Q: What is a 501(c)(3) organization?
A: A 501(c)(3) organization, commonly called a charitable organization, must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3) of the Internal Revenue Code, and none of its earnings may inure to any private shareholder or individual.
The organization may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.
All projects participating in Fiscal Sponsorship must fit within our organizational guidelines. In addition, contributions to a 501(c)(3) are deductible for Federal income tax purposes to the extent allowed by law.
Q: Does fiscal sponsorship allow the project to be absolved from tax reporting?
A: No. Contributions received and disbursed by IFP will likely be treated as income by the IRS. IFP will issue Form 1099-MISC for total payments over $600 during the calendar year to each project, except if the project is a corporation. Note that an LLC is treated as a partnership and not as a corporation, except if IFP has received certain written notification from the LLC stating that each member of the LLC is a corporation. Consult a tax advisor to determine your specific liability.
Q: Why does the Fiscal Sponsorship Program have an application process?
A: IFP must insure project activities are conducted according to IRS regulations and must establish discretion and control over the project and the contributions received. This is accomplished through an application process, internal procedures regarding grants, and a sponsorship agreement between IFP and the project to govern the relationship.
Q: Why does IFP need to establish discretion and control over a sponsored project?
A: Technically speaking, your donor has made a contribution to IFP with a recommendation that IFP grant this contribution to your project while also monitoring that their funds are put to proper use and that all tax-reporting requirements are met.
Q: Once I am fiscally sponsored, have I become a non-profit?
A: No. Being sponsored at IFP does not make the project or production company a tax-exempt organization.
Q: Does IFP Fiscal Sponsorship process in-kind contributions?
A: IFP Fiscal Sponsorship is not able to accept or grant a charitable gift letter for in-kind contributions such as donations of goods or equipment.
Q: Does the project retain its own legal identity if it has a fiscal sponsor?
A: Yes. Your project is a separate legal entity and not part of IFP. You retain creative control, ownership and responsibility for tax reporting and liability.
Q: What is the difference between corporate sponsorship and fiscal sponsorship?
A: Corporate sponsorship consists of support, usually in the form of money or materials, given directly to the project. Often corporate sponsors expect something in return, such as advertising or publicity. However, many corporations also maintain philanthropic programs that donate to tax-exempt charitable organizations.
These programs will not provide funds to a non-exempt filmmaking project but may donate to the project through a fiscal sponsorship program. A project selected for fiscal sponsorship is able to solicit tax-deductible contributions from these foundations, corporations or government organizations.