Many funding sources state in their guidelines that they will only fund projects of non-profit corporations which are exempt from federal taxes under Internal Revenue Code Section 501(c)(3). If you are not incorporated, you may still be able to obtain funds from these agencies and from individuals if you can find a non-profit organization that is willing to serve as a fiscal sponsor for your project.

Most people give money to arts projects for two reasons. First, they like the artist's work, and second, they want to get a charitable deduction on their federal income taxes. Since the Internal Revenue Service determines which contributions are tax-deductible, most donors prefer to give to corporations that have been granted tax-exempt status under Internal Revenue Code Section 501(c)(3). That way the donor can be certain that their contribution will be tax-deductible to the full extent of the law.

A fiscal sponsor is a tax-exempt corporation that agrees to receive and disburse the funds for your project. There are many organizations that offer this service. For instance, both Women Make Movies and Boston FilmˇVideo Foundation have programs for sponsoring film and video makers. You are most likely to be sponsored by an organization that is already doing work similar to yours. For your convenience, it is a good idea to select an organization that is geographically close.

The Fund for Women Artists has started a fiscal sponsorship program for selected women artists. To qualify for this program, a project must be led by women and must have the potential for artistic excellence. Also, the artists must prove that women will receive at least 51% of the fees or salaries paid. The Fund for Women Artists generally cannot sponsor a project that will be seeking funds from a source where we already have a proposal pending.

Here is how the sponsorships work. The donors make their checks out to The Fund for Women Artists. We process the checks and issue thank-you letters to the donors for their tax records. As the project moves forward, The Fund for Women Artists reimburses the artists for expenses, maintains the books, and prepares any needed tax forms. The Fund for Women Artists deducts 5% of the total donations as a service charge for handling the sponsorship.

It is important to remember that individuals can be major donors. Since people who know your work are more likely to donate if they can get a tax deduction, fiscal sponsorships can be very effective fundraising tools.