The Nonprofit FAQ

Is there any way to be eligible for grants before getting 501(c)3) status?

In "fiscal sponsorship" arrangement, an established nonprofit with tax-exempt status accepts responsibility for a program or activity that fits within its mission but is being developed and operated with considerable autonomy. Wikipedia offers an explanation and useful links at http://en.wikipedia.org/wiki/Fiscal_sponsorship There is more information about fiscal sponsorship arrangements in the general FAQ article on starting a nonprofit organization at http://www.idealist.org/if/i/en/faq/70-9/99-33 Many advisors suggest using an alliance with an existing organization as a way of testing the waters before going through the whole process of setting up a new nonprofit. The sponsoring organization oversees the financial affairs of the new effort and assures authorities that necessary standards are being met and the charitable purposes being achieved. Usually, a small fee is paid to cover the sponsor's costs during the start-up phase. See Fiscal Sponsorship: Six Ways to Do it Right from the Study Center Press if this idea of working as a sponsored program of another organization seems like a promising way to go. You can order this book from Amazon.com by clicking on http://www.amazon.com/dp/1888956070/?tag=internetnonprofi">this link (a small royalty will be paid that helps support this site). Or visit http://www.studycenter.org/scp.fs.html The Fiscal Sponsor Directory at http://www.fiscalsponsordirectory.org offers links to organizations that act as fiscal sponsors in many states. The National Network of Fiscal Sponsors provides networking and technical assistance for organizations that act as fiscal sponsors; see http://www.tidescenter.org/fiscal-sponsorship/nnfs/index.html Caution — The term "fiscal agent" is sometimes used in conversations about arrangements of this sort; it is an error. If a tax-exempt entity serves as an "agent" under the direction of a non-tax-exempt "principal" in this way it is possible that donors or supporters will find that their gifts do not qualify as tax-exempt (or deductible). For a fuller explanation of this distinction, read this discussion at the Foundation Center: http://www.foundationnews.org/CME/article.cfm?ID=3069. Revised 9/6/10 -- Ed.