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How do I choose the best fiscal sponsor for my project? Part II

By M. Melanie Beene

With an assessment of fit and an understanding of the types of fiscal sponsor relationships complete, it’s time to look at a few other factors that will help you choose the best fiscal sponsor for your idea or project.

  • Location

While many of the tasks of fiscal sponsorship can be easily accomplished from a distance, certain types of project activity – especially direct services – are most easily sponsored locally. If you are choosing a fiscal sponsor far from your location, make sure that sponsor is registered to do business and to fundraise in your state. If you are going to have employees, the sponsor must also obtain workers’ compensation insurance in your state. Check out the health benefit coverage as well, because out-of-area fiscal sponsors may have limited health providers in your area.

  • Costs & Services

Costs can vary, but most sponsors charge around 10 percent of revenues and/or expenses. These fees cover the back-office services provided by a fiscal sponsor. Services may vary considerably from sponsor to sponsor. Make sure you know what services your potential sponsor offers, and which ones are included in your basic fees. For example, Community Initiatives includes insurance (liability, property, directors & officers liability, etc.) in its fee. Some other sponsors bill the projects for insurance. Some sponsors exclude their projects from lobbying or accepting government grants. Sponsors that do their own fundraising may prohibit their projects from approaching certain funders if the project will be in competition with the sponsor. Community Initiatives does not discourage any of these activities. Since our only mission is fiscal sponsorship, we support our projects in their lobbying and fundraising efforts.

Before signing up with any sponsor, review the written sponsorship agreement and its exit provisions. If the potential sponsor does not have a written agreement, or if that agreement makes leaving difficult or costly, don’t sign up. Make sure you can easily leave that organization if the fit for your project isn’t what you’d hoped. There are lots of sponsors across the U.S., and you if you don’t succeed in finding the right one on the first try, you should be able to transfer to another sponsor with a minimum of difficulty.

Posted May 16, 2014 in Fiscal sponsorship

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