What is fiscal sponsorship?
A fiscal sponsor is a unique type of nonprofit organization that shares its 501(c)(3) status with unincorporated nonprofit projects. This allows projects to receive grants and tax-exempt donations from government, foundations, and individuals. Fiscal Sponsorship can end there, but at Community Initiatives we provide comprehensive back office services in support of projects for a flat fee. While we take care of the administration, you can focus on your mission!
Community Initiatives is a member of the National Network of Fiscal Sponsors.
What are the Benefits of Fiscal Sponsorship?
- Projects can launch quickly, without having to file for 501(c)(3) status.
- Newly founded projects have time to incubate without having to invest in infrastructure.
- Financial management is taken care of by a team of professionals, increasing the confidence of funders.
- Projects can be limited in duration by design, such as disaster relief.
- Fiscal sponsors can offer economies of scale for many services. By pooling resources, projects are able to affordably access liability protection, health insurance, and legal counsel.
Learn about the services provided at Community Initiatives.
Where Can I Read More About Fiscal Sponsorship?
“[The] earliest stage of new nonprofit ventures is not just highly time-consuming and demanding of ample commitment from the nonprofit entrepreneur but also the most fragile stage in a nonprofit’s life.”
“[New] organizations suffer a heightened risk of failure because entrepreneurs must engage in so many vital activities more or less simultaneously, which often ends up being an overwhelming task.”
“Fiscal sponsorship is an option that may be available to a person, group, or business to attract charitable funding without starting a nonprofit. It may allow an individual artist to fund the creation of a mural, a group to hold a crowdfunding campaign for pediatric cancer research, or a manufacturer to create and distribute products to regions devastated by a recent natural disaster.”
“It is likely that a great majority of individuals and groups interested in forming a nonprofit have never considered, nor even heard of, fiscal sponsorship. Yet, fiscal sponsorship may be a very attractive alternative to formation of a nonprofit, particularly where the sustainability of a separate entity is highly questionable or the charitable endeavor has a relatively short life span. Sponsors often serve as incubators of Projects that later spin off upon a determination by their respective Project Initiators that they can govern and operate sustainable independent organizations. Lawyers providing counsel to would-be founders of nonprofits who appear inadequately prepared to set up a sustainable organization should inform their clients of the fiscal sponsorship alternative.”
What is a fiscal sponsor? Does your organization need one? Have you been asked to become a fiscal sponsor? Rachel Epps Spears, Executive Director, Pro Bono Partnership of Atlanta shares the pros and cons of having a fiscal sponsor and what organizations can do to avoid potential problems when entering into a fiscal sponsorship agreement.
“Why might conversation about fiscal sponsorship be particularly important right now? In a time of active experimentation in terms of programs and organizational form, and in a context of some turbulence, the ability to test ideas without setting up formal organizations to hold them becomes increasingly important.”
“Not everyone is quick to believe that formal nonprofits are the right choice. More important, many are raising concerns that a 501(c)(3) status is the wrong choice for some groups”