A fiscal sponsor is a nonprofit organization that can offer its legal and tax-exempt status to Kickstarter projects related to its mission. By using a fiscal sponsor, granting organizations and private donors can get the benefits of donating to a 501(c)(3) nonprofit, such as tax deductions, while saving you the hassle of becoming a nonprofit yourself. Additionally, the fiscal sponsor will manage the project’s funds and the reports to funders and tax agencies.
As a creator, if you decide to use a fiscal sponsor for your Kickstarter project, the money you raise will be transferred directly to their bank account at the end of your campaign (if it’s successful). The funds will then be regranted to you by your fiscal sponsor, minus their fee.
If you think your backers will be more likely to support your project if their pledges are tax deductible, then finding a fiscal sponsor might be a good idea. However, it’s important to keep in mind that doing so will mean your project is subject to additional fees. When you’re calculating your budget and funding goal, make sure that you factor in your fiscal sponsor’s fees, alongside Kickstarter’s 5% and our payment processor’s fees.
In order to use a fiscal sponsor for your Kickstarter project, you will need to secure one prior to launching your campaign. On the Payment tab of your project editor, you will be required to verify your fiscal sponsor’s information, this includes entering their bank details instead of your own. Once a project goes live the information on the Payment tab cannot be changed, therefore it’s important that you have this arrangement locked in before you launch.
Lastly, you will want to clearly include details about your fiscal sponsor somewhere in your project description, as that information won’t automatically be visible to backers.
For more information about fiscal sponsorship, check out this article from Docs in Progress. We also recommend taking a look at this short film that used a fiscal sponsor.