One of the most common questions among fiscally sponsored projects and new sponsors is: is it legal to have different rates of fiscal sponsorship? The short answer is yes—but with important caveats.
Fiscal sponsorship fees are typically calculated as a percentage of funds raised or managed, and sponsors may use variable rates based on project size, complexity, risk level, or the level of administrative support required. What matters most is that these rates are applied fairly, transparently, and in accordance with IRS guidelines to avoid conflicts of interest or private benefit issues.
To understand which models are used and why they vary, explore fiscal sponsorship options that are designed with flexibility and compliance in mind.
Legal Considerations for Variable Rates
So, is it legal to have different rates of fiscal sponsorship among projects? Legally, it is allowed—as long as the rate structures are justifiable, documented, and not arbitrary.
Legal Requirements:
- Rates must reflect services provided: The fee charged should correlate to the level of administrative and financial support delivered.
- No private benefit: Rates should not be tailored to benefit one individual or project unfairly.
- Consistent rationale: A sponsor should be able to explain and justify why one project is charged 6% while another is charged 12%.
- Written agreements: Each rate must be clearly laid out in the fiscal sponsorship agreement.
Sponsors like Group 36 follow a value-based sponsorship philosophy that ensures rate setting is tied to mission alignment and support levels—reducing risk and increasing trust.
Examples of Rate Structures in Fiscal Sponsorship
When asking is it legal to have different rates of fiscal sponsorship, it's helpful to look at how various fiscal sponsors set and justify these rates in practice.
Common Rate Models:
- Tiered rates: Smaller projects pay a lower rate (e.g., 5–8%), while larger, complex projects may pay 10–15% to reflect greater administrative demands.
- Flat percentage: A standard rate (e.g., 10%) for all projects, with additional fees for special services like payroll or grant reporting.
- Custom rates: Unique structures based on service bundling, project risk, or special compliance needs.
Each of these models is legal when the structure is consistent, documented, and transparent. See how Group 36 structures its pricing in line with the services that influence sponsorship rates, from accounting to HR management.
Compliance Best Practices for Fiscal Sponsors
Returning to the main question—is it legal to have different rates of fiscal sponsorship—compliance depends on more than just legality. Ethical and reputational considerations are also at play.
Best Practices for Sponsors:
- Create a rate policy that defines how fees are determined
- Disclose rates and services clearly in sponsorship agreements
- Document decision-making for custom or adjusted rates
- Ensure consistent treatment of similar projects
- Regularly review and update policies based on service changes or legal developments
If you're a project leader unsure whether your current rate is fair—or a sponsor looking to structure rates compliantly—consult with a fiscal sponsorship expert for custom guidance based on your specific situation.
Conclusion
So, is it legal to have different rates of fiscal sponsorship? Yes—but only when those rates are fairly determined, transparently documented, and consistently applied. Variable rates can reflect the unique needs of each project and the level of services provided, but they must be grounded in best practices and nonprofit law.
With the right structure in place, differentiated pricing becomes not only legal—but an effective way to serve a broader range of mission-driven projects.