Model A and Model C are two commonly used fiscal sponsorship structures in U.S. practice, but they create very different relationships. In comprehensive fiscal sponsorship (commonly called Model A), the project becomes a program of the fiscal sponsor, which carries legal and fiduciary responsibility. In a pre-approved grant relationship (commonly called Model C), the project remains a separate entity and the sponsor provides grants for approved charitable purposes while retaining the oversight required for the funds it receives.
Jurisdiction note: “Model A,” “Model C,” 501(c)(3) and IRS terminology are U.S.-specific. If your project is based in Kenya, elsewhere in Africa or another jurisdiction, use these models as a framework for understanding the relationship—not as a substitute for local legal, tax or donor advice.
Use the comparison to decide who will employ staff, sign contracts, oversee expenditure and hold project assets. The National Network of Fiscal Sponsors describes both relationships; the sponsor’s written agreement must turn those descriptions into operational responsibilities.
Also read:How Long Can a Nonprofit Operate Under Fiscal Sponsorship?
A Detailed Explanation: Types of Fiscal Sponsorship Models (Model A vs. Model C Explained)
Understanding clearly the types of fiscal sponsorship models begins with comprehending their core structures, advantages, limitations, and suitability for different nonprofit scenarios. Let’s analyze each model in detail.
Model A: the project operates within the sponsor
In comprehensive sponsorship, the project is a programme of the sponsor. The sponsor holds legal and fiduciary responsibility for its programme, including employees and activities. A project advisory team may guide delivery, but it cannot treat the sponsor as a bank account while acting outside the sponsor’s controls.
This can fit a new initiative that needs an employer, accounting and organisational infrastructure. Confirm which services are actually offered, the approval process and any exclusions. Sponsorship does not create a separate tax-exempt status for the project or remove every individual’s responsibilities.
Questions for a Model A sponsor
- Who can sign contracts and approve purchases?
- Who employs staff, runs payroll and manages safeguarding or complaints?
- Which insurance covers which activities, and what is excluded?
- Who owns project assets, materials and intellectual property?
- What happens to staff, grants, records and restricted balances on exit?
Illustrative example: a new community initiative needs two staff members and has no payroll or finance system. A comprehensive sponsor may provide the required infrastructure, if the activities fit its mission and it accepts the risks. That is a service-and-governance decision, not just a choice of fee percentage.
Model C: a separate project receives approved grants
In a pre-approved grant relationship, the project remains a separate entity responsible for its own operations, tax reporting and liabilities. The sponsor assesses and oversees the charitable use of funds it receives and grants. The project does not obtain the sponsor’s tax exemption as its own status.
The sponsor must retain independent discretion and control over charitable funds. NNFS warns against pass-through or conduit arrangements. Project independence therefore does not mean unrestricted access to donor money or freedom from grant conditions.
Questions for a Model C sponsor
- Which entity is the donor’s grantee of record, and which agreement governs onward grants?
- What due diligence is required before funds are released?
- What uses, reporting, approval and monitoring conditions apply?
- Can the sponsor withhold or recover funds following misuse or breach?
- Who employs staff, carries insurance and meets local registration and tax obligations?
- Does the donor permit this relationship and the proposed country of implementation?
Illustrative example: an existing organisation can manage its own staff, accounts and programme, but a prospective funder permits funding through an eligible sponsor. A grant relationship may be suitable only if the sponsor accepts the project, the donor approves the route and both parties can fulfil their obligations.
Administrative support and price vary. Neither the model label nor a claim of lower fees proves that the arrangement fits. See the fee guide and total-cost example.
How to Decide Between Model A and Model C Fiscal Sponsorship
Choosing between fiscal sponsorship models requires careful consideration of your project’s legal structure, desired autonomy, staffing and administrative needs, funding sources, risk profile and the sponsor’s actual agreement. The labels alone are not enough.
| Question | Model A — comprehensive sponsorship | Model C — pre-approved grant relationship |
|---|---|---|
| Project relationship | Project operates as a program of the fiscal sponsor | Project remains a separate entity receiving approved grants |
| Administrative involvement | Usually broader | Usually more limited |
| Operational autonomy | More sponsor oversight | Generally greater project independence |
| What to verify | HR, contracts, insurance, liabilities, fund controls and sponsor policies | Grant terms, expenditure responsibility, reporting, permitted uses and fund controls |
Fees can also differ substantially by sponsor and service level. See how fiscal sponsorship fees work, then review Africads’ fiscal sponsorship guidance and readiness support if your team needs help preparing for sponsor conversations.
A four-step model decision
- Map the work: list staff, contracts, assets, grants, donations and delivery risks. Identify what your team can manage now.
- Map responsibility: name the entity accountable for each item. Missing employer, insurance or finance responsibility is a reason to pause.
- Check the funding route: obtain the donor’s rules and the sponsor’s acceptance criteria. Neither model guarantees eligibility or an award.
- Test the agreement: compare services, controls, total cost, reporting and exit terms. Choose the relationship your team can actually operate.
Model A may fit when the project needs to operate inside an established organisation. Model C may fit when the separate recipient can manage its obligations and needs an approved grant relationship. If the proposed sponsor only offers to receive and pass on money without oversight, stop and obtain qualified advice.
For Kenyan and other African projects
These U.S. model names do not replace local law. Specify the country of the sponsor, project and donor; verify the recipient’s legal authority, banking arrangements, tax treatment, cross-border transfers and donor conditions. KRA’s charitable-organisation and donation rules address Kenyan exemption and donation deductibility. Do not assume a U.S. sponsor or a Model C agreement grants Kenyan tax exemption.
Prepare these documents for a sponsor conversation
- A one-page project summary, implementation location and leadership contacts.
- A budget and list of potential donors, including restricted-funding conditions.
- A responsibility map for staffing, contracts, finances, reporting and safeguarding.
- A list of required services, unresolved risks and proposed exit arrangements.
Need help organising that conversation? Read about Africads fiscal sponsorship consulting and readiness support. Africads is not the sponsor and cannot guarantee acceptance. The comparison and preparation list above are available without signup; no unverified template delivery is promised.
Updated by Africads. NNFS model descriptions and oversight guidance, and KRA’s published notice, reviewed 30 September 2026. This educational comparison distinguishes U.S. structures from country-specific legal and tax requirements.
Frequently Asked Questions
What is the main difference between Model A and Model C?
In Model A the project generally operates within the sponsor; in Model C a separate entity typically receives approved grants through a pre-approved relationship.
Does every sponsor use these model labels?
No. Ask how the arrangement actually works instead of relying on the label alone.
Which model gives a project more independence?
Model C often preserves more separate identity, while Model A usually provides greater sponsor integration and control.
Can an unregistered initiative use Model C?
Often not in the classic structure because Model C normally involves a separate project entity. Confirm the sponsor’s requirements.
Can a project change models later?
Potentially, but fund restrictions, contracts, records and responsibilities must be transferred carefully and documented.
Conclusion
Choose a fiscal-sponsorship model by examining legal structure, control, staffing, contracts, insurance, fundraising and exit needs. Model labels are useful shorthand, but the written agreement determines how the relationship works. Review the actual responsibilities with qualified advisers before relying on a label.
Put this guide into practice
Free resource: Fiscal Sponsorship Agreement Template. Use the agreement template to structure a discussion with your fiscal sponsor and adapt it to your arrangement.
Optional paid resource: Fiscal Sponsorship Toolkit. Practical documents for fiscally sponsored projects, nonprofit founders and fiscal sponsors. Review the product details and current price before purchasing.
