The Fiscal Sponsorship Model: A Growing Trend in the Nonprofit Sector

“I want to start a nonprofit” is an unsurprisingly common phrase heard in the nonprofit space — whether from practitioners or legal and philanthropic advisors. Often, the answer is, “Don’t” (Bradrick, 2015; Spicer, 2021; Takagi & Chan, 2009). After all, the process of establishing and managing a nonprofit involves a multitude of challenges, including:

• handling back-office operations such as human resources, insurance, and financial management;
• obtaining legal certifications like certificates of incorporation, tax exemptions, and charitable solicitation licenses;
• forming and managing a volunteer board of directors; and
• cultivating and activating donors.

Moreover, the nonprofit sector already houses nearly 1.85 million organizations (IRS, 2023), potentially leading to service and mission duplication.

In response to these challenges — and as our colleagues Mandy Sharp Eizinger and Tory Martin noted in last year’s Trends report — fiscal sponsorship continues to emerge as an alternative model that allows individuals or groups to engage in charitable activities without establishing a separate nonprofit entity. As the National Council on Nonprofits (n.d.) notes, “In essence the fiscal sponsor serves as the administrative ‘home’ of the cause”