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Q&A #87 – Who controls the remaining funds when fiscal sponsorship is terminated?
While the specific rights of each party would be determined by the specific fiscal sponsorship agreement at issue, it is very likely that the fiscal sponsor has retained the sole discretion and control (also known as “variance power”) over how to disburse the funds raised in furtherance of the charitable purposes of the project when the fiscal sponsorship is terminated.
Q&A #71 – What’s the difference between Model A and Model C fiscal sponsorship?
There are many different models of fiscal sponsorship. Model A and Model C are the most common. In Model A, the charitable project is carried out directly by the fiscal sponsor and the people who operate the project are employees or volunteers of the fiscal sponsor. The closely related Model B is very similar, except the people who operate the project are independent contractors of the fiscal sponsor rather than employees. In contrast, in Model C the fiscal sponsor has a more limited management role that is generally limited to receiving and disbursing grants in furtherance of the charitable project.
A Case Study in the Risks of Fiscal Sponsorship
Nonprofit Quarterly recently covered an interesting case of fiscal sponsorship gone wrong. As originally reported by a local news website, Baltimore Brew, the case involves an organization called Strong City Baltimore. This situation is an unfortunate reminder that fiscal sponsorship presents many risks if not done correctly. In particular, the case exposes an often-overlooked reality that fiscal sponsorship cannot work if the fiscal sponsor does not have the capacity and experience to handle the immense responsibility of administering funds for a variety of sponsored projects.