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Nonprofit Law/501c6 as a Fiscal Sponsor?

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Question
We have a 501c6 Business League which has been approached to act as a Fiscal Sponsor for a Project.

Researching the matter, I see either generic "nonprofit" as a Fiscal Sponsor (which doesn't exclude 501c6) or specific mention of 501c3 organizations acting in that role.

I've been unable to get validation that a c6 can, but have also not seen any exclusion from a c6 doing so.

Answer
    "fiscal sponsorship" is a vague term and I recommend against using it.

As a matter of fact Gregory L. Colvin, the author of a book "Fiscal Sponsorship : 6 Ways To Do It Right" explained that there are 6 different models of proper fiscal sponsorships.
www.worldcat.org/oclc/29290377&referer=brief_results

    The IRS only uses the phrase one time as we can see by a Google search for
site:irs.gov "fiscal sponsor" "fiscal sponsorship" In that one paper, from 1994, at
www.irs.gov/pub/irs-tege/eotopick94.pdf the IRS states, on page 16 "Fiscal sponsorship is an area of
current concern for the Service... fiscal sponsorship occurs when one or more charities choose to financially support another charity or nonexempt project."  One page 17 the IRS elaborates, "A
nonexempt project, as used in this context, is a charitable activity of an organization that does not have an IRS determination letter."

    On page 16 the IRS takes the esoteric out of the term by stating, "There is nothing inherently wrong with fiscal sponsorship; it is what nonoperating public and private charities [and some operating public and private charities] do."

But, to address, your specific question, the answer is no.  As used by the IRS, "fiscal sponsorship" refers to the sponsor which is a charity.  A 501(c)(6) organization is not a charity.  Now, if the people approaching you want to arrange something with your organization, you would probably be able to accommodate them.  Just don't use the term "fiscal sponsorship" in the contract.  

If you want me to help with drafting of the contract let me know directly by email and then I will quote you my fees.  

Harvey Mechanic
Attorney at Law
Harvey108@hotmail.com

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather more information.

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Harvey Mechanic

Expertise

I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


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