Fiscal Sponsorship Models Explained: A, C, and F

# Fiscal Sponsorship Models Explained: A, C, and F

If you've been researching fiscal sponsorship, you've probably come across terms like "Model A," "Model C," and "Model F." These aren't just jargon — they describe fundamentally different legal relationships between a fiscal sponsor and the projects they support.

Choosing the right model affects your independence, your liability, your tax reporting, and how donors interact with your ministry. This guide breaks down each model in plain language so you can make an informed decision.

What Are Fiscal Sponsorship Models?

The models were originally defined by Gregory Colvin in his book *Fiscal Sponsorship: 6 Ways to Do It Right*. He identified six models (A through F), but three are most commonly used in practice:

• Model A — Direct Project (Comprehensive)
• Model C — Pre-Approved Grant Relationship
• Model F — Supporting Organization

Each model defines the legal relationship differently, which affects control, liability, and administrative responsibility.

Model A: Direct Project (Comprehensive)

How It Works

Under Model A, your project is legally part of the fiscal sponsor's organization. The fiscal sponsor:

• Owns the project and its assets
• Employs project staff (or engages them as contractors)
• Controls the finances
• Files all tax returns
• Holds all contracts and insurance

Your project operates as a program of the sponsor, similar to how a department operates within a company.

Who It's For

• New organizations without infrastructure
• Ministry leaders who want to focus on mission, not administration
• Projects that benefit from centralized financial management
• Organizations that may eventually spin off as independent nonprofits

Pros

• Lowest administrative burden for the project
• Sponsor handles payroll, insurance, compliance, and reporting
• Donors give directly to a 501(c)(3) — no questions about tax-deductibility
• Strong oversight protects against financial mismanagement
• Ideal for leaders who are great at ministry but don't want to run a back office

Cons

• Less independence — the sponsor has legal control
• Harder to "take your project with you" if you leave
• The sponsor's reputation affects your project and vice versa

How InFocus Uses Model A

InFocus Ministries operates primarily under a Model A structure. Our partnered ministries benefit from:

• Centralized fund accounting through Alignmint
• Donor management and tax receipts handled automatically
• Shared insurance coverage
• Financial reporting and compliance

This lets ministry leaders focus entirely on their calling while we handle the business side.

Model C: Pre-Approved Grant Relationship

How It Works

Under Model C, your project is a separate entity (or operates as one). The fiscal sponsor receives donations on your behalf and then "re-grants" the funds to your project after verifying they'll be used for charitable purposes.

The key difference from Model A: the fiscal sponsor does not control or operate your project. They're essentially a pass-through for tax-deductible donations.

Who It's For

• Projects that want more independence
• Organizations that already have their own infrastructure
• Projects applying for grants that require a 501(c)(3) fiscal agent
• Temporary fiscal sponsorship while waiting for your own determination letter

Pros

• More independence — you run your own programs
• You can maintain your own staff and contractors
• Easier to transition to independent status
• The sponsor evaluates and approves grants but doesn't micromanage

Cons

• More administrative work for the project
• You may need your own insurance
• Less oversight means less protection from financial mistakes
• The grant review process can slow down access to funds
• Donors technically give to the sponsor, not to you — which can create confusion

Important Note

The IRS has scrutinized Model C arrangements more closely in recent years. The fiscal sponsor must demonstrate that they're exercising appropriate oversight of the re-granted funds, not just acting as a conduit. Proper documentation is essential.

Model F: Supporting Organization

How It Works

Under Model F, a separate nonprofit entity is created specifically to support the fiscal sponsor or another public charity. The supporting organization operates under Section 509(a)(3) of the tax code.

Who It's For

• Large, established organizations
• Situations where significant assets or endowments are involved
• Complex organizational structures

Pros

• Formal legal structure with clear separation
• Can hold significant assets independently
• Favorable tax treatment under 509(a)(3)

Cons

• Most complex to set up and maintain
• Requires its own board and governance
• Subject to specific IRS requirements for supporting organizations
• Not practical for small or new ministries

For most ministry leaders, Model F is overkill. It's included here for completeness, but the real decision for most organizations is between Model A and Model C.

Model A vs Model C: Side-by-Side Comparison

How to Choose the Right Model

Ask yourself these questions:

Choose Model A if:

• You're launching a new ministry and don't have infrastructure
• You want someone else to handle payroll, insurance, and compliance
• You value mentorship and operational support
• You're comfortable with the sponsor having legal oversight
• You want to focus 100% on your mission

Choose Model C if:

• You already have a team and operational capacity
• You need a fiscal agent primarily for grant applications
• You plan to file for your own 501(c)(3) soon
• You want maximum independence over day-to-day operations
• You're comfortable handling your own administration

Questions to Ask a Potential Fiscal Sponsor

Before signing an agreement, ask:

1. Which model do you use? (Get this in writing)
2. What fees do you charge and what do they cover?
3. Who controls the bank accounts?
4. What happens to project assets if we part ways?
5. How are restricted funds tracked and reported?
6. What financial reports will I receive and how often?
7. What insurance coverage is provided?
8. What's the process for ending the sponsorship relationship?

The Right Model Depends on Your Stage

There's no universally "better" model. Model A is better for new ministries that need full support. Model C is better for established organizations that need tax-exempt status for a specific purpose.

At InFocus Ministries, we've found that Model A serves our faith-based partners best because it lets ministry leaders pour their energy into serving their communities rather than managing paperwork. Our Alignmint platform handles the financial infrastructure, and our team provides the oversight that donors and grant-makers expect.

Learn more about how fiscal sponsorship works →

See what InFocus provides as a fiscal sponsor →

Apply to join our family of ministries →