Fiscal sponsorship is a common mechanism used in the nonprofit sector that enables individuals and organizations to start new programs without establishing a new, separate nonprofit organization. These fiscally sponsored projects get their charitable status from their fiscal sponsor. Fiscal Sponsorship enables your project to receive grants and tax-deductible contributions, including monetary and in-kind donations through The Voice Project charitable 501(c)3.
The Voice Project is able to alleviate the costly, time-consuming legal and administrative infrastructure required to set up your own non-profit so you’ll have more time and freedom to focus on your mission, project, and fundraising strategies.
1. Tax Receipts for Donors
With tax-exempt status through Fiscal Sponsorship, TVP sponsored projects will be able to fundraise at events, from individuals, corporations, and foundations by requesting that donations be made to TVP to support their program activity.
Receipting is handled in one of two ways, depending on how the donation is made:
- After an online donation is made, TVP automatically generates a receipt and sends it to the donor’s email address for their tax records.
- When a donation is made by check or wire, the donor information is sent to each sponsored project on a monthly statement so that donor information can be inserted into standard thank you letter/receipt template and sent to donors directly.
2. Donate Button and TVP Donation Page
Sponsored projects will get an official profile page on The Voice Project site where donations can be made as well as ebed-able donate button s that can be integrated into sponsored project websites and fundraising pages.
3. Budget and Accountability
Complete monthly donation tracking report and funds transfer from TVP by the 15th of each month for collections from the preceding month.
We keep it simple, and low cost relative to other options.
For all monetary contributions processed through TVP’s Fiscal Sponsorship program:
7% of gross revenues raised up to $300,000; 5% for revenue from $300,001 – $750,000; and 3% from $750,001 and up.
Other Frequently Asked Questions
Q. How does disbursement of donations work?
A: TVP will mail a check in the name of sponosred project by the 15th of each month for collections from the preceding month.
Q. When starting a new bank account for the project under the project name, will I need a new tax ID or would I be using the TVP tax ID?
A: When a project sets up their new bank account, the TVP tax ID is not used. We recommend applying for new federal tax ID. Check out this website for help.
Q. Must the sponsored project’s business account be opened in the USA, or can TVP disburse the funds to an International account?
A: The Voice Project can disburse funds to an International account; however, there will be an additional charge of $45 USD to cover our bank’s outgoing wire charges. We apply extra scrutiny to overseas projects to concur with US regulations regarding off-shore disbursements.
DONOR RECEIPTS / THANK YOU LETTERS
Q. We want to thank our donors. Will we get reports of who donates in order to send them a thank you letter?
A: Anyone who donate to your project online will immediately receive a printable receipt for their tax records. However, we encourage you follow up with an additional thank you letter. We find it’s a great way to foster long-term relationships. We will provide you with monthly reports of your donors and a template letter that you can edit to describe your program.
Q. How do I process a matching grant from my employer?
A: Employers will need confirmation of the original donation before matching it. Sometimes they have a web based, matching grant program. If that’s the case, they can email us directly, and we will facilitate the matching grant for you.
Q. How do I report grants?
A: You can report any and all grants made to your project as taxable income for that year. The Voice Project files 1099s for its sponsored projects with fiscal sponsorship. A 1099 is a report of Miscellaneous Income of at least $600 for services paid to an individual, partnership, or estate.
LLC VS SOLE PROPRIETORSHIP
Q. How do I decide whether to identify my project as an LLC or as a sole proprietorship? Will either affect my taxes differently?
A: Whether you choose to make your project an LLC or a sole proprietorship will not affect your taxes. That being said, you have to make that decision based on your own liability protection perspective. Next, you will need to obtain an EIN and open a bank account that you will use exclusive for your project