Libby Hikind, grant expert, speaks about fiscal sponsorship: the positive and negatives of using a fiscal sponsor for your grant application. According to Libby," ...there are ways in which you can still apply for grants that will not turn off funders..."
I'm still working on becoming a 501(c)(3). Is there any way that I can still apply for grants from organizations?
Almost a Nonprofit
Dear Almost a Nonprofit:
Your question is a good one and it’s one that we see often at GrantWatch.com. You found a great grant opportunity for your organization, but the grant is only being offered to 501(c)(3)s. You haven’t quite gotten there yet. Is there still room to be hopeful?
The answer, in short, is yes.
As you are probably aware, a 501(c) organization is a tax-exempt, nonprofit organization in the United States. There are 29 ways to receive exemption status under the Internal Revenue Code section 501(c), including the 501(c)(3). The 501(c)(3) determination is limited to organizations whose activities relate to religion, education, charity, science, literacy, testing for public safety, fostering of national or international amateur sports competitions or prevention of cruelty to children or animals.
Once an organization establishes its 501(c)(3) status, its donors can claim tax deductions, provided their contributions meets certain regulations.
Before you receive 501(c)(3) status, there are ways in which you can still apply for grants that will not turn off funders who want the IRS tax deduction. Fiscal sponsorship might be a good choice for you right now. By joining a fiscal sponsorship, you may qualify for more funding opportunities and be able to start your project sooner.
According to the National Network of Fiscal Sponsorship, this process refers to the practice of legal, nonprofit organizations offering their tax-exempt status to groups with similar missions as the nonprofit. It typically involves a fee-based, contractual arrangement between the organization which does not yet have 501(c) status and the established nonprofit. This will give you time to continue working on getting your own nonprofit status, your 501(c)(3).
Fiscal sponsorship has become more common in the past decade as there are many advantages to this arrangement. However, it is important for both parties to understand the exact terms of this set-up before an agreement is final. An organization that is joining a fiscal sponsorship must understand that its project will be controlled by its sponsor(s), who may be held legally responsible for the operations and activities of the venture. Therefore, it is wise to weigh the benefits of immediate tax-exempt status and administrative support against the lack of autonomy and the fees typically charged by the fiscal sponsor.
To find grant opportunities related to fiscal sponsorships for which you may be eligible to apply, search for "fiscal sponsor" atwww.GrantWatch.com in the search box on the right side of the page.
On behalf of GrantWatch.com, I wish you success in receiving your 501(c)(3) status, and in funding all of your worthy projects.
All the best to you and yours,
CEO & Founder
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Referenced from: GrantWatch.com