What's Fiscal Sponsorship?

Better Giving’s mission is to democratize access to financial opportunity, so that any qualified nonprofit organization can achieve a more secure financial future and our support can reach impactful grassroots nonprofits of any size, from around the world. One way we can help further this, is by offering ‘fiscal sponsorship’ services to qualified organizations. Why? Read on.

For nonprofits registered in jurisdictions outside of the US that are aiming to attract the generous pool of US donors, fiscal sponsorship can be a game-changer. But what exactly is fiscal sponsorship and how can it be leveraged to maximize your nonprofit's potential?

Understanding Fiscal Sponsorship

At its core, fiscal sponsorship refers to a formal contractual arrangement where a US-based 501(c)(3) non-profit organization (the "Sponsor") agrees to provide administrative support and accept donations on behalf of a non-US charitable initiative or organization (the "Project").

In essence, the Project can operate under the legal and tax-exempt status of the Sponsor, enabling the Project to solicit tax-deductible donations and grants from U.S. funders without needing to establish a separate US non-profit organization, which can be costly and time-consuming to set up and maintain.

To save non-US based nonprofits this additional complexity and expense, Better Giving offers fiscal sponsorship services, and serves as the Sponsor for qualified nonprofit organizations. Through this legal arrangement Better Giving accepts donations from US donors on your behalf, issues them tax receipts, and then grants the funds to your organization in accordance with the terms and conditions of our Fiscal Sponsorship and Grant Agreement.

Why Should my Organization Be Interested?

Broadening Your Donor Base Beyond Borders: Historically, many local nonprofits have maintained a close-knit relationship with their immediate communities, relying on the familiarity and trust developed within that region. Additionally, due to local tax incentives, most nonprofits only attract donors within their tax jurisdiction. However, the world has shrunk, thanks to technology and global mobility. With fiscal sponsorship, even the most locally-focused organizations can break these geographical constraints and attract a diverse range of donors.

Consider this: An expatriate, originally from your locality but now based in New York, stumbles upon your nonprofit's work online. Touched by the cause that resonates with their roots, they are eager to contribute. Fiscal sponsorship makes this cross-border donation seamless and beneficial for the expatriate as they can benefit from tax deductions in the US. This not only amplifies your organization's fundraising capacity but also strengthens the bond of global citizens to their home communities, bridging the gap between local impact and international support.

Access to US Donors: American donors are known for their generosity, donating $499bn in 2022. By entering into a fiscal sponsor relationship, your nonprofit can pitch to these donors and offer them the incentive of tax-deductible donations – an attractive proposition for many. Additionally, many U.S. foundations and grantmakers prefer or are required to fund only tax-exempt organizations under Section 501(c)(3) of the Internal Revenue Code. By partnering with a U.S.-based fiscal sponsor, your nonprofit organization can access these funding opportunities, which would otherwise be unavailable.
Cost-Effective: Establishing and managing a 501(c)(3) non-profit in the US can be expensive and time-consuming. Fiscal sponsorship provides a streamlined way for non-US organizations to access US funding without the burden of administrative overheads or navigating the complexities of US nonprofit regulations. The Better Giving fiscal sponsorship fee is just 2.9% of every donation (compared to the market cost of between 4-10%), and shortly this fee can be covered at the option of the donor, making it no cost to your organization.
Credibility: An association with a reputable US sponsor can increase your organization's credibility, especially if donors are unfamiliar with your nonprofit. This can lead to enhanced trust and consequently, more substantial contributions.
Support and Mentorship: Often, fiscal sponsors offer more than just a conduit for funds. Better Giving can provide valuable mentorship, guidance, and resources, particularly how to benefit from blockchain, cryptocurrency, and establishing an endowment. These resources can aid in the growth and effectiveness of your organization.

If your nonprofit qualifies and is seeking to broaden its horizons and unlock a potentially significant source of funding, or even if this has never, ever been a remote possibility, fiscal sponsorship offers a practical and strategic avenue.

Engaging with Better Giving's fiscal sponsorship services might just be the key to ensuring your organization's impactful and sustained presence in the philanthropic arena.

The Better Giving Fiscal Sponsorship service costs just 2.9% of donations - which matches well against an industry standard of between 4-10%.