FISCAL SPONSORSHIP IN TRULY INDEPENDENT FILM: ENTITY AND MODEL CHOICE AND LEGAL RISKS

Abstract

This article examines fiscal sponsorship as a legal and financing structure for “truly independent” films—low-budget, non-commercial projects created by filmmakers without access to studio financing, tax incentives, or traditional investors. Neither standalone nonprofit incorporation nor purely for-profit entity structures adequately address the unique needs of such projects. After surveying the development of fiscal sponsorship as a means of funding projects that meet an exempt purpose, relevant IRS guidance, and current prevailing practices and organizational structures in independent film, the article contends that a Model C (“regranting”) fiscal sponsorship paired with a single-member limited liability company (SMLLC) offers the optimal balance of compliance, liability protection, fundraising access, and filmmaker/producer creative control. The article compares alternative entities and sponsorship models, identifies key governance and contractual requirements, and analyzes common compliance risks through IRS rulings and case law. It concludes by recommending clearer regulatory guidance to legitimize and stabilize fiscal sponsorship as an important tool for funding independent artistic film projects in an increasingly constrained industry landscape against the backdrop of Trump-era cuts to traditional arts organizations