Supporting Organizations as they evaluate their decision to choose a new fiscal sponsor
What is a Fiscal Sponsor?
From the National Network of Fiscal Sponsors:
Fiscal sponsorship is when a nonprofit organization (the “fiscal sponsor”) agrees to provide administrative services and oversight to projects, groups and/or individuals engaged in charitable work that relates to the fiscal sponsor’s mission. Fiscal sponsors also assume all of the legal and financial responsibility for the project’s activities. Fiscal sponsors are tax-exempt according to the IRS, are able to receive charitable contributions and donations for the project,and have the infrastructure to ensure compliance with all federal and state laws.
Typically, a fiscal sponsor will provide operational and administrative support to projects, including:
HR Services
Hiring project staff into their entity
Administering payroll
Providing benefits
Compliance
Ensure federal and state compliance
Often have legal teams who can support the projects
Finance
Receive donations, grants, and incoming funds on behalf of the project, under their tax-exempt status
Provide financial accounting for those funds
Support in the financial reporting process to donors
Operations
Support projects in administering grants to other charitable organizations
Support in drafting contracts or purchase agreements so projects can engage with consultants and/or other vendors to further their work and mission
Benefits to using a Fiscal Sponsor:
Quick Launch: By working with a fiscal sponsor, a project can often get off the ground much faster than it takes to apply for and receive their 501(c)3 status from the IRS. Donors are also able to make donations quickly, as soon as a project is established at the fiscal sponsor.
Savings on administrative costs: Typically, fiscal sponsors have multiple projects they support, and therefore projects benefit from shared administrative and operational expenses. This includes having access to group benefits (health insurance, etc.) which can be extremely expensive for a new or smaller organization.
Compliance Support & Risk Management: Fiscal sponsors can support and manage the compliance requirements that often come with grants or donations. Some fiscal sponsors can advise on program strategy, and have access to legal counsel for projects to confer with. Fiscal sponsors also have established operational policies and procedures which help mitigate risk.
Saved Personnel Time/Cost: Free’s up staff time to focus on other organizational and programmatic needs.
The Ops Collective has helped several organizations select a fiscal sponsor by:
Understanding the project activities, staff size, funding structures, and operational needs of a project in order to help determine which fiscal sponsor is right for them.
Understanding the current strengths and weaknesses of existing fiscal sponsorship services and relationship
Creating a rubric to evaluate the fiscal sponsors that help projects understand their highest needs in a fiscal sponsor.
Providing initial recommendations of potential fiscal sponsors, based on prior knowledge of the landscape of fiscal sponsors working in the field, and conducting research to identify additional fiscal sponsors if necessary.
This also includes understanding and evaluating critical fiscal sponsorship services such as regranting, payments, lobbying, compliance, as well as health benefits and other policies for project staff.
Conducting research on fiscal sponsors that fit within that rubric. Research includes a combination of “desk research” (information from websites and materials), as well as more indepth research that comprises of calls with the fiscal sponsors, speaking to projects who are currently in their networks, etc.
Participate in initial conversations and diligence calls with the recommended fiscal sponsors to gather additional information on the full services of the fiscal sponsor.
Provide recommendations based on a combination of the project needs and fiscal sponsor due diligence.
Facilitate the decision making with the project to select their fiscal sponsor.
The Ops Collective has supported organizations onboard to new fiscal sponsor by:
Creating a transition work plan and timeline and project managing the transition to the new fiscal sponsor.
Supporting the communication and coordination between old and new fiscal sponsors.
Reviewing all new agreements, working with legal counsel to ensure all services are captured in said agreements and MOUs.
Transitioning any and all agreements such as contracts, subgrants, and donor agreements to ensure compliance and good governance.
Supporting important communications to staff about the fiscal sponsor transition, including change in health benefits, payroll timings, PTO transitions, and what to expect in the transition to the new fiscal sponsor.
Project managing fiscal sponsor onboarding tasks and timeline.
Image sourced from The Noun Project, Bana Studio.
