Chicago Nonprofit Attorney – Fiscal Sponsorship
Over the years, our law firm has worked with numerous people from Chicago and northern Illinois with large philanthropic aspirations, and one of the most common things we hear is, “I want to start a nonprofit and help my community.” Although such enthusiasm is a wonderful thing for our communities, not all organizations need to form a nonprofit corporation and file for income-tax exemptions.
In fact, there are some alternatives that can help a nonprofit efficiently and effectively conduct their mission and achieve their goals. One such alternative, fiscal sponsorship, allows a nonprofit to continue its charitable activities with certain benefits from a recognized tax-exempt sponsor organization.
It is important to note, however, that incorrectly conducting a fiscal sponsorship can lead to many problems for the project, the sponsor, and donors. As such, when undergoing fiscal sponsorship, it is essential to have the legal guidance and oversight of a Chicago nonprofit lawyer.
Why Seek Fiscal Sponsorship
A great charitable idea is, unfortunately, not enough for a nonprofit to get off the ground and begin conducting charitable work with real results. Therefore, when just starting up and before the organization has a tax-exempt status, donors may not be able to deduct a donation from their taxes. In order to encourage greater financial help at this start-up phase, the project and organization can collect donations and, through the aid of a tax-exempt fiscal sponsor, attract tax-deductible donations from donors.
In most cases of fiscal sponsorship, the sponsored project or organization becomes an internal program of the sponsor, known as comprehensive fiscal sponsorship. As part of larger entity, the sponsored organization or project doesn’t need its own initial or ongoing filing or registration requirements. There are several cons associated with this alternative, such as the relinquishment of legal control and ultimate oversight of the project
Contact Our Nonprofit Law Office Today
There are numerous situations, circumstances, and other factors that should guide a budding organization into finding the ideal fiscal sponsor. Because of the near-equal amount of benefits and risks associated with most types of fiscal sponsorship, it is important to be especially diligent in this decision. With decades of experience helping nonprofits in the Chicago area, James C. Provenza & Associates, PC is confident that they can help you use this legal tool effectively. For a consultation regarding your nonprofit, project, or organization, call our Chicago law firm today at (847) 729-3939.