Fiscal Sponsor Organizations

  • 1.  Sponsoring Incorporated Entities

    Posted 08-07-2023 15:19

    Greetings

    We've noticed a rising trend among incorporated entities without 501c3 status who are seeking fiscal sponsorship. As a result, we've been accommodating their programs as Model As, while offering the following guidelines to the founders:

    1. They can maintain their own board of directors and pursue projects independently outside of fiscal sponsorship.

    2. Our insurance coverage extends solely to the program we sponsor, not the incorporated entity.

    3. The program we sponsor must have a distinct name separate from its incorporated entity.

    4. Our D&O insurance does not cover the board members of their incorporated entity.


    However, we've encountered a couple of challenges that we believe require clearer guidelines:

    1. Some incorporated Fiscal Sponsorship Organizations (FSOs) resist using a different program name due to perceived "branding issues."

    2. Certain incorporated FSOs insist on us sponsoring their entire organization's work, effectively "mothballing" their corporate status. We need to establish clear boundaries in such cases.


    While our aim is to assist as many organizations as possible, it has become necessary to establish firmer guidelines to address these issues. Since there are no formal laws governing fiscal sponsorship, we acknowledge that this falls into a gray area.

    We would greatly appreciate any best practices that other FS organizations can share to tackle these challenges effectively! Collaborative insights are so valuable in navigating this evolving landscape.




  • 2.  RE: Sponsoring Incorporated Entities

    Posted 08-07-2023 15:49
    hi

    We do this a little bit but usually do more of a Model C and simply help underwrite the programs vs absorbing them as a Model A project. This does not actually solve the two issues you have but just wanted to give that context.

    In general I think this comes down to an instance where the client cant "have their cake and eat it to." I think it also helps to think of the "costs" of Fiscal sponsorship as being more than just $$$.

    "have their cake and eat it to."
    They cant offload services and risks to you while still keeping all autonomy/control.

    If they want to move all their programs under you then thats cool... that feels like a full Model A. I don't feel like they can keep their separate entity active AND have you be a sponsor over all their activities.

    More than $$$
    Projects "pay" an administration cost and in turn you provide support and systems.

    Projects also "pay" the sponsor in handing over some level of control/autonomy over their operations. What they get in return is mitigated risks as you define what is right/wrong. As your appetite for risks goes down your need for more control over projects goes up and vice versa.

    How much support they need/want --> Which model is the best fit --> how much autonomy/control they will need to hand over to you --> how much risk you can mitigate


    So I think its important to ask yourself:
    1. How much $$$ do we need to align with our budget? (i get this is not part of your question)
    2. How much control do you need to "charge" to align with our appetite for risk?
    2.1 - how much risk does the name "issue" really expose you to and how does that impact your overall appetite for risk?

    I know this is not as much of an "answer" as it is simply some questions and thoughts... hope it helps in some way!


    I know this is not really an anwser


  • 3.  RE: Sponsoring Incorporated Entities

    Posted 08-24-2023 18:13
    Very helpful thank you!


  • 4.  RE: Sponsoring Incorporated Entities

    Posted 08-07-2023 17:20
    Thanks for the question, (and the response, )...I just wanted to make sure i'm clearly understanding the situation:

    When you say "incorporated entities" - are those:
    * for-profit businesses that want to do a charitable project?
    * non-profits that are on their way to getting their c3 status, but just haven't done so yet? (and are thinking they can put that off if they go under FS at NOPI)
    * something else entirely?
    * some combination?


  • 5.  RE: Sponsoring Incorporated Entities

    Posted 08-24-2023 18:14
    These are non-profits that are on their way to getting their c3 status, but just haven't done so yet? (and are thinking they can put that off if they go under FS at NOPI) - you said this perfectly!


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