Museum of Human Achievement acts as Fiscal Sponsor for many artists and informal organizations to apply for and manage grant funding as well as donations. Read more about Fiscal Sponsorship at MoHA on its progam page. You can see a list of our current fiscally sponsored projects here. | Fiscal Sponsorship |
| Events |
Program Purpose
The Museum of Human Achievement can be a Fiscal Sponsor for artists and informal organizations to apply for and manage grant funding and donations. This document outlines MoHA’s fiscal sponsorship program.
MoHA’s fiscally sponsored projects and organizations are aligned with MoHA's mission and committed to upholding their community standards.
Read about MoHA's fiscally sponsored projects and organizations on their Open Collective page, the platform MoHA uses to manage finances with their fiscally sponsored projects and organizations.
What is Fiscal Sponsorship?
Fiscal sponsorship is a way for 501(c)(3) organizations to umbrella individuals and groups under their nonprofit status for projects, events, or programs. This can help with grant eligibility and tax liability and allow sponsored projects to receive tax-deductible donations from individuals or corporations.
Am I Eligible?
MoHA’s Fiscal Sponsorship program is for individuals, groups, collectives, and LLCs. We also sponsor folks operating under a DBA or an individual name with a bank account.
MoHA prioritizes individuals and organizations working in Central Texas with operating budgets under $500k/annually. Fiscally sponsored projects must align with MoHA’s mission and values.
After reading this article, if you have questions about eligibility, reach out to us.
How Does it Work at MoHA?
MoHA uses a platform called Open Collective to manage fiscal sponsorships. Through Open Collective, we receive your grant or tax-deductible donated funds and pay your employees, contractors, vendors, or other personnel directly. Fiscally sponsored projects will use Open Collective to manage funds, receive donations, approve expenses, and organize payments.
MoHA offers no-fee fiscal sponsorship (other organizations tend to request 5-15% of grant funds).
To Inquire
- Fill out the Fiscal Sponsorship Inquiry Form Linked Here
- After you submit the inquiry form, MoHA staff will contact you to schedule a meeting to discuss your application.
- After this meeting, if both MoHA and the applicant agree to move forward, the documents below will be needed to submit an application and create a fiscal sponsorship agreement.
What You Need to Apply
- Completed application template
- 2025 outline of programming or events you will offer
- 2025 basic budget
- List of 3 people who have the authority to sign or approve documents for the project
- Governance docs (any bylaws or ways you make decisions)
FAQs
Looking for more information on fiscal sponsorships? See below. Don’t forget, the City of Austin grant programs do not require a Fiscal Sponsor to receive grant funds.
What are some pros and cons?
Pros
- MoHA does not charge a fiscal sponsorship fee.
- You do not have to have an active grant or funding when applying for fiscal sponsorship. Many of our applicants are in the process of applying for grant funds when applying for the program.
- Fiscal Sponsorship allows for less individual tax liability. A non-profit can receive the lump sum of your grant on your behalf, then you would only be liable to pay taxes on any funds you pay out to yourself.
- It helps individuals who receive government social support, such as disability, food stamps, etc., to receive grant funds and donations with a reduced risk of losing their benefits because the income could appear on their taxes or bank account.
- Increased access to individual donations, grants, and other support that require fiscal sponsorship or non-profit status.
- Fiscally sponsored projects can receive tax-deductible donations/sponsorships through the non-profit.
- In some cases, fiscally sponsored entities can buy cheaper insurance through a non-profit, like liability insurance.
- Some funders require funded projects to have insurance. If MoHA fiscally sponsors you, you can sign onto our insurance policy. MoHA can provide grant reporting oversight and consultation for this process.
- Clear and transparent payment processing.
- Risk mitigation through the sponsor's legal and financial management.
- MoHA’s model is also a good fit for short-term or temporary projects.
Cons
- There is a possibility of mission misalignment between MoHA and your project/organization over time.
- Complexity in money management. For example:
- Everyone you pay using funds collected in Open Collective must create an account and fill out a W9.
- Sponsored Project admins and MoHA must approve all invoices and reimbursements, adding additional steps.
- MoHA requires all sponsored projects to use Open Collective, which requires internet access and has some usability hiccups, including some mobile device incompatibility.
- If your project violates the terms of MoHA's Fiscal Sponsorship agreement, MoHA may be unable to distribute your funds legally. Please thoroughly review your contracts and talk to us if you have any questions.
Is fiscal sponsorship a good fit for my needs?
Without fiscal sponsorship, money from government/nonprofit grants and donations is received through your LLC or DBA. This incurs a tax liability because you must pay taxes on that money.
One of the reasons people employ fiscal sponsorships is because of the financial benefits of separating their personal income from their income as an artist/presenter. The financial reality is that if you receive a $10,000 grant, you will be liable for those funds when filing your tax return. If your project needs multiple funding sources, fiscal sponsorship can open up opportunities for tax-deductible donations, eligible grants, and some sales tax benefits for large purchases.
What isn’t included in MoHA's fiscal sponsorship?
MoHA does not specifically provide staff support or labor for fundraising, sponsorships, marketing, administration, or other operational needs for fiscally sponsored projects. We are happy to address requests on a case-by-case basis, but we encourage fiscally sponsored projects to establish infrastructure that best meets their operational needs. Additional MoHA staff, labor, supplies, production, A/V equipment, space usage, event requests, and other requests will be addressed case-by-case via existing MoHA policies and procedures.
MoHA’s Fiscal Sponsorship program does not provide marketing, fundraising, or project management services. Occasionally, a project needs a little extra support for administrative, logistical, or space needs. If that is the case, MoHA does offer scalable fee structures for added support based on needs and project size
What is the difference between the fiscal sponsorship Model A vs Model C?
Within Fiscal Sponsorship Type A or “direct” Fiscal Sponsorship, the fiscal sponsor organization will directly distribute funds to the people, services, and organizations you have agreed to pay.
Within Fiscal Sponsorship Type C or "indirect" fiscal sponsorship, the non-profit takes the bulk sum of a grant or donation, re-grants it, and then sends the fiscally sponsored organization or individual a 1099 for that full amount.
Both types of Fiscal Sponsorship (Type A or C) can be difficult to navigate, and you should consider your obligations to the IRS. For folks who are on any form of disability or receive any form of social support (for example, food stamps), fiscal sponsorship is a mechanism that can help reduce the chance of losing your benefits.
What model does MoHA offer?
MoHA’s Fiscal sponsorship follows Model A, or Comprehensive Sponsorship, which refers to the practice of non-profit organizations offering their legal and tax-exempt status to groups, typically projects, engaged in activities related to the sponsoring organization's mission. Operating under Model A, we receive the funds and pay all expenses directly. This means we directly pay your employees, contractors, vendors, etc. This is done via Open Collective, where you can manage your funds, review expenses, and organize payments. MoHA offers no-fee fiscal sponsorship (other organizations usually ask for 5-15% of grant funds).
MoHA uses Open Collective to manage the distribution of all funds for fiscally sponsored projects. All fiscally sponsored entities must create an account. Open Collective works as a type of bank account where you can manage the spending, tracking, and management of that money. When we receive a grant or funding on your behalf, we put the funds into your account, and the project spends down that money until it gets to zero in accordance with any grant contracts. This is useful because grants often ask awardees to stipulate how the money will be spent. Open Collective helps support grant compliance or reporting.
