Yes, fiscal sponsorship does work for grants. You would use a fiscal sponsor if your organization does not yet have 501(c)(3) status. Most granters are restricted from providing grants to any organization that is not a 501(c)(3) nonprofit.
If you do use a fiscal sponsor, be sure to include this information in your grant proposal. Your fiscal sponsor will likely have guidelines for handling this information in a grant proposal.
More about fiscal sponsorship.
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