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.
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. To learn more about writing one, please see our proposal writing resources.
- How it advances the nonprofit's mission.
- Other ways the nonprofit can benefit from being associated with your project.