Fiscal Sponsorship: What and Why?

- [Narrator] So you've got a great idea and you're ready to hit the ground running. Your mission-driven project will be a great benefit to your community. To get things going you'll need to raise funds, line up some sort of administrative infrastructure, and get tax exempt status. It might be natural for you to think you need to jump right into the 501c3 application process to start a nonprofit. But did you know that there's an alternative? Starting a 501c3 nonprofit is a bit like jumping into t

he deep end of the pool. It's a lengthy and involved process that isn't a fit for every charitable project, and it could turn out that you don't enjoy swimming. Or maybe the water is too cold. But once you start a nonprofit, you are already in the water and have no choice but to swim. You get the point. To put it another way, you may be getting in over your head when there are other ways to enjoy the water. Fiscal sponsorship allows you to wade into the work and test out the waters. You can disc

over if the water is the right temperature for your work, and if you like swimming or not. Starting out with fiscal sponsorship also gives you the benefit of having a coach. Someone who can guide you as you move at your own pace. A good fiscal sponsor is a financially strong nonprofit organization with the capacity, structure, and experience to provide administrative services, oversigh,t and guidance. They assume some financial responsibility related to you and your project. Partnering with a fi

scal sponsor allows you to gain tax exempt status while devoting your energy to your mission and supporters rather than infrastructure. It also offers a low risk way to test new ideas. It's a great way to give yourself time to figure out how to approach the project. Your fiscal sponsor will be a partner, a champion of your charitable purpose. They'll help you operate according to best practices. Depending on the type or model of sponsorship, and your specific sponsor, they may also offer additio

nal administrative support, training, and financial management. And a good fiscal sponsor is a trusted expert that knows the landscape of the local nonprofit and fundraising communities. So how do you know if fiscal sponsorship is right for you? Well, your project, program, or initiative has to have a charitable purpose. Remember, the sponsor is putting their IRS 501c3 status on the line when sponsoring your project. Your initiative also has to align with the sponsors mission. Your initiative co

uld be a specific project with a short life span, or it could be an ongoing program that eventually leads to 501c3 status. Fiscal sponsorship isn't limited by a project's scope or budget. It doesn't matter if yours is a small project with a small budget, or if it's large in scope with millions of dollars in the budget. You can still benefit from fiscal sponsorship. If you're interested in learning more about fiscal sponsorship, contact Propel Nonprofits.