Fiscal Sponsorship vs. Starting Your Own Nonprofit: What Veteran Leaders Need to Know

At Veterans Collaborative, we see every day how powerful local leadership can be in strengthening mental health, family stability, and community ecosystems for those who have served. But we also see how many Veteran- and military-led initiatives struggle—not because of lack of passion or impact, but because the nonprofit system is complex, slow, and often inaccessible.

The fiscal sponsorship field is now one of the fastest-growing segments of the U.S. nonprofit sector. As of 2023, more than 12,000 charitable projects operate under 600+ sponsors, stewarding over $2.6 billion in mission-driven work. And experts believe the real number is far higher.

But here’s what many Veteran and military founders don’t know:

👉 Fiscal sponsorship is not a pass-through. It is a fully regulated charitable structure governed by IRS compliance, oversight, and fiduciary responsibility.
It takes skill, administrative rigor, and deep knowledge of nonprofit law to use this tool well—and many new founders are never told it exists.

In fact, in nearly every discovery meeting we host, we hear the same sentence:

“I wish I had known about Veterans Collaborative and fiscal sponsorship sooner.”

And that is exactly why we exist—to make launching a Veteran- or military-serving initiative faster, safer, and more accessible.

What Is Fiscal Sponsorship (and How VC Uses It to Serve Military Communities)?

Fiscal sponsorship is a legal arrangement where Veterans Collaborative—a 501(c)(3) public charity—provides tax-exempt status, financial stewardship, compliance oversight, and administrative support to Veteran- and military-serving projects. This allows leaders to begin fundraising and delivering impact immediately, without the year-long wait and administrative load of forming a new charity.

Our goal at VC is simple:

👉 To force-multiply Veteran-led ideas and accelerate impact at the local level. We take on compliance, governance, reporting, and financial administration, allowing leaders to focus on mission—not paperwork.

What Does It Mean to Start Your Own Nonprofit?

Starting your own 501(c)(3) can be the right path—but it’s a significant undertaking. Incorporating at the state level is only the first step. You must still file IRS Form 1023, complete governance requirements, set up compliant financial systems, maintain annual reporting, and meet strict public-support tests.

For Veteran founders who are trying to simultaneously deliver programming, fundraise, build partnerships, track impact, and complete federal filings—this can be overwhelming with slow growth. The majority of nonprofits take an average 10-12 years to reach sustainability and growth milestones of $250,000 in revenue, and that’s if they make it this long.

Key Differences: Fiscal Sponsorship vs. Forming Your Own 501(c)(3)

Fiscal Sponsorship (VC Model A) Starting Your Own Nonprofit

*Operates under VC’s 501(c)(3) status - Must obtain your own 501(c)(3) approval

* Immediate access to tax-deductible donations - 3–12 month IRS approval timeline

* VC handles compliance, accounting, audits - You handle all compliance, filings, audits

* Low startup and ongoing costs - Higher legal, accounting, and filing costs

* Ideal for pilots, community initiatives, or launching fast - Best for long-term, complex, or large-scale orgs

* VC carries fiduciary oversight - Your board bears all legal liability

* Shared administrative infrastructure - You must build infrastructure from scratch

When Fiscal Sponsorship Is the Better Fit for Veteran Leaders

You should consider fiscal sponsorship if:

• You’re launching a new idea, pilot, or grassroots initiative

• You need to activate quickly to meet urgent community needs

• You don’t have capacity for administrative or legal setup

• You want to test and refine your impact before becoming a standalone nonprofit

• You want access to VC’s ecosystem of partners and Veteran-focused networks

When Starting Your Own Nonprofit May Be Right

You should consider forming your own org if:

• You are prepared for the administrative and legal responsibilities

• You want full independence and a dedicated board from day one

• You expect significant planned and sustainable revenue growth

• You want full organizational independence

What We See in the Veteran & Military Community

Many of the most meaningful, high-impact programs we support—from mental health and suicide prevention, to military child education, to peer support and community-building—began with: A leader, a lived experience, determination to have impact, and a heart of service to serve others.

Fiscal sponsorship often becomes the launchpad that helps Veteran founders build structure, credibility, and momentum—without losing months (or years) to the barriers and bureaucracy of a system.

Our Mission Is Simple: Serve Those Who Serve

Whether you choose fiscal sponsorship or are ready to build your own nonprofit, the goal is the same:

Strengthen the Veteran and military-connected community through access, stability, and opportunity.

Veterans Collaborative exists to make that path possible—faster, safer, and with the full force of an ecosystem designed around service.

If you’re building something that supports Veterans, service members, or military families… you don’t have to do it alone.

Get started today!