Fiscal Sponsorship: An Alternative to Nonprofit

Incorporation Wednesday, October 27th, 2010

Emily Davis, MNM, EDA Consulting YNPN Denver & San Diego

Overview

•  Introductions

•  Experience with fiscal sponsorship

•  Desired outcomes

What is Fiscal Sponsorship?

“Fiscal sponsors are 501(c)(3) charitable corporations that give unincorporated groups whose missions are aligned with their own a tax-exempt home.

Although sponsored programs are not completely independent —they are legally part of the sponsor organization—they nevertheless retain

programmatic autonomy and often have separate advisory boards making their strategic decisions. They are responsible for their own fund-raising,

and they absorb any shortfall and retain any surplus.”

- Jonathan Spack, Third Sector New England

Fiscal Sponsorship Process

• Less legal expertise

• Less paperwork (no

incorporation)

• Less administrative work

• Less liability

• Collaborative

• Financially sound

• Saves time

Challenges

•  Finding a fiscal sponsor

•  Less independence

•  Advisory Board instead of Board of Directors

•  Subject to FS policies and procedures

•  Monthly fees – back office, financial processing

•  Quality of services

Identifying a Fiscal Sponsor

•  Mission alignment

•  Staff capacity

•  Fiscally stable

•  Complimentary organizational culture

•  Governance and operations best practices

•  Space availability

•  Insurance

•  Community credibility & reputation

Finding a Fiscal Agent •  Community Foundations

•  Infrastructure Organizations (Tides Center, CompassPoint, CRC, NMS)

•  Universities/Academic Institutions

•  Hands On Network

•  Incubation Nonprofits (CNDC

•  Chambers of Commerce

Elements of the Agreement

About YNPN Chapter Making the Case

Best Practices Responsibilities

Agreement

About YNPN

•  Who is YNPN?

•  National Mission Statement

•  Chapter History and Formation

•  Organizational Leadership

Making the Case

•  Access to YNPN network

•  Mission-alignment

•  Collaboration & partnership

•  Similar community stakeholders

•  Mutually-beneficial access to resources

•  Minimal oversight

•  Access to the next generation of nonprofit leaders

•  Ability to terminate agreement

Best Practices

•  Policies and procedures

•  Financial Management

•  Planning

•  In-services/Training

•  Learning organization

•  Evaluation

Fiscal Agent Responsibilities

•  Due diligence

•  Time commitment & capacity

•  Financial management/accounting

•  Human resources support

•  Back office administration

Agreement Elements

•  Terms of agreement

•  Project activities

•  Financial management as restricted funds

•  Financial responsibilities

•  Intellectual property rights

•  Expenditure responsibilities

•  Fundraising

•  Restricted funds management

Agreement Elements Con’t •  Records and reports

•  Administrative fees

•  Partnership

•  Changes in tax status

•  Confidentiality

•  Termination

•  Indemnification

•  Arbitration

Sponsorship Policies

•  Cash advances

•  Grants received

•  Donations

•  Fundraising activities

•  Communications with potential donors

•  Financial statements

•  Administrative fees

•  Lobbying

•  Loans to projects

•  Automatic termination of project

•  Extra services

•  YNPN email accounts

•  Amendments

•  Acknowledgments

Sample Agreements

•  CompassPoint

•  YNPN San Diego

•  Minnesota Council of Nonprofits

•  Fiscal Sponsorship Agreement (Model A)

Putting It All Together

•  Best practices in financial management

•  “Insurance” with the agreement & policies

•  Recognition of FS

•  Best practices in nonprofit leadership & management

“In addition to building the capacities of fledgling groups and helping them achieve sustainability, fiscal

sponsorship promotes more practical thinking among everyone in nonprofit world about the viability of

longer-term, shared administrative models.”

- Jonathan Spack, Third Sector New England

Resources

•  Fiscal Sponsorship: 6 Ways to Do it Right

•  Guide to Fiscal Sponsorship

•  Fiscal Sponsorship: 6 Ways to Do It Wrong

•  Fiscal Sponsorship Template Agreement

•  National Network of Fiscal Sponsors

•  Getting a Head Start

•  Fiscal Sponsor Directory (San Francisco)

•  Colorado Nonprofit Development Center (Denver)

Questions

Thank You

For questions or more information…

Emily Davis, MNM

President, EDA Consulting

3840 Telluride Place

Boulder, CO 80305

(303) 652-7536

www.edaconsulting.org

www.edaconsultingcafe.blogspot.com

http://twitter.com/edaconsulting

http://www.facebook.com/edaconsulting

emily@edaconsulting.org