Fiscal sponsorship fee opacity causes sponsored projects to lose 5-15% of donated funds to administrative allocations they cannot audit or negotiate

Fiscal sponsors charge sponsored projects an administrative fee of 5-15% of all incoming revenue, but a 2023 field survey found that 46% of fiscal sponsors do not budget or track the full cost of their services. Projects have no way to verify whether the fee reflects actual costs or subsidizes the sponsor's other operations. So what? A grassroots project that raises $100,000 loses $5,000-$15,000 to fees before a single dollar reaches its intended purpose, with no transparency into what services that fee actually funds. So what? Projects with lower fundraising capacity are disproportionately harmed because the percentage-based fee structure means the sponsor's margin stays constant while the project's usable budget shrinks. So what? Cross-subsidization is rampant: high-maintenance projects with complex compliance needs get subsidized by simple, low-touch projects, meaning efficient projects effectively pay for others' overhead. So what? Project leaders who question fee structures or seek transparency risk damaging their relationship with the sponsor, who controls their tax-exempt status and financial accounts. So what? The power asymmetry between fiscal sponsors and sponsored projects replicates the very inequities that many community-based projects were created to address, particularly affecting BIPOC-led and emerging organizations that lack alternatives. The structural root cause is that the fiscal sponsorship sector has no standard cost-accounting methodology, no required fee disclosures, and no regulatory body overseeing fee practices. The legal characterization of the relationship -- whether projects are 'clients' paying 'fees' or 'programs' receiving 'cost allocations' -- varies by sponsor and has tax implications that most project leaders do not understand.