An organization must apply to the IRS and receive written notification confirming that this status has been granted. This process can take several months and usually requires the help of an attorney. Having a tax-exempt letter from a State or a Federal Employer Identification Number (EIN) does NOT automatically mean that a group has been granted 501(c)(3) status by the IRS. Classification under section 509(a)(1) or 509(a)(2) will be indicated on the IRS letter of determination and also on Guidestar. You can also contact us at grantproposals@mainecf.org if you need help determining your organization’s eligibility.

Groups without any tax status that are organized to carry out a specific charitable project or program must have an established advisory board or oversight committee in order to demonstrate broad community support for their efforts before seeking a fiscal sponsor. Such groups must also have a clearly articulated mission statement or project goal with a not-for-profit purpose that serves the public.

Yes, your group must have its own advisory board or oversight committee made up of unrelated members. This is mandated by the IRS and used to demonstrate broad community support. Fiscal sponsorship is only available to groups. Individuals may not use fiscal sponsors to apply for a grant.

If your group is already assigned a particular status for tax purposes, for example a 501(c)(7) Social Club, 501(c)(19) or 501(c)(23) Veterans’ Organization, 501(c)(8) Fraternal Society, or a for-profit organization, your group is not eligible for fiscal sponsorship.

You must find a fiscal sponsor for your project before you apply for a grant from the community foundation. This process can take time so start as soon as possible. Identify an eligible organization that has a similar mission as your group does and establish a working relationship. Once the 501(c)(3) or other eligible organization has taken on your project as one that furthers its own mission, then your group is eligible to apply for grant funding through a fiscal sponsorship arrangement.

The fiscal sponsor maintains full discretion and control over the funds received for a project and has the right to withdraw financial support from the project if its original goals are not being accomplished or the grant agreement is not followed. This means that the group and the fiscal sponsor should maintain a good working relationship, and the fiscal sponsor should monitor the project in some way to ensure the funds are properly spent. Grant funds awarded through such an arrangement should appear on the fiscal sponsor’s IRS Form 990 tax return. If grant funds are used to pay individuals for their services, the fiscal sponsor will need to determine whether they are acting as partners, employees, or independent contractors, and comply with tax reporting requirements accordingly. The fiscal sponsor may also charge a fee (usually no more than ten percent of the grant) for administrative costs.

Yes. If the fiscal sponsor wants to have more control over the project and own the results of the project (e.g., art or a study), then the group carrying out the project can be treated as an independent contractor rather than a grantee. This has different tax and reporting implications for the sponsoring organization. Please seek legal guidance if you are considering establishing any type of fiscal sponsor arrangement.

Your application must include our completed fiscal sponsorship agreement form.

If you are unable to submit physical signatures, simply type the requested information at the end of the form, upload the form to our online application, and have the fiscal sponsor send an email verifying the agreement before the deadline. If we do not have the completed form and all approvals by the deadline, your application will not be reviewed.

You will be asked to name your fiscal sponsor and a contact person at that organization in the first section of the application (the very last question in that section) and you will be required to upload your fiscal sponsorship agreement form in the Attachments section of the application. You do not need to include any additional information about your fiscal sponsor. You should answer all questions on the application as the applicant group. For example, in the Organization Financial Information section, you will use your group’s financial information, not the fiscal sponsor’s information.

Yes, you are not excluded from applying in the same cycle as the group you are sponsoring. We appreciate your assistance in directing funds to grassroots efforts.