Some non-profit organizations offer tax sponsorship as a way to generate additional revenue without properly managing or monitoring their projects. In the case of full tax sponsorship, the tax sponsor should have the appropriate infrastructure and resources that could reasonably be expected of the legitimate project operator. In accordance with this expectation, the delegation of financial sponsor functions to project managers should only be followed after sufficient diligence of these individuals and their planned activities. In addition, the tax sponsor should ensure that it has appropriate policies in place to guide the actions of project managers, maintain oversight of operations and protect assets of public utility. The role of the tax sponsor may include performing many different administrative functions on behalf of the sponsored organization or program, including the assumption and management of charitablely funded contributions on behalf of the sponsored organization. Some tax sponsors do a lot more, z.B. back-office features. The term “tax sponsorship” refers, on the whole, to a number of contractual relationships that allow an individual, group or company to promote non-profit activities or other tax-exempt activities that are exempt sponsorship organizations. These relationships are convincingly described in Greg Colvin`s pioneering book, Fiscal Sponsorship: Six Ways to Make It Right. The most common models of tax sponsorship for non-profit projects are the most important: the key to this model is to ensure that the tax sponsor does not serve as a simple channel for donors and foundations to guide contributions and grants to the financial sponsor. While the tax promoter may accept contributions and grants limited to their use, the tax promoter must have the ultimate discretion and control to determine whether he is using these contributions and whether he is in charge of them or passing them on to another organization, not limited to the fellow whose representatives may have mobilized such funds as a representative of the tax sponsor. A tax sponsor who provides pre-approved tax sponsorships can facilitate the granting of broader grants to individual artists who produce works made available to the public for non-commercial purposes, non-profit organizations not including the IRS provision of 501 (c) (3) status and discrete public service programs of for-profit social enterprises.
Unlike the tax sponsor, these fellows cannot be eligible for deductible non-profit contributions. In the overall model, the assets and liabilities of the project are the assets and liabilities of the tax sponsor. The financial sponsor takes charge of the project and all its risks, because it advances its own mission of public utility of the sponsor. As a general rule, taking into account all the administrative costs and costs associated with the project and to ensure its own organizational health, the tax promoter charges an internal administrative fee to the organization of the restricted fund for the project`s charities.