RUF can act as a fiscal sponsor of your project or nonprofit organization, either in the diaspora or in Romania. The article below outlines what a "fiscal sponsor" is, and how it works.

A fiscal sponsor serves as an intermediary for a project or organization that is not a recognized nonprofit but seeks to conduct activities aligned with charitable purposes. The fiscal sponsor is typically an established 501(c)(3) organization (in the U.S.) that agrees to take a project under its wing. This allows the project to benefit from the sponsor’s tax-exempt status and the ability to receive tax-deductible donations, grants, and other funding sources.

Key Aspects of Fiscal Sponsorship


  1. Legal Structure:

    • The project operates as part of the fiscal sponsor’s organization, under its tax ID number.
    • Donations are made to the fiscal sponsor, earmarked for the project, but the sponsor retains control over how the funds are distributed and spent.
    • Legally, the fiscal sponsor may be responsible for the activities related to the project. Generally, RUF's intention is to be as far removed from all legal responsibilities as possible. This may require a waiver from the grantee.
  2. Benefits of Fiscal Sponsorship:

    • Tax-exempt Status: Projects can accept donations and apply for grants that require 501(c)(3) status, which they otherwise wouldn't be able to do.
    • Administrative Support: The fiscal sponsor may handle bookkeeping, financial reporting, payroll, tax filings, insurance, and legal compliance.
    • Fundraising Legitimacy: Having a fiscal sponsor can lend credibility to the project, giving donors confidence that funds will be managed properly.
    • Cost Efficiency: Instead of forming a new nonprofit (which involves legal and administrative costs), projects can focus on their mission while the fiscal sponsor handles back-end operations.
  3. Types of Fiscal Sponsorship:

    • Comprehensive: The project becomes a fully integrated program of the fiscal sponsor. The sponsor assumes all legal, financial, and operational responsibilities.
    • Pre-approved Grant Relationship: The project remains a separate legal entity but receives grants from the fiscal sponsor. The sponsor does not have full control over the project’s operations, but it ensures compliance with grant-making rules.
    • Other Models: There are variations, including fiscal sponsors acting as intermediaries, trustees, or providing temporary sponsorships.
  4. Responsibilities of a Fiscal Sponsor:

    • Oversight and Accountability: The sponsor must ensure the project operates within the bounds of the law and follows IRS regulations governing nonprofits.
    • Fund Management: The fiscal sponsor is responsible for tracking and disbursing funds for the project in accordance with donor restrictions and the project’s budget.
    • Compliance: The sponsor ensures that the project complies with tax reporting, employment laws, and any relevant state or federal regulations.
  5. Fees:

    • Fiscal sponsors usually charge a fee for their services, typically a percentage of the funds raised (commonly 5-15%). This fee compensates the sponsor for the administrative and legal responsibilities they assume.
    • Although RUF is a 100% pass-through entity operating with a high level of transparency, in the case of complex projects, high costs may require RUF to agree on some sort of fee structure with our grant recipient.
  6. Fiscal Sponsorship Agreement:

    • A detailed contract between the sponsor and the project is essential to outline the terms, responsibilities, financial arrangements, and operational expectations.
    • The agreement covers issues like ownership of intellectual property, liability, reporting requirements, and exit strategies (e.g., what happens if the project later becomes a standalone nonprofit).

Example Scenarios


  • Startup Nonprofit: A group developing a community arts program may not have the resources to become a formal nonprofit but wants to raise money through donations and grants. A fiscal sponsor can step in, allowing the group to accept funds while the sponsor manages legal and financial responsibilities.
  • Time-sensitive Projects: A rapid-response humanitarian project that needs to launch immediately may choose to partner with a fiscal sponsor rather than waiting for months to obtain nonprofit status.

Fiscal sponsorship is commonly used in the nonprofit sector to allow projects to focus on their mission and fundraising while minimizing administrative burdens. However, it's important for both parties to clearly define expectations and roles to ensure a smooth and successful partnership.


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