Hey Robi! Yeah, I agree fiscal sponsorship can be a misleading term, since “sponsor” suggests someone who provides money. In the case of fiscal sponsorship, what the sponsor provides is tax-exempt status. I’d be somewhat reticent to use another term because this one is widely used in the nonprofit world. From Wikipedia:
Fiscal sponsorship refers to the practice of non-profit organizations offering their legal and tax-exempt status to groups (...). It typically involves a fee-based contractual arrangement between a project and an established non-profit.
I do think the EA community could use a bit more clarity around what fiscal sponsorship is, though. Maybe us at RP will write some posts about this soon.
I should note also that fiscal sponsors often don’t provide operational support, as RP does for Epoch and other fiscally sponsored projects. So that’s not what the term “fiscal sponsorship” primarily refers to. Outside of EA, I think it’s more commonly just a way for non-profit projects to accept tax-exempt donations.
FYI, the lottery system described above as a means to distributing prizes is illegal in the US (states have a monopoly on random lotteries, unfortunately)
Basically, if a payment system involves three features together, it will likely be illegal:
Consideration (e.g. you need to spend money or time to be considered for the prize)
Chance
Prize (cash or anything of value)
The typical way around this is to get rid of consideration and give an alternative means of entry, e.g. “you can also enter by emailing this email” or similar. This is why promotions often have the “no purchase necessary” language in the US. There are ways around this, but typically you need to apply for a license.
[Credits to Abraham Rowe for catching this.]