There are several models of fiscal sponsorship. The most comprehensive legal discussion of these can be found in the book Fiscal Sponsorship: 6 Ways to Do It Right (Study Center Press, 1993, 2005) by attorney Gregory L. Colvin.
For practical purposes, the NNFS has articulated the two most-frequently used models of fiscal sponsorship:
Comprehensive Fiscal Sponsorship
In a Comprehensive Fiscal Sponsorship relationship, the fiscally-sponsored project becomes a program of the fiscal sponsor, and is a fully integrated part of the fiscal sponsor that maintains all legal and fiduciary responsibility for the sponsored project, including its employees and activities. This model of fiscal sponsorship is particularly valuable when a project has employees.
Grant Relationship Fiscal Sponsorship
In a Pre-Approved Grant Relationship Sponsorship, the fiscally-sponsored project does not become a program belonging to the sponsor, but is a separate entity responsible for managing its own tax reporting and liability issues. In addition, the sponsor does not necessarily maintain ownership of any part of the results of the project’s work—ownership rights may be addressed in the fiscal sponsor agreement and could potentially result in some form of joint ownership. The sponsor simply assures that the project will use the grant funds received to accomplish the ends described in the grant proposal. This is the model of fiscal sponsorship primarily utilized in the arts.