Instead of starting your own nonprofit, you can work with an existing 501(c)(3) public charity under a formal arrangement known as fiscal sponsorship. You can ask for grants and tax-deductible donations under your sponsor's exempt status. Fiscal sponsorship can also open a world of grant opportunities to individuals, such as artists.
This blog is a simple overview of who might want to have a fiscal sponsor and who might become one.
Your donors will give money to your sponsor, noting that the funds are for your project. The sponsor passes the money to you, keeping a fixed amount--typically five to 10 percent--for administrative services. Because you'll be signing a contract, it's important to do your homework to find a sponsor you trust and to structure the agreement carefully.
The resources below will help you prepare.
Video: What You Need to Know About Fiscal Sponsorships
During this one-hour video, 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.
Since most grantmakers give to organizations, not individuals, fiscal sponsorship might help you qualify for a wider range of funding opportunities. Thus, you might be able to fund and start your project sooner. Meanwhile, you can work on getting your own nonprofit status if that is your goal.
To learn more about fiscal sponsorship, please see:
- Grantseeking Basics for Individuals in the Arts, our free recorded webinar.
- Where can I find examples of policies, procedures, and guidelines for fiscal sponsorship agreements? This article links to guidelines of real fiscal sponsorship programs so you can see what is involved.
- Fiscalsponsorship.com, an authoritative site by Gregory L. Colvin, nonprofit attorney and author of Fiscal Sponsorship: 6 Ways to Do It Right. This site includes highlights from the book, sample agreements, and additional resources.
How to Find a Fiscal Sponsor
- See the helpful hints in the Candid Learning blog post, Find a Fiscal Sponsor that Fits.
- Look for nonprofits whose missions are similar to yours. You might start with your current affiliations. Make a list of the professional societies, educational associations and institutions, religious organizations, social and recreational clubs, and other groups with which you are already associated, including nonprofit employers.
- The Fiscal Sponsor Directory allows you to search by state, service category, or keyword for nonprofit fiscal sponsors. Profiles include eligibility requirements, fees, services, and types of projects supported. The site also provides statistics and resources on fiscal sponsorship.
When approaching your prospects, be ready to give a verbal or written proposal that explains:
- Your project: Why it's needed, and its goals, objectives, method, evaluation, staffing, and budget. This is similar to a grant proposal.
- How it advances the nonprofit's mission.
- Other ways the nonprofit can benefit from being associated with your project.
Social Impact Commons supports fiscal sponsors, sponsored projects, funders, and other organizations by providing resources, research, advocacy, and direct services related to fiscal sponsorship and nonprofit infrastructure sharing. Free resources include two fiscal sponsorship agreement templates:
‘Model A’ Fiscal Sponsorship Agreement Template
‘Model C’ Fiscal Sponsorship Agreement Template
The Fiscal Sponsor Directory allows you to search by state, service category, or keyword for nonprofit fiscal sponsors. Profiles include eligibility requirements, fees, services, and types of projects supported. The site also provides statistics and resources on fiscal sponsorship.
Fiscal Sponsorship
Community Initiatives
Community Initiatives is a fiscal sponsor whose sole purpose is to provide best-in-class infrastructure and administrative support to sponsored projects. Services include human resources, financial management, tax preparation, grant support, risk management, legal counsel, coaching, and online donation management.
The Use of LLCs in Fiscal Sponsorship - A New Model
Adler & Colvin [PDF]
Lawyers Steven Chiodini and Gregory L. Colvin discuss a new model, "Model L", in which the fiscal sponsor acts as the sole member of a limited liability company (LLC) from which the sponsored project is conducted. Published May/June 2011.
Fiscal Sponsorship Resources
Tides Center
Tides takes a unique approach to fiscal sponsorship. Beyond serving as a conduit of grants, Tides says it provides the organizational and operational support, and the network to help nonprofits grow their impact.
Founded by artists for artists, The Field is dedicated to providing strategic services to thousands of performing artists and companies in New York City and beyond. Offers fiscal sponsorship.
Comparison of Starting a New 501(c)(3) Organization with Using a Fiscal Sponsor (Model A)
Adler & Colvin [PDF]
This table describes the pros and cons of setting up your own nonprofit versus fiscal sponsorship.
Fiscal Sponsorship: Six Ways to Do It Wrong
Nonprofit Law Blog
By Gene Takagi, California nonprofit attorney. Published Feb. 20, 2009.
Fiscal Sponsorship
Fractured Atlas
Fractured Atlas is the country's largest fiscal sponsor for the arts. It works with thousands of artists and arts organizations nationwide to provide education and support for raising funds.
Fiscal Sponsorship for Nonprofits
National Council of Nonprofits
Describes fiscal sponsorship and provides many helpful links on the topic.
Fiscal Sponsors
NEO Philanthropy Inc.
Formerly called Public Interest Projects, NEO offers fiscal sponsorship to nonprofits that support its mission "to increase funding for cutting-edge strategies that advance social change."
Fiscal Sponsor Agreement Form (PDF)
Hawai'i Community Foundation
Provides a link to a fiscal sponsor agreement form.