I have a 501(c)(3) nonprofit and nonprofit (but not tax exempt) has asked that my organization be a fiscal sponsor.

Many organizations do this. The organization or individual that does not have an exemption should enter into an agreement with you that states they will only use the funds for charitable purposes. They will also have to report to you on a regular basis to prove they are doing charitable activities. You do not need to amend your 1023 but should report your activities on the 990 each year. Also, keep in mind you may have to issue an 1099 to the recipient. Its not as simple as I laid out but this is quite common.

You want to be efficient. I am assuming the other nonprofit is a business organization (bizorg). I will call the charity organization (charorg). In the nonprofit world, there are classes of nonprofits. bizorgs can accept money and donors can sometimes deduct under section 167. In charities, there are a couple of types. 1. Churches 2. Publicly supported charities 3. Educational nonprofits and Medical research nonprofits. 4. Foundations 1 has freedom of religion behind it. 2 comes about only after you can show wide and popular (and statistically spread) support. 3 is an automatic status if you are these types. 4 is a dirt-dog group where the IRS does not trust you because you have not shown that you are deserving of 2. 1-4 can get a 170c donation tax deduction Bizorgs don't get a deduction outside of 167. In general if a charity starts to raise the flag of a non-charity it a BIG problem. For example, listing more than a simple acknowlegement of a company on a dinner sponsorship can get the charity in trouble and attract UBIT for ADVERTISING the non profit. The reverse is not true. I can write "I love the ASPCA" on every letter head, on my web site, and on T-shirts. Its simple speech. IRS considers that when people salute charities its an ok thing. But when charities adopt and affiliate with a non-charity private business, it is bad. When a charity sponsors a nonprofit, non-golden charity, the result is bad, but not quite as bad. It will be as if you are sponsoring all the private businesses in a chamber of commerce, for example. Fiscal = Money. Do you realize that you will be taking money FROM a charity and handing it over to a NON charity? You will be converting 170c funds for which a charitable deduction was obtained, and into a chamber of commerce use? Will the IRS, from a policy standpoint, be pleased with the setting up of a charity for funnelling money from a church (for example) to a chamber of commerce? -------------------- Here is the kicker. If you are in California, your model articles state that "the property of this corporation is irrevocably dedicated to charitable purposes " In California you do have to worry about IRS, but also, and much closer to home, worry about Kamala Harris and Belinda J. Johns, Senior Assistant Attorney General,. Charitable Trusts Section, and. Diane Deatherage of the Franchise Tax Board. California rules are more stringent (one example is donor intent is honored in California, with donor's purpose being given a lot more exclusivity than in the federal system) If I were you, you should consult with an attorney. But if you want to make an anonymous call to the AG's office and ask a policy question, that might be possible as well. The real question they would ask is the same as I would ask "is the fiscal sponsorship directly related to your charities' CORE PURPOSE & MISSION?? I wish you luck and I wish you caution. Please remember to designate your question's BEST ANSWER. Please remember to designate your question's BEST ANSWER. Curt Harrington (562) 594-9784 Curt: http://patentax.com/curt/index.html Visit the Library: http://patentax.com/library/