Published on February 16, 2014
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 • Lobbying • Grants received • Loans to projects • Donations • Automatic termination of project • Fundraising activities • Extra services • Communications with potential donors • YNPN email accounts • Financial statements • Administrative fees • 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)
Thank You For questions or more information… Emily Davis, MNM www.edaconsulting.org President, EDA Consulting www.edaconsultingcafe.blogspot.com 3840 Telluride Place http://twitter.com/edaconsulting Boulder, CO 80305 http://www.facebook.com/ edaconsulting (303) 652-7536 firstname.lastname@example.org
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