We`ve published many other useful resources on an additional site for those looking for more details and ideas on where to find a tax sponsor or what you should think if your organization is considering serving as a tax sponsor. A tax sponsor is a not-for-profit organization that provides fiduciary oversight, financial management and other administrative services to develop the capacity of non-profit projects. The Pro Bono Partnership of Atlanta reports that a good financial officer has a similar mission, his own resources and staff, a history of donor support and strong administrative policies and procedures. In addition to the ability to obtain more funding, a not-for-profit organization with a financial officer could have access to the skills of the tax officer`s staff or other services. A sponsored organization can obtain staff and accounting services from the financial officer, have access to insurance and benefit packages, and receive legal and other advice from a more experienced non-profit organization. Tax officials often charge a fee for these services. While the not-for-profit sponsored organization will have more opportunity to draw attention to its mission rather than spend time on administrative issues, it may not have as much leeway to make its own decisions. And some donors do not subsidize through financial agencies. Tax sponsorship is often used by newly created non-profit organizations, which must raise money during the start-up phase before being recognized as exempt by the IRS. The use of tax sponsorship allows a program or organization that is not itself considered tax-exempt to obtain funds for its transactions which – via the tax sponsor – are tax deductible for donors.
As a result, tax sponsorship agreements benefit organizations or programs that are not tax-exempt by providing a debit route for income that the organization might not otherwise be able to collect. Creating a tax agency requires a carefully crafted legal agreement, ideally written by a lawyer, tailored to the needs and requirements of both parties. All agreements should stipulate that the tax sponsor is responsible for complying with the legal provisions relating to the receipt, notification and recognition of donations from non-profit organizations and must provide information on administrative costs.