Community Initiatives is open to using any of the six models of fiscal sponsorship, but have found that three models have best served our projects.
Model A: Direct Project
In a Direct Project fiscal sponsorship relationship (“Model A”), the fiscally sponsored project (FSP) and Community Initiatives (CI) are legally considered one and the same. The FSP is part of CI and is run by FSP/CI employees, contractors, and volunteers. Charitable donations are made to CI for the benefit of the FSP; CI assumes total liability for acts of the FSP’s employees; and CI files all government forms (e.g., 1040, 1099, 990, payroll tax returns). The FSP’s mandatory Advisory Committee is self-governing. It hires, supervises, and terminates (if necessary) the Project Director.
In a “Model A” relationship, CI supervises (via the Project Director) all programmatic operations of the FSP. These include:
- All community programs
- Public information work
- Fundraising events
- Processing and acknowledgment of cash and non-cash revenue items
- Accounts payable and receivable
- Negotiation of leases and contracts
- Disbursement of project funds (including grants) from an established restricted fund
- Other activities conducted by the project
A fiscally sponsored project that has, or intends to have, paid employees (separate from independent contractors) must be a “Model A” project. Under a “Model A” agreement, all project employees become at-will employees of CI and are subject to the same personnel policies and benefits as all other CI employees.
“Model A” is our most common model.
Additional information can be found at the National Network of Fiscal Sponsors Guidelines for Comprehensive Fiscal Sponsorship.
Model B: Independent Contractor
In the case of an Independent Contractor (“Model B”) project, CI sponsors the fiscally sponsored project (FSP) through a restricted fund principally for payments to an independent contractor in support of the FSP. The FSP is not operated as a direct project of CI. Under the “Model B” agreement, the contractor may be either an individual or a firm engaged to conduct the work of the project. The contractor’s work is supervised by the FSP’s mandatory Advisory Committee on behalf of CI, but CI is not responsible for programmatic operations of the FSP (for example, community programs, or public information work such as fundraising events, accounts payable and receivable, negotiation of leases and contracts, insurance*, or day-to-day use of FSP funds). All these functions, as well as incurred liabilities to third parties, are the ultimate responsibility of the contractor as of the effective date of the agreement.
The “Model B” independent contractor has full discretion and control over the selection of subcontractors. No one in a “Model B” project is considered an employee of CI.
* Note: CI does not provide insurance coverage for contractors; the contractor must maintain a minimum of $1,000,000 general liability insurance coverage for FSP activities.
Model C: Preapproved Grant or Re-grant
In the case of a Pre-approved Grant project (“Model C”), CI re-grants funds received from a donor to a specified fiscally sponsored project (FSP). CI is NOT responsible for the FSP’s programmatic operations. These operations, as well as incurred liabilities to third parties, are the ultimate responsibility of the FSP as of the effective date of the agreement.
No one in a “Model C” project is considered an employee of CI.
Under a “Model C” agreement, CI has authority over the financial administration of an established restricted fund, and makes grants from the fund to support the FSP at its discretion. The grantee must use these funds solely for the intended grant purposes and repay to Community Initiatives any portion of funds that are not spent. All other authority and responsibility related to the FSP rests with the grantee — including the preparation of grant reports to its funders and to CI.
For more information, see the National Network of Fiscal Sponsors Guidelines for Model C, a Pre-Approved Grant Relationship.
Please see Mutual Expectations for more guidance on the fiscal sponsorship relationship.