Fiscal Sponsor Organizations

Hello, I would say that the other name or search term to try might be “Grants to Individuals” and here is one resource that pops up. https://nonprofitlawblog.com/grants-to-individuals-and-businesses-part-one/. The key thing is that a 501c3 can make grants to individuals (of whatever size or form), but there has to be a process, application, charitable class, etc. It’s allowable, but a fair amount of paperwork and such to make sure it’s done correctly, so the challenge or decision point for a fiscal sponsor, I believe would be setting up the systems to track it correctly and being able to do that with your projects. Good luck!

@Susan Light do you think it’s something that can be integrated into an MOU[ between us and the fiscally-hosted group? We’d like to have all fiscally-hosted groups to have the option to use it from the beginning of our relationship.] We’re big on poverty relief and harm prevention. Our NTEE is, W99: Public & Societal Benefit N.E.C. Use this code for organizations that clearly provide services relating to public affairs or society benefit where the major purpose is unclear enough that a more specific code cannot be accurately assigned.

Hey @Christopher Preciado - Just wanted to jump in here. I’m not an attorney and not providing any legal advice (and I recommend talking to your legal counsel before moving forward on any of this), but it seems like in your MOU, you could have something to the effect of “If your group’s activities include distributing funds to individuals in need, [Sponsor] has a very specific process that we require Projects follow to ensure that all of the components of this activity are compliant with relevant regulations and laws. Please reach out to us X weeks in advance to discuss the process and determine if/how we can move forward with this activity.”

As the sponsor, I don’t think you’d want to give blanket approval for this kind of activity without:
1) knowing all of the details (who is eligible, how are the recipients being chosen/determined, etc.) of each project’s proposed plan to distribute the funds, and
2) ensuring that your org (the sponsor) has a repeatable process that checks the boxes and ensures that, if followed, is defensible when the time comes.

@Andrew Schulman thanks, yeah I was also going to recommend addressing it with an attorney before moving forward to set it all up properly, and agree I would think you’d want to evaluate each program. Also not sure what model of sponsorship we are talking about. At SGF we don’t allow Model Cs to do regranting of funds in any way (to individuals, nonprofits, or other entities) due to the complexity of tracking and such.