Fiscal Sponsorship Frequently Asked Questions
Fiscal sponsorship is a complex topic and we want to make sure every project considering working with us has the information they need to make a good decision. Below you will find answers to the most common questions we receive about how fiscal sponsorship works, what Mockingbird Incubator's program includes, and what to expect from the process.
If you do not find what you are looking for here, reach out directly.
Understanding Fiscal Sponsorship
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Fiscal sponsorship is a legal arrangement in which your project operates under the 501(c)(3) umbrella of an established nonprofit organization. As your fiscal sponsor, that organization takes on the legal and financial responsibility for your project. This means you can receive tax-deductible donations and apply for grants right away, without forming your own nonprofit or waiting for IRS approval. It is a widely used and legitimate model in the nonprofit sector, particularly for new and early-stage projects.
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When you form your own 501(c)(3), you incorporate, apply to the IRS for tax-exempt status, build out your own financial and compliance infrastructure, and take on full legal and regulatory responsibility for your organization. That process typically takes twelve to eighteen months and carries significant startup costs. Fiscal sponsorship allows you to skip that process and start raising funds immediately, while a qualified fiscal sponsor handles the legal and administrative infrastructure on your behalf. It is not a shortcut around accountability. The same rules that apply to standalone nonprofits apply to fiscally sponsored projects.
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Model A, also called comprehensive fiscal sponsorship, means your project operates fully under the fiscal sponsor's 501(c)(3). The sponsor holds all funds, signs all contracts, and carries all legal and financial responsibility. Your project has no separate legal entity. Model C, also called a pre-approved grant relationship, involves a separate legal entity (usually an unincorporated association) that receives funds through the sponsor. Model C projects retain more independence but also more legal and financial responsibility. Mockingbird Incubator currently offers Model A only.
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A grant is funding given to an organization to carry out specific work. Fiscal sponsorship is an ongoing organizational and legal arrangement. As a sponsored project, you are not receiving a gift from your sponsor. You are operating under their legal umbrella and paying a cost share for the administrative services they provide. You still have to raise your own funds through grants, donations, and other sources.
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Yes. As a project under Mockingbird Incubator's 501(c)(3), you can apply for many government grants. The grant agreement would be signed by Mockingbird Incubator as the legal entity, with your project named as the implementing program. Some government grants have specific requirements around fiscal sponsorship arrangements, so we review each opportunity carefully before signing any agreement.
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Fiscal sponsors are held to the same rules as all other 501(c)(3) organizations, including transparency, public benefit requirements, and proper reporting of all funds on the annual Form 990. The National Network of Fiscal Sponsors maintains a helpful resource on common misconceptions about fiscal sponsorship and how it is regulated. We are members of that network and follow their best practice guidelines.
Working with Mockingbird Incubator
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We sponsor progressive projects across the United States that are doing community-rooted work and are aligned with our mission and values. We work with projects focused on closing gaps in services and removing barriers to justice, equity, diversity, and inclusion. Cause areas we work with include racial justice and civil rights, environmental justice and equity, arts and culture, health equity, human rights, income inequality and economic justice, incarceration and abolition, direct community services, and organizational ethics and accountability. New projects are welcome. We also accept projects transferring from other fiscal sponsors.
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We are not able to sponsor the following:
Organizations that already have their own 501(c)(3) status or have begun the application process
Projects operating outside of the United States
Religious organizations whose primary purpose is conversion, missionary work, or requiring adherence to a particular faith or doctrine
Projects whose primary activity is lobbying or raising awareness without direct service delivery
Organizations whose services, mission, or activities could be considered discriminatory
Projects with discriminatory language, beliefs, or affiliations of any kind
Projects that provide health or therapeutic services that are not HIPAA compliant or that are considered harmful or controversial within the relevant professional community
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Most fiscal sponsors provide the administrative infrastructure and step back. We stay involved. We think of ourselves as a teaching hospital: our goal is not just to handle the paperwork while you deliver programs, but to make sure every project under our umbrella understands the system they are operating in and builds the organizational knowledge to grow over time. Every sponsored project has access to our training programs, workshops, and open office hours. We have worked in the nonprofit sector across direct service, social justice organizing, and organizational management, and that experience is available to our projects, not just our back office.
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Yes. We welcome projects that are currently sponsored by another organization and are looking for a stronger fit. The transfer process follows the same steps as a new application. We will ask you to share your current fiscal sponsorship agreement so we understand the terms of your existing relationship, and we will work with you to ensure a smooth transition.
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No. Mockingbird Incubator is based in Los Angeles but sponsors projects across the United States. Your project must be located and operating in the United States, but there is no geographic restriction beyond that.
Fees and Services
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We charge a cost share of 10% of all funds received into your project account. For certain federal grants that carry additional compliance and reporting requirements, the cost share may be up to 13%. This fee covers the full range of administrative and operational services we provide, including financial management, HR and payroll, legal compliance, insurance coverage, and access to our educational programs. For context, building this same infrastructure independently as a standalone 501(c)(3) typically costs between $74,000 and $129,000 annually.
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Our comprehensive fiscal sponsorship includes legal compliance and tax filings, financial management and bookkeeping, banking and financial services, HR and payroll administration, contract and vendor management, general liability insurance coverage, capacity building and education through our training programs and workshops, and access to our team for guidance and support.
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Your responsibilities as a Mockingbird Incubator project include raising funds for your activities, managing your programs and employees, establishing an advisory board for your project, participating in the next available Incubator cohort program,following all Mockingbird Incubator policies and procedures as outlined in the Fiscal Sponsorship Program Manual and agreement, sharing programmatic and financial reports with our team, acknowledging fiscal sponsorship by including Mockingbird Incubator's name and logo on all materials and platforms, and communicating proactively with our team about any changes, challenges, or new activities that could affect your project or our shared 501(c)(3).
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Start by completing our intake form. We review submissions on a rolling basis and reach out within two weeks to schedule a discovery call. That conversation is not a formal interview. It is a chance for us to learn more about your project and for you to ask us anything about how we work. If we move forward, you will complete a full application. If approved, you will sign a Fiscal Sponsorship Agreement that outlines the responsibilities on both sides.
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Onboarding takes approximately two weeks from contract signing and starts with an onboarding call with our team to review our policies and procedures. Once your account is set up, your project is ready to receive funds.
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Fiscal sponsorship does not have to end. Many projects find that the support and infrastructure Mockingbird Incubator provides is a strong long-term solution, and you are welcome to remain sponsored for as long as it serves your work. If you decide at any point to transition to your own 501(c)(3), we will support you through that process. Our goal is to help your project succeed in whatever form makes the most sense for your community and your work.
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We fully support projects that are ready to form their own nonprofit. In fact, helping organizations build the knowledge and infrastructure to eventually run independently is central to what we do. If you reach that point, we will work with you to create a transition plan, help you understand the steps involved in forming your own organization, and ensure a smooth and responsible end to the sponsorship relationship.