Fiscal Sponsorship: An Alternative to Nonprofit Incorporation

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Information about Fiscal Sponsorship: An Alternative to Nonprofit Incorporation
Business & Mgmt

Published on February 16, 2014

Author: edaconsulting

Source: slideshare.net

Description

As each new YNPN chapter emerges to develop programs and resources for the next generation of nonprofit leaders, they are inevitably faced with the decision of whether or not to incorporate formally as a nonprofit. Nonprofit incorporation can require a good deal of time and legal advice; while this may be a viable option for your chapter learning about other models will help chapters make well-informed decisions.

Fiscal sponsorship is a useful alternative to nonprofit incorporation that has strong benefits as well as its challenges for YNPN chapters Its collaborative approach is one that may fit the philosophy of your chapter as well as helping to save time to serve your chapter’s programs.

In this session Emily Davis will explain what fiscal sponsorship is, the pros and cons to fiscal sponsorship as well as elements of a fiscal sponsorship agreement. Learn from her experience in setting up fiscal sponsorship with two YNPN chapters – Denver and San Diego – as well as perspectives from other fiscally sponsored chapters.

Fiscal Sponsorship: An Alternative to Nonprofit Incorporation is useful for any chapter including those with nonprofit incorporation status or those looking into the options for the first time. Join us on Wednesday November 3 at 5:00 p.m. pacific time for this discussion.

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)

Questions

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 emily@edaconsulting.org

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