We sometimes work with nonprofits that want to come under our umbrella. Does the affiliate nonprofit have to file certain papers, or does the umbrella organization have to do anything at all? Do we draft up an agreement, if so, what kind, and what should it say? Does the affiliate organization owe the umbrella nonprofit a percentage when it applies for and receives a grant?
It sounds as though you are not talking about a governance affiliation, which would probably require amendments to articles of incorporation and/or bylaws to give your organization some type of governance authority, but a “fiscal sponsorship” in which you utilize your 501(c)(3) charitable status to help raise and accept charitable contributions for a group that doesn’t have its own tax-exempt status. Normally a fiscal sponsorship requires an agreement, which spells out the relationship, whether you will provide a grant to the other organization to carry out a charitable program or whether you will absorb it into your own operations, what happens when the relationship ends, and what sort of fee you will charge to provide the relevant services.
For a more complete discussion of the critical issues you should be considering, participate in our November webinar “Fiscal Sponsorship: For the Funders, Sponsors and the Sponsored.” It will illuminate a lot of the options.
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