A fiscal sponsorship agreement is a legal contract between a nonprofit organization and a separate entity, known as a fiscal sponsor. This agreement enables the sponsor to provide financial and administrative support to the nonprofit, allowing it to operate as a tax-exempt organization.
A model fiscal sponsorship agreement outlines the terms and conditions of the relationship between the nonprofit and the sponsor. It is essential that this document be carefully crafted and reviewed by legal professionals to ensure compliance with state and federal laws.
The following are some of the key elements that should be included in a model fiscal sponsorship agreement:
1. Purpose: A clear statement of the purpose of the agreement should be included. This statement should outline the specific goals and objectives of the sponsorship.
2. Term: The length of the agreement should be specified. This may vary depending on the needs of the nonprofit and the sponsor.
3. Responsibilities: The responsibilities of the nonprofit and the sponsor should be clearly defined. This may include financial reporting, fundraising, grant management, and administrative support.
4. Compensation: The compensation for the sponsor should be outlined, including any fees or expenses that may be incurred.
5. Termination: The conditions and procedure for terminating the agreement should be outlined. This may include notice requirements and any penalties for early termination.
6. Liability: The liability of both parties should be addressed. This may include indemnification clauses that protect each party from any financial or legal liability.
By using a model fiscal sponsorship agreement, nonprofits and sponsors can establish a clear understanding of their relationship and ensure compliance with state and federal laws. It is important to consult with experienced legal professionals when drafting and reviewing these agreements to ensure they are properly structured and legally binding.
