Now that you’ve decided to explore fiscal sponsorship as an alternative to – or while waiting for – 501c3 determination, how do you locate potential fiscal sponsors? A good first step is the online directory at fiscalsponsordirectory.org. It lists more than 140 sponsors nationally and gives brief profiles of their services and requirements. While any existing 501(c)(3) organization could provide fiscal sponsorship, a much fewer number of organizations work specifically as fiscal sponsors. The field is generally arranged by content type – arts and culture, health, or environmental fiscal sponsors – or by broader topic, for example, social justice. A smaller number, like Community Initiatives, will consider any project that meets the IRS definition of a charitable purpose.
Once you’ve found potential sponsors via the directory and other searches, seek referrals from the foundation grant makers you may approach for funding. Also talk to other nonprofit organizations and fiscally sponsored projects in the area of your work. Be aware, some funders restrict their funding of fiscal sponsors to the ones they know and trust from prior experience. A small number may not fund sponsored projects at all.
Once you have a list of potential sponsors you need to determine if your nonprofit activity will meet their eligibility requirements. Many fiscal sponsors have minimum annual revenue requirements. For example, Tides requires a $200,000 minimum, and Rockefeller Philanthropy Advisers mandates over a million. Intersection for the Arts, on the other hand, does not have a minimum requirement, but it charges projects an annual sponsorship fee. Community Initiatives’ annual minimum revenue requirement is $24,000.
Some sponsors may limit the types of fiscal sponsorship they practice. The only available text on the topic is Gregory Colvin’s “Fiscal Sponsorship, Six Ways to do it Right” in which he outlines six different ways to structure the relationship. You will want to make sure that the sponsors you are considering practice the form of fiscal sponsorship you need.
Some sponsors might limit the area in which their projects may be located. Some are very local, others regional, national or international. Community Initiatives currently operates primarily in the San Francisco Bay Area but has projects in five other states and two that do work outside the U.S. We are open to discussing any project anywhere. In general, however, direct service projects are better served using a local fiscal sponsor.
Once you have a handful of potential sponsors to consider, what’s next? Stay tuned for some tips on what to think about in making your choice.