Using the Whole Whale - A Nonprofit Podcast
Business:Non-Profit
Interview with Andrew Schulman of Schulman Consulting.
Here are some key points about fiscal sponsorships from the conversation:
- A fiscal sponsorship allows a new project or group to operate under the legal and tax-exempt status of an existing 501(c)(3) nonprofit organization. This avoids having to incorporate separately and apply for 501(c)(3) status.
- The fiscal sponsor provides back office services like accounting, HR, legal compliance, and manages fundraising so the sponsored group can focus on programs.
- Sponsors typically charge an admin fee of 8-12% of funds raised. Some charge a % of expenses instead. This covers their management costs.
- Good for getting started quickly, building a track record, and testing an idea before launching a standalone nonprofit. Provides credibility.
- Downsides are less autonomy, fewer funding sources, can’t get some nonprofit discounts, and sponsors add rules/oversight.
- Suggested to use a fiscal sponsor if raising over $50k in first year or don’t have nonprofit management experience.
- Most sponsors want to help projects succeed and transition to independence. Process takes 3-6 months after getting 501(c)(3) status.
- Fiscal sponsorships should be the default first step before creating a new 501(c)(3) since it simplifies startup.
In summary, fiscal sponsorships allow faster startup in exchange for some autonomy but are a great way to incubate and test a new social impact idea.
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262: Fundamentals of Copywriting for a Cause
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259: (news) Nonprofits Helping Afghan resettlement and Indigenous community Reparations
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256: (news) Haiti Supply Chain Issues & Omaze lands $85M Funding
255: Planned Giving & The One Thing to Know
254: (news) Nonprofit Reality Show & 9/11 Day of Service
253: (news) HRC President Fired & Afghan Refugee Support
252: (news) Hurricane Ida & Afghanistan Nonprofit Response
251: (news) Afghanistan Fundraising & Nonprofit Democracy Report
250: (news) Afghanistan & Haiti - How Nonprofits are Responding
249: (news) Half of U.S. Gives & ASPCA Overhead Questions
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