• 501c3 fiscally sponsoring a 501c7

    Posted by Ashley on May 28, 2024 at 1:51 pm

    Hi there! I’m wondering if anyone has an experience or knowledge about a 501c3 fiscally sponsoring a 501c7? I realize this must be out of the ordinary, so any information or guidance would be most appreciated!

    Kate replied 2 weeks, 6 days ago 3 Members · 3 Replies
  • 3 Replies
  • Kate

    May 28, 2024 at 9:34 pm

    I have experience as a fiscal sponsor, though not for a 501c7. The key question is how to assure that the funds will be used for eligible charitable purposes under the 501c3. Otherwise, the form of entity is less important than the clear language and controls in your fiscal sponsorship agreement. Make sure that the 501c3 sponsor has discretion over the funds. Because the sponsee is already a legal entity, a Model C fiscal sponsorship probably works best. (and caveat, I’m not a lawyer …)

    • andrews

      May 30, 2024 at 12:00 pm

      Also not an attorney, but it’s my understanding that a 501cX organization can only fiscally sponsor projects that fall into the same IRS designation. For example, 501c3 organizations can fiscally sponsor other c3-type organizations. Same for c4 organizations. While I have not come across many c7-type organizations seeking fiscal sponsorship, my understanding is that they’d have to seek that fiscal sponsorship from an existing c7.

      But, as a counterpoint, if the organization has already has c7 status from the IRS, what’s the benefit of it becoming fiscally sponsored by another organization?

      • Kate

        May 31, 2024 at 12:03 pm

        Thanks for adding this, Andrew. I made an assumption that I did not state that the request for fiscal sponsorship is probably limited to a project or purpose that will be funded with charitable funds. Again, this is a situation that needs legal guidance.