Fiscal Sponsor Organizations

Hi @Harry Meltzer - Thanks for your post. For the sake of clarity and to help folks better understand your situation, can you share a bit more about your practice with the group:

What Model(s) of FS does your organization offer?

About how many projects is your organization currently serving?

What does the organization’s current cost share structure look like?

Sure thing! We have 25-30 organizations active at any one time and have a total of 70 officially fiscally sponsored projects on the books.

This is our costshare schedule based on funds raised in a calendar year.

We do not limit the models we offer and maintain the same costshare schedule across all projects.

Hi, Harry. Last year we had 55 sponsored organizations, all but two being Model C. We charge 6% for admin overhead. The total income in 2023 was approx. $1.1 million, $83,000 of which was “our” money, a combination of admin sharing with the sponsored orgs, grant money we took in, interest, and event income. From that, for the first time, I am being paid $16/hour (minimum wage which is all I’m willing to accept right now until I know this works) for 20 hours/week. This is after 13 years of volunteering my time. I would love to get a second person on the payroll to ease the burden of admin work for me and allow me to do more “high level” planning, but I’m not sure we can afford it yet. People tell me that you should have 6 months of salary and benefits in the bank before you hire someone, but that doesn’t seem like enough. I would hate to hire someone and then let them go 6 months later. I hope this helps!

It looks like you are definitely undercharging - 10% seems to be a fairly standard rate. It also sounds like you might need to say no or exit some small projects while you get more financially stable.

Five to seven years ago we were where you are, and you are correct that it is not financially sustainable at that size. We finally got there somewhere around $3 million in revenue, and when we increased our rates to 8% and then 9% across the board. I was working 20, then 30 hours per week, and now we are at 4.1 FTE at $5 million in revenue. I think more funders these days understand that what you are doing fits in the realm of capacity building, so hopefully you can find a funder to bridge the gap until you get to a more sustainable size.

I work for a large fiscal sponsor, and I do not hold a position involved with securing financial sustainability, so I want to be transparent that I am not personally speaking from experience.

However, here are a few things I’ve noticed/a few notes that may be helpful to consider:

• Similar to what Lisa said, the average cost share allocation across fiscal sponsors seems to be around 10% for non-government funds. (Some fiscal sponsors charge up to 14% on government funds, due to the complexity of the grant reporting, etc.)

• Some fiscal sponsors choose to only accept projects that have a certain fund balance. (So a project can’t come onboard without $X from day one, which helps the fiscal sponsor project their income.)

• Similar to above, some fiscal sponsors may require their projects to fundraise (or work towards fundraising) a certain amount during the year (which, again, may help the fiscal sponsor project their income).

• Some fiscal sponsors pass on certain costs to the project which are not covered by the 10% cost allocation. (For example, this could be a certain amount for every project employee to be on payroll or a certain amount towards the project’s “piece” of the insurance coverage, etc).

• I don’t know how to phrase this well, but it seems some fiscal sponsors may encourage their less financially successful projects (and/or projects that aren’t having the desired impact) to close to preserve the fiscal sponsor team/staff resources.

• Some fiscal sponsors have received general operating funds from funders to help build sustainability/scale. (I will share that I worked at a different fiscal sponsor that focused on providing fiscal sponsorship to folks in one state in particular, and that fiscal sponsor was able to secure occasional funding from local funders/foundations.)

Thank you all SO much for your perspective. I am very grateful for your time in responding. I am going to take the discussion into our BOD.

We are very much in the game in the first place to provide a venue for anyone to make a go at their charitable effort. It’s monumentally frustrating that the only conceivable way make it sustainable is to throw up barriers (like minimum balances, fundraising minimums, etc) that would preclude so many of our projects from being able to participate. Or, continue operating on an all-volunteer basis.

Last year we solicited some 40+ funders for capacity building funds, with no response (literally, zero).

I’m left wondering, what is the point of continuing to invest time and energy in this enterprise if there is no sustainable way to make 501c3 available to any project of any size?

Thanks for attending my rant :). See you at the next discussion!

My first reaction is compassion, as I know how much work it is for the ED and Program Officer to manage a portfolio of that size. I read that you take no salary. This is a lot of work and a full-time job for us. You deserve to be well compensated. Agreeing with the comments above, the average cost share is 10%—12%, and even then, it can be tough to cover operations for that revenue level. Capacity building and technical assistance grants can help supplement this.

@Amanda LaFleur I wonder if we need to undertake another round of LOI’s with a more specific focus on capacity building and technical assistance.

I agree with everything others have mentioned, and my heart goes out to you! I would add that you want to review your portfolio and create a clear break-even point - how many different projects, and at what size do they need to be to cover the internal budget you aspire to have? Besides increasing the cost share rate, you might need to intentionally focus on bringing larger projects into the portfolio to help balance the smaller initiatives and help current projects fundraise. The field scan also documented that most of the smaller fiscal sponsors (under 1M in expenses) could not recover total costs just from the shared costs collections. Therefore, they leveraged different subsidies to invest in the program at that size. You might want to pull some of the data from the field scan to share with the BOD. Last, but not least important, offering shared management services while not having any staff could be why larger, more complex projects do not choose you as a fiscal sponsor. This structural issue could limit the organization’s ability to grow and flourish. I really hope you will find a way to address this obstacle as we need you in the community. I hope this is helpful!

@Asta Petkeviciute Thanks! I took another look at the Field Scan and have noted what you describe, however, I haven’t found any information on what those additional subsidies actually are. Do you have a sense of what levers people pull to make operating funds appear?

@Harry Meltzer yes, we did not ask more details as to where the subsidies come from. From what I am aware of, the majority of the initial subsidies are usually coming from grants. Also, keep in mind, that over 70% of all field scan respondents offered other programs besides fiscal sponsorship. So in certain cases, revenues earned from other programs might be subsidizing FS program too. I hope this is helpful.

Very, thank you!